News Corp. said it will reincorporate as a U.S.-based company -- a move that could substantially increase the amount of institutional investment in the media giant.
According to News Corp., existing shareholders will swap their voting and nonvoting stock on a share-for-share basis for newly issued stock.
The move basically wipes out the media giant’s American Depository Receipts, currently traded on the New York Stock Exchange, and replaces them with a new NYSE-traded stock. The new shares will also be traded on the Australian Stock Exchange.
The reincorporation will have no effect on News Corp.’s operations, and it is expected to be closed by the end of the year.
The impetus behind incorporating in the United States is to make the company’s stock more liquid -- institutional investors that had been limited by their own policies in buying foreign issues would be able to increase their investments in News Corp. substantially.
It would also allow News Corp. to become part of an index -- such as the Standard & Poor’s 500 -- which would increase its attractiveness to institutional investors.
Chairman Rupert Murdoch said on a conference call with media and analysts Tuesday morning that of the top five media-investment firms, three -- Barclays PLC, State Street Corp. and The Vanguard Group Inc. -- are index funds.
"The highest investment any one of them have in [News Corp.] is $4 million," Murdoch said on the conference call. "In contrast, all of them, their minimum investment in Time Warner [Inc.], [The Walt] Disney [Co.], Viacom [Inc.] and Comcast [Corp.] is $900 million. That shows you the sort of stakes we’re playing for."
News Corp. shares rose slightly on the news, up 55 cents each in 4 p.m. trading Tuesday to $37.43 per share.
Murdoch added that News Corp. has been contemplating the U.S. incorporation for a while, and it was spurred to action by Liberty Media Corp. chairman John Malone.
Liberty, which owns a 17% interest in News Corp., recently swapped some of its nonvoting shares for voting stock in the media giant.
"This is something that Dr. Malone urged on me several months ago," Murdoch said. "I think they’ll do very well by it. They should be very happy."