Shareholders' OK for News Corp.


NEW YORK -- In a special meeting Tuesday, News Corp. shareholders approved a planned deal with John Malone's Liberty Media that will strengthen chairman and CEO Rupert Murdoch's control over his entertainment conglomerate.

The transaction, green-lighted by shareholders representing 99.76% of outstanding Class B shares, will see News Corp. swap its controlling 38.4% stake in satellite TV operator DirecTV Group, three regional sports networks and $550 million in cash for a large chunk of News Corp. stock held by Liberty. The deal, first announced in late December, is valued at $11 billion.

The swap will boost the Murdoch family's voting stake in News Corp. from about 31% to 38%.

It still needs regulatory approval and is expected to close by the third quarter at the latest.

The close of the deal will end a two-year battle that started when Liberty quietly took a sizable voting stake in News Corp. by changing nonvoting into voting shares.

In reaction, Murdoch had his board pass a poison pill anti-takeover measure. Wall Street observers expect the News Corp. board to drop that provision as soon as the Liberty swap closes.

Analysts say the deal is good for both companies and should boost their respective shares. Liberty increases its focus on owning operating assets and gets cash in the transaction; News Corp. gets rid of a possible distraction and shareholder concern and buys back 16% of its stock.

Murdoch at the meeting said a buyback of a similar size in the open market would take about 18 months. He also said that the swap will allow News Corp. to end its exposure to the U.S. satellite TV market, which he noted has become increasingly competitive.

The chairman emphasized again that News Corp. remains happy with its satellite operations in the U.K. and Italy.

The meeting in midtown Manhattan lasted about 10 minutes, with no shareholder questions on the proposed deal.