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Australia Passes New Media Ownership Rules and The Free-For-All Is Already Underway. Murdoch Buys 7.5% of Fairfax and 7 Network Buys Into West Australian NewspapersAfter months of contentious lobbying, Australia’s Parliament has approved a new media ownership law that invites more foreign investment and also liberalizes cross-media holdings, although not as much as the media barons had hoped.And the government, being ever cautious, says that although the law has passed Parliament it has not yet settled on when it actually takes effect, but certainly not until 2007, and therefore any deals done now have to be under existing rules. But that didn’t stop Rupert Murdoch’s News Ltd., from launching a lightning raid on rival John Fairfax newspapers and taking a 7.5% holding at a cost of A$360 million ($275 million,€215 million), nor did it stop Kerry Stokes, owner of television broadcaster Seven Network from buying a 14.9% of West Australian Newspaper Holdings, publisher of Perth’s only daily, nor did it stop Australia’s richest man, James Packer, from selling 50% of some of his key media assets in a A$5 billion deal. Murdoch paid an 18% premium for the Fairfax shares over their close earlier that day. Murdoch’s roots, of course, are Australian and his News Ltd is already the country’s largest newspaper publisher with such newspapers as The Australian and The Daily Telegraph, but Fairfax prints three of the country’s major titles, The Sydney Morning Herald, The Age in Melbourne, and the prestigious Australian Financial Review. Merrill Lynch last week also bought up some 6% of Fairfax, but it has not been revealed whether that was quickly sold to Murdoch for a very quick profit as part of his purchase or that holding is still out there gaining value.
Murdoch’s people say the News Ltd. investment is purely friendly, but many analysts believe it is strategic in that if Fairfax moves into play next year Murdoch will have something to say about what happens to his biggest competitor. Because News Ltd already controls about 70% of the metropolitan newspaper market, the government would not allow it to buy a controlling interest in Fairfax. Communications Minister Helen Coonan explained the News Ltd. buy. “``It's a defensive move. We know that it's not possible for them to actually take over or control that particular asset (because of competition rules) so clearly they wish to take a position to safeguard their ultimate asset.'' Billionaire James Packer, Australia’s richest man, is thought to have his eye on Fairfax, which is what his father, Kerry who died recently, wanted to achieve. Analysts believe that of all the major Australian publishing houses that Fairfax is now the most likely to be gobbled up once the new rules take effect. Under the old rules, companies were able to own just one media – whether it be newspapers, TV or radio – in a market. And foreign ownership was limited to 25% for newspapers and 15% for television stations. Under the new rules media owners can now own two media in a market whether it be newspapers, radio stations or television stations (the media barons had lobbied very hard to be able to own all three). The new law also abolished the foreign ownership rules. Finance Minister Nick Minchin said the new rules will not reduce media diversity. “With the explosion of the number of sources of information available to ordinary Australians, I’m certainly not, and the government is not, worried about any significant reduction in diversity.” News Corp and Packer have history with Fairfax. Back in 1987 just before Fairfax attempted to go private, News Corp. and Kerry Packer bought large stakes, and later sold out for very large profits. And with almost all Australian media shares being bid up because of the expected action to come, the new law may also give an opportunity for such foreign entities as CanWest Global Communications Corp. to sell its holdings in Network 10 – where it has a 56% shareholding – at a large premium. It is already taking financial advice. Now that the law has been passed and the buying and selling has started in such a frenzy the government is having to defend itself from favouring the media barons. Communications Minister Helen Coonan, quoted in the SydneyMorning Herald, said, “This government has been very careful not to make any of the arrangements in the new media package mogul-specific. "It doesn't relate to any particular proprietor, and in fact I've had to endure the sustained criticism and complaints from just about every one of them who are not happy with the whole arrangements." The basic government view is that the moguls are actively trying to quarantine the properties they are most interested in, waiting for the new laws to take effect. But when the government does set the effective date for the law to take effect – thought to be any time after February, 2007, then stand-by for some real media ownership fireworks. |
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