Wheeling and dealing in newspapers

Press, 21 June 1980, Page 14

Wheeling and dealing in newspapers

By

JAMES FORTH

in Sydney, for the “Financial Times”

The rise and rise of Mr Rupert Murdoch and his News, Ltd publishing empire has been spectacular to say the least. It has mushroomed from a small, troubled afternoon newspaper in the Australian city of Adelaide into an international octopus, with major activities in Australia, the United Kingdom and the United States. Moreover, the pace of the expansion has quickened in recent months rather than settling back to a more sedentary corporate lifestyle, which usually overtakes most “growth” companies.

Over the last twelve months, Mr Murdoch has indulged in an another burst of wheeling and dealing, including an audacious and not entirely unsuccessful, attempt to take control of Australia’s largest press groun. the Herald and Weekly Times. The end result of this activity has seen News gain control of major television interests in Melbourne and Sydney — one area where the group was previously weak but its rivals were represented — and diversify into part ownership of Australia’s only domestic private airline. More recently Mr Murdoch has moved into energy with an investment in the Cooper Basin fields in south Australia, which supply Sydney and Adelaide with natural gas. Together with another local boy made good, Mr Robert Stigwood, Mr Murdoch has launched a film-making venture in Australia. In this latter venture, called R. and R. films, both men are partly motivated by a desire to promote Australia as a producer of world class films, using stars such as Mr Robert Redford to gain international recognition.

Mr Murdoch has always had newspapers in his blood. His father, the late Sir Keith Murdoch is the man who welded the Herald and Weekly Times into a national newsnaner press chain. He started as a reporter and became editor in 1921 at the age of 35 and ultimately the chief executive. Under his reign the “Herald” was virtually his personal fiefdom and it was during this period that the

company sold him the “Adelaide News,” which was to become the springboard for his son’s empire. Sir Keith died in 1952 when Rupert was in England at Oxford University. He returned to Australia the next vear after working short stints as a general reporter on the “Birmingham Gazette” and as a junior sub editor on the London “Daily Express.” When his father’s estate was settled, Mr Murdoch was left with the Adelaide afternoon newspaper, the “News.” The “Herald” got his father’s Queensland newspaper holdings. By 1960, Mr Murdoch had achieved a 10-fold increase in News profits. He started his expansion activities almost immediately in his career as a proprietor. In 1956 he bought a Sunday newspaper in Perth. In 1960 he bounded into the hurly burly of Sydney, the most competitive newspaper scene in Australia. From there he went on to build up a chain of suburban newspapers in the major cities.

In 1964 he launched an ambitious project — the “Australian,” a quality national daily printed in several states. It has never been the commercial success honed, but it confounded the critics who predicted an early demise and is still printing today. It forced an upgrading and restyling of many of the metropolitan dailies which compete with the “Australian.” In January 1969 Mr Murdoch started on the international trail. The “News of the World,” headed by the Carr family, received an unwelcome takeover bid from Mr Raymond Maxwell’s Pergamon press. The story was filed to Australia by the News London office. It attracted the attention of the boss and almost immediately the wire was cluttered with information for Mr Murdoch about “News of the World” — as much as the staff could find. Soon after, he appeared in London and stunned the London press scene by backing the Carrs News ended up with 49.9 per cent of “News of the World.” Later that year he

took over the London “Sun” from 1.P.C., owner of the “Daily Mirror.” At the time the “Sun” had a circulation of 700,000, had run up heavy losses and I.P.C. was desperate to quit itself of the paper. Mr Murdoch is reputed to have told I.P.C.’s Sir Hugh Cudlipp at the time, Hugh, the ‘Minor’ will reach 3M before we do, except that you will be on the way down.” The “Sun” was turned into a tabloid and became an astonishing circulation success, with sales now more than 4M copies a day. The U.K. interests became News International, Ltd. He has dipped in and out of other. U.K. press investments, including London Week-end Television, where he was blocked from building a substantial stake and which was recently sold. In 1973 Mr Murdoch, reportedly bored with London where he had spent most of his time since the News and

“Sun” acquisitions, turned his sights on the United States. He started with two papers in San Antonio, Texas, and then in 1974 launched a national weekly, the “Star.” He followed this with the acquisition of New York’s only afternoon daily, the “New York Post,” after persuading its elderly proprietor, Mrs Dorothy Schiff, to sell to him, something American proprietors had been unable to accomplish. Then came a bitterly opposed takeover of the New York and New West magazine group partly financed by funds sitting idle in the “New York Post’s” coffers. ■ Last year Murdoch, perhaps now bored with New York, turned his attention back to Australia. He snapped up control of United. Telecaster Sydney, which operates one of Sydney’s three television sta-

tions, in a sAust34 million sharemarket battle ar. ’. is currently in the process of mopping up the remaining shares. In September he picked up about 4 per cent of Ansett Transport Industries at the height of a three way struggle between Ampol Petroleum, Thomas Nationwide Transport (T.N.T.) and Perth businessman Mr Robert Holmes.

Mr Murdoch then made another stunning move, with a SAI26 million bid for a controlling stake in the “Herald.” This would have given News a greatly expanded newspaper base, particularly in Victoria where the group is weakest, and substantial television interests. It would also have put a Murdoch back at the helm of the paper. Alarmed, a rival newspaper group, John Fairfax, joined a SA7S million share market exercise to buy “Herald” shares to block Mr Murdoch.

This succeeded, but onlv after Mr Murdoch surprised his rivals by secretly selling his stock on the market, making a profit on the deal, and leaving Fairfax with heavy capital losses. Undaunted, Mr Murdoch moved on Ansett, where Sir Reginald Ansett was then holding his own. Ansett runs a domestic private airhne and has extensive transport and other activities, including television stations tn Melbourne and Brisbane. This was the prime attraction to News. The end result is that Ansett is now jointly controlled by News ana T.N.T., and Mr Murdoch and Sir Peter Abeles,. the T.N.T. head, are joint chief executives of Ansett. The moves by News have caused wholesale reshuffles in the ownership of television stations in Australia, because of legislation restricting the extent of interests any one party can hold. The reverberations are still being felt. More recently Mr Murdoch, through Ansett has branched into energy with the purchase of a 15 per cent holding in the major Cooper basin partner, Santos for more than SA7O million. Within the space of two months Ansett is showing a capital profit of more than $2O million from its Santos investment.

Mr Murdoch' arouses strong passions, both at home and abroad as controversy seems to follow him. He has been described as “the dirty digger,” while in the United States his papers have been described as a “force for. evil.” The Australian Labour Party is almost obsessed with antiMurdoch fervour, and has currently been trying to block News’s television moves;

Even in the United States a row blew up recently over an Export-Import Bank loan to Ansett to buy Boeing aircraft with suggestions that the group obtained favoured terms in return for the New York Post endorsing President Carter as the Democratic candidate. Mr Murdoch lunched with Mr Carter the day the loan was obtain-

ed. But, one thing about Mr Murdoch stands out: he heads one of the few press groups in the world today which is still expanding.