News Corp Investors, Analysts in Australia React to Lachlan Murdoch Elevation

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SYDNEY – Australian investors reacted Thursday to Lachlan Murdoch’s elevation to the role of non-executive co-chairman of both News Corp and 21st Century Fox and his resignation from the board of Australia’s third ranked commercial broadcaster, Ten Network Holdings, by slightly driving down the stock of News Corp.

Meanwhile, Ten shares held steady on the Australian Stock Exchange Thursday. Shares of News Corp closed down 2.3 percent at $16.48 (AUS$17.86).

Analyst Mark McDonnell of BBY said it was “fascinating” that there was any market reaction, although stocks typically don't only move on a single news event.

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“Lachlan Murdoch’s new position is still a board position, and the distinction between that and an executive position is being maintained," he said. "It's clear that Lachlan is still not interested in an executive role."

The new appointments also served to bring back past speculation here that News Corp may look at acquiring Ten, with the network near ratings share lows. News Corp has consistently denied it has any interest in acquiring Ten though, and under current Australian media regulations a deal would prove difficult. Rules here currently prevent media companies from ownership of radio, TV assets and newspapers in the same market.

Aside from News Corp’s 60 percent coverage of the newspaper market in Australia, it also holds a 50 percent stake in pay TV operator Foxtel.  

But Australian communications minister Malcolm Turnbull has recently flagged the loosening of cross-media ownership rules that could allow the market to consolidate.

"My view is that the arrival of the Internet and the additional diversity and avenues for competition that it brings really says we should have less regulation and more freedom," he said recently following meetings with the bosses of Australia’s major media groups. "We're committed to a lot less regulation across the board including in the telecom and media sectors.”

But McDonnell pointed out that the country's anti-competition regulator, the Australian Competition and Consumer Commission, has ruled out a potential merger between Kerry Stokes' Seven Network and pay TV operator Foxtel.

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“If Stokes can’t do it, why would they let the Murdochs who control even more Australian media merge News and Ten?’ he told THR.

Following Lachlan Murdoch’s News and Fox appointments, Ten announced that its current CEO, Hamish McLennan – a former advisor to Rupert Murdoch and handpicked for the Ten job by Lachlan – has been appointed Ten Network chairman, while also retaining his position as CEO.

"On behalf of the board I thank Lachlan for the contribution he has made during a very difficult time for the company," Ten deputy chairman and lead independent director Brian Long said. "Hamish will make an excellent successor to Lachlan as chairman. He combines deep international experience in advertising and media, along with a broad business understanding. The board looks forward to Hamish leading Ten as executive chairman."

In interviews on Thursday, McLennan said there would be no other major changes at Ten. He told Fairfax Media that “what the board wants is continued execution of our strategies, so we have seen great success with things like [cricket competition] the Big Bash and the Sochi Winter Olympic Games and Formula One, and I think we have identified the problems."

McLennan was hired a year ago to turn around the ailing network and has reset Ten’s strategy to target the 25-54 audience and acquired sports programming including the Big Bash 20/20 cricket competition that lifted ratings over the summer and aired the Sochi 2014 Winter Olympics, which were reportedly profitable for the network.

However, since the Olympics, Ten’s primary channel has suffered from record low ratings shares, falling below a 7 percent share on some nights. It has been widely recognized in the industry that Ten failed to capitalize on its Winter Olympics coverage by using the Games as a launch platform for new programs.

While he struggled to steady Ten, Lachlan Murdoch has had more success during his seven years down under with his investment in the Nova Entertainment FM Radio group. As executive chairman and now 100 percent owner, he has successfully grown Nova to become the top-rated and largest FM radio network in the country.

Murdoch’s peers at his media rivals have congratulated him on his move back to the “family fold” as it has been described by News Corp’s The Australian.  

Ratpac Entertainment partner and gaming mogul James Packer, who shared a 17.6 percent stake in Ten with Lachlan, and with whom he has shared a long friendship, told The Australian: "It's an outstanding achievement and Lachlan is truly deserving. He has great character and business acumen and will do a wonderful job for the company."

 

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