Round three with Rupert in 2001

By Stephen Mayne
January 7, 2008

This was sent to Crikey subscribers just hours after the News Corp AGM held in Adelaide on October 10, 2001.

I'm writing this at the net cafe just around the corner from Rupert's monopoly Adelaide Advertiser newspaper in the two hours of free time before our pub night commences at 5.30pm on Wednesday, October 10.

Rupert and those board members in town are apparently having a nosh up at Magill Estate - the home of Penfolds - which was no doubt organised by recently appointed News Corp director Graham Kraehe, the former CEO of Penfolds owner Southcorp. Let's hope copious amounts of Grange isn't the reason why Graham became the legally required second Australian-based News Corp director this year.

Our Gadget man is sending this to you on the knocker of 10am Adelaide time Friday just as the News Corp AGM gets underway.

I'm a bit nervous about what might happen and therefore want to get this on the record to subscribers before it does.

Media bad boy John Safran is currently working on a series for SBS called John Safran's Music Jamboree and they are taking an interest in the News Corp music division Rawkus Records which is overseen by youngest son James Murdoch.

John's production team asked me to line up five proxies to access the meeting but that is the extent of my involvement in their plan to secretly film some rappers asking Rupert a couple of questions in rap-talk. Think of Warren Beatty in Rupert's movie Bulworth and you've got some idea of what is planned.

Because of pure Crikey disorganisation, I had to publicly solicit for several News Corp proxies which is why I'll probably get fingered for whatever happens.

I've also lined up a proxy for a representative of the dissident Chinese religious group the Fulan Gong (sic) but won't be telling them what to ask or how to go about it.

Silly me has drawn attention to the fact that possible "trouble-makers" will have numbers at the meeting so don't be at all surprised if Rupert runs some unprecedented security.

I had to jump through plenty of hoops just getting the proxies registered. Computershare wanted proof from my end that the faxes were sent before the 10.30am AEST deadline on Tuesday.

Telstra confirmed over the phone that the faxes were sent at 10.21am and 10.26am but couldn't give me written evidence. Even when the Telstra guy rang Doris Grave from Computershare in Adelaide this was not good enough.

I had no alternative but to go down the stat dec path they were demanding so the taxi from the airport on Wednesday went straight to the City Central cop shop and I picked up a form and then headed for State Parliament.

Former Labor MP Mario Felppa, who served in the Upper House from 1982 till 1996, was good enought to witness it but by the time I got down to Computershare Doris said this not necessary and they had cleared all the proxis. Persistance pays it would seem.

Doris was actually quite pleasant and the faxes she showed me did not have any times recorded on them and having not registered my fax number, their transmission reports did not show up my fax number either. With News Corp obviously a bit nervous, she was caught in the middle.


Just like last year, I'm planning to hand out a few suggested questions for shareholders to pose because Rupert will almost certainly try and shut me down early in proceedings. There is no guarantee I'll get to a printer but you may as well get an insight into the planning and the issues.

This is what I've worked up so far:


Dear Shareholders, this is our day but in past years we've all been too shy to ask Rupert any questions. With the share price having fallen 40 per cent since last year's meeting, here are a few suggested issues to be raised:

Cheers, Stephen Mayne


ANSETT: Ansett was in our books at $340m and we announced the sale of our 50 per cent to Air New Zealand for $580m in cash and an expected additional $100m in June 2002 based on 10% of Air New Zealand's then market capitalisation. How did we account for the proceeds at the time and what prospect is there of recovering any of the additional proceeds now that the NZ government has bailed it out? Also, News Corp has been widely criticised for starving Ansett of capital and leaving it with the second oldest fleet of any airline in the world. Is this a fair criticism?

ONE.TEL: Note 5 of the accounts reveal a $576m write down of our 24 % stake in One.Tel. What lessons have we learnt from this and how much advertising revenue did we receive from One.Tel before it collapsed. What prospect is there of us having to return the $49m of pre-paid advertising from One.Tel that we still hold and the One.Tel administrator wants to pay out worker's entitlements and unsecured creditors.

NEW YORK MEDIA: We own two television stations in New York and the New York Post. How has the events of September 11 affected these properties and out business worldwide, especially in places like India and China. How is the Post going with its new editor Col Allan and new color printing plant and what prospect is there of New Corp being able to retain ownership of the Post in the long time. Would we sell out to a rival such as the Daily News if the price was right given that the FCC has ordered us to sell.

EXECUTIVE SALARIES: Kerry and James Packer gloat that they do not draw $1 in salary from PBL because they own $3 billion worth of shares and that is incentive enough. Given that the Murdoch family owns more than $10 billion worth of News Corp shares, why did Rupert, Lachlan and James need to be paid a combined $21m in cash for the year, especially when you consider that the family received about $50m in dividend payments?

AUSTRALIAN SPORT: How did our investment in 50% of the National Rugby League and ongoing underwriting of the competition perform in financial terms in 2000-01. What was the profit or loss? Does the $100m a year deal to buy the AFL TV rights reflect on the future of our commitment to the NRL. Can we really own the two rugbys and AFL and keep everyone happy and how our negotiations progressing with Telstra and PBL over the future of Foxtel.

DEBT: Total company debt is at a record high of $18.8 billion as at June 30 although this is easily covered by $84.9 billion in assets and we have also reduced debt by about $5 billion with the just-completed sale of Fox Family to Disney. We've seen total debt rise in each of the past 5 years. What is our target level of debt and is this trend likely to continue. Also, what is the breakdown between bank debt and bond debt because it was the banks that caused all the trouble during the liquidity crisis that coincided with the Gulf War in 1990 when our total debts were only about $10 billion.

FOX NEWS: Fox News has been an unqualified success which must be very satisfying given that CNN founder Ted Turner said he was going to "squash us like a bug"when it was launched 5 years ago. How much profit did it make last year and how much have we invested in the business over 5 years? Could it ever become as valuable as Fox Family and how much profit are we hoping to make from it this year?

DIVIDEND: The company has been paying a paulty 3c a year in dividends for as long as I can remember. Why can't we be like conventional companies and pay a consistent proportion of profit as dividends rather than a fixed amount which is less than only about 15 per cent of average profits over the past 5 years. I know that capital gains on your shares are probably tax free so you prefer share appreciation to dividend flow but the shareholders who own the other 82 per cent of the shares would probably like a bigger dividend. Any chance that could happen?


This one came through from a subscriber yesterday:

"The hacks at The Advertiser are not looking foraward to Rupert's visit today. They are a little pissed off that they are no longer able to claim any expenses - not even for coffee with contacts. The former deputy editor now associate editor, Rex Jory, had a $15 claim knocked back just this week. And guess where Rupert and company are going for dinner tonight? None other than the home of Penfold's - Magill Estate. And while this is what qualifies as an expensive restaurant in Adelaide, it will be even more so for the Murdoch soiree. It's a Grange only affair. Not your ordinary muck served - only Grange."