The CEO of 21st Century Fox opened today’s briefings in Los Angeles for Wall Street analysts who are trying to figure out where the entertainment company is headed now that it’s separate from the publishing properties at News Corp. “I believe this will be a day to remember,” Rupert Murdoch said. He acknowledges that Fox critics say its collection of traditional media movie and TV properties have peaked. He says, though, that in business — like in the movies — “many of you know that sequels can be far more lucrative than the original.” He points to opportunities overseas in markets with a growing middle class, and with new digital technologies including smartphones. “Our challenge at 21st Century Fox is to get there ahead of everyone else,” Murdoch says noting that “the value of hit content is only going to increase exponentially….A good story knows no border.” Fox execs will be “thoughtful risk takers” since “our greatest successes come from the businesses that we have built, not acquired.”
Listen to (and share) the first episode of Deadline’s audio podcast “Global Showbiz Watch, with Nancy Tartaglione.” Deadline’s international editor talks with host David Bloom about Rupert Murdoch’s latest backpedal over the long-festering British newspaper scandals; the new investment tie-up between media powerhouses Bruno Wu and Thomas Middlehoff; and whether China is loosening its restrictions on filmmakers. Finally, with the imminent debuts of The Wolverine, which was filmed substantially in Japan, and a samurai remake of the Oscar-winning Western Unforgiven, they spotlight the entertainment business in the Land of the Rising Sun.
The M4A version of this podcast is designed to run on any device using Apple’s iTunes software, and includes enhanced graphics and links to stories and other resources. The MP3 version of this podcast is designed to play on virtually any device capable of playing digital audio.
Britain’s Channel 4 News has obtained letters sent by Rupert Murdoch to two British MPs in an attempt to clarify statements he made to Sun staff that were secretly recorded in March and revealed earlier this month. In the correspondence to MPs Keith Vaz and John Whittingdale, Murdoch says he regrets his choice of words in a “highly emotional meeting”. In the original transcript, which was published by Exaro News, Murdoch says that the practice of making payments to police officers for news tips had “been going on a hundred years” and was the “culture of Fleet Street”. In the letter to Vaz (read it here), Murdoch says, “I did not intend to suggest that any violations of the law are tolerable or acceptable.”
When News Corp announced plans to divide into two distinct entities, questions remained about chief Rupert Murdoch‘s aspirations for full ownership of Britain’s BSkyB. Talking to watchers this week, an issue that arises is what effect comments Murdoch made to Sun staffers about News Corp’s handling of bribery and hacking charges could have on his interest in the pay-TV giant. One analyst tells me they don’t think that any business in which Rupert or son James Murdoch has a substantial role “will ever be allowed to buy a single more share” of the company. This person allows, however, that it’s hardly clear from the secretly-recorded tapes whether there was conspiracy to encourage misconduct in a public office, “I’d think the evidence is marginal.” Still, if any serious evidence does emerge from a Parliamentary hearing or a police investigation, most are agreed that UK regulator Ofcom could take another look at Murdoch’s relationship to BSkyB.
The phone-hacking scandal led News Corp in 2011 to withdraw a bid to acquire the 61% of BSkyB that it didn’t already hold. This was considered a blow to Murdoch who had long coveted full ownership. Analysts have held that News Corp would make another run at BSkyB in a few years’ time with the entertainment division, 21st Century Fox, putting forth a bid after the dust had settled around the publishing arm. But the dust may be kicking up again.
The secret recordings of Murdoch talking to Sun journalists, exposed last week by Exaro News, reveal him saying that the practice of making payments to police officers for news tips had “been going on a hundred years” and was the “culture of Fleet Street.” Parliament’s Culture, Media and Sport Committee yesterday invited Murdoch to appear and discuss the comments and he has accepted the invitation. The Committee itself has no real teeth (and has to be careful not to prejudice any ongoing criminal cases), but it can influence Ofcom.
Allen & Co Hollywood moguls are arriving at the 31st annual Allen & Co investment conference in Sun Valley starting today — and this time there’s something fun awaiting them. For years now the mogulfest has been mostly a showbiz snorefest with not a single entertainment panel on the official schedule. But my sources say this year’s features a Friday media panel consisting of Rupert Murdoch, John Malone, and Barry Diller. In other words, a trio of enemies who have sued or badmouthed each other so much over the years that it’s hard to imagine them sitting in the same room much less conferring politely together. The other sessions appear to be way less enticing:
Wednesday: Sports discussion featuring NFL Commissioner Roger Goodell; Presentation by Google co-founder Larry Page.
Thursday: Panel entitled ‘Cyber Insecurity’; Economic growth discussion led by NYC Mayor Michael Bloomberg; Presentation by the President of Mexico; Discussion about the future of universities moderated by Andrew Ross Sorkin.
Friday: Panel about the environment; Interview of King Abdullah II Of Jordan conducted by Tom Brokaw; Media panel with Rupert Murdoch, John Malone, and Barry Diller; Interview of Facebook COO Sheryl Sandberg by Charlie Rose; Political discussion with Jeb Bush and Bill Bradley.
Saturday: Discussion with Bill and Melinda Gates.
UPDATE: News Corp Says Rupert Murdoch Accepts Invitation To Appear Before UK Parliament To Discuss Secret Tape
UPDATE, 2:30 PM: It looks like the UK Parliament’s committee will get its wish. A News Corp spokesman has said Rupert Murdoch will accept their invitation. “Mr Murdoch welcomes the opportunity to return to the select committee and answer their questions. He looks forward to clearing up any misconceptions as soon as possible.”
PREVIOUS, 10:46 AM: The secret recording of Rupert Murdoch addressing Sun staffers at a meeting last March has incited Parliament’s Culture, Media and Sport Committee to extend an invitation to the News Corp chief. “We’re inviting him to return to give evidence,” a spokesperson tells Deadline, and “to discuss” the “supposedly secretly recorded set of comments.” Those comments included Murdoch talking about his company’s handling of bribery and hacking charges. Any evidentiary hearing before the committee would be an official one, but there’s an interesting aspect to the panel’s wording: Murdoch is being invited, not compelled, to appear. Conversely, Murdoch was indeed summoned in July 2011 when the News Of The World hacking scandal was blowing wide open. Still, if Murdoch accepts the invitation, it is unlikely he would appear anytime soon. The House of Commons is about to go into summer recess until September when it reconvenes for two weeks and then closes down again for three weeks before opening again in October. I’m told it would be a “safe assumption” that there will be no further movement until …
Audiences Fail To Embrace BBC In 3D
The BBC is suspending 3D programming after a lackluster response from viewers who found it “quite hassly,” BBC head of 3D Kim Shillinglaw said. A two-year 3D trial period started in 2011 and included the Olympics but only half of the 1.5M Britons with 3D-enabled sets watched the games that way. The Doctor Who 50th anniversary special will be one of the last programs aired in 3D in November. Shillinglaw said the broadcaster will “see what happens when the recession ends and there may be more take up of sets, but I think the BBC will be having a wait-and-see. It’s the right time for a good old pause.” ESPN in June said it was scrapping its 3D channel.
British Labour Party MP Tom Watson, a vocal and enduring Rupert Murdoch critic, has called on the News Corp boss to be questioned by police following yesterday’s revelations about a secret recording of comments he made to Sun staffers last March. Speaking to Channel 4 News, Watson said he wants to know “what are they sitting on that they’ve not given the police” and “I hope that they’re going to be interviewing Rupert Murdoch about what he did know about criminality in his organization.” Enders’ senior analyst Douglas McCabe tells me Murdoch being questioned by police or ordered before Parliament again is “just about plausible” but adds, “I don’t feel that this in isolation would be comprehensive as a trigger to make that happen.” McCabe sees Murdoch’s comments to Sun staff as being blown out of proportion. “Fundamentally, should we be surprised that privately the chair of a large media organization is trying to rally the troops and be sympatheic with different situations he acknowledges in public?” He allows, “I think one can say he shouldn’t be saying whatever he is about the UK police operation,” but “I can’t read any impact on News Corp.” News Corp yesterday said, “The unprecedented co-operation granted by News Corp was agreed unanimously by senior management and the board, and the [Management and Standards Committee] continues …
UPDATE: News Corp Defends Rupert Murdoch After Secret Tape Shows Him Acknowledging UK Bribery: Video
UPDATE, 4:15 PM: News Corp has just released a second statement that more directly defends Rupert Murdoch against the UK revelations today (see the Channel 4 report below). Here’s the statement: “Mr. Murdoch never knew of payments made by Sun staff to police before News Corporation disclosed that to UK Authorities. Furthermore, he never said he knew of payments. It’s absolutely false to suggest otherwise.”
PREVIOUS, 3:16 PM: “I don’t know of anybody, or anything, that did anything that wasn’t being done across Fleet Street and wasn’t the culture. And we’re being picked on,” Rupert Murdoch told journalists at UK’s The Sun in March in a secretly recorded conversation about his company’s handling of bribery and hacking charges. The recording was disclosed today with a full transcript on the website Exaro as well in a report on the UK’s Channel 4. It shows Murdoch alternately angry and sympathetic as he assured staffers that he “will do everything in my power to give you total support, even if you’re convicted and get six months or whatever. I think it’s just outrageous.” Regarding “payments for news tips from cops: that’s been going on a hundred years, absolutely. You didn’t instigate it.” He added that “the worst thing that’s going to happen is that some of you will be charged shortly, and some of you will be released shortly. And the bulk of you will be made aware after three or four months. It’s just disgraceful that they’re [the police] doing, but we’ll see.” The News Corp chief assured one staffer that the company Management and Standards Committee hasn’t “given [police] anything for months.” Later he added that the committee “has told the police…No, no, no — get a court order. Deal with that.”
Global Showbiz Briefs: Rupert Murdoch Eyeing Financial Times?; Ruling On Hacking Appeal; ‘Either Way’ Helmer’s Next Pic
Report: Rupert Murdoch, Abu Dhabi Media Group Eyeing Financial Times
A report out of Malaysia circulated this morning which claimed Rupert Murdoch and the state-owned Abu Dhabi Media Group are in talks to acquire The Financial Times Group for $1.2B. News Corp. said, “This is completely untrue” and FT owner, Pearson, also denied the report saying, “The Financial Times is not for sale, and Pearson is not in any talks to sell it.” The talks, reported by Malaysian political and business magazine The Edge Review, cited financial executives familiar with the negotiations which had purportedly been going on for the past month. The Financial Times Group includes the flagship Financial Times newspaper as well as The Economist magazine. Per AFP, the report said the Abu Dhabi group is eyeing a 75% stake with Murdoch’s new News Corp. taking 25%. News Corp. officially split into two entities today. In an interview published in the FT website on Thursday evening, chief executive of the publishing business, Robert Thomson, said News Corp. could use its $2.6B of net cash for acquisitions, but there was no mention of the FT, and he also played down expectations of a bid for the Los Angeles Times. Thomson is a former U.S. managing editor of the FT.
Judges Deny Appeals To Drop Charges Against Hacking-Scandal Figures
In other News Corp.-related news, former News International chief Rebekah Brooks, and former News Of The World editor Andy Coulson have both been denied appeals to have criminal charges against them dropped. Neither appeared in a London court Friday, but three judges there dismissed the appeal that had been brought by Brooks, Coulson and three others, The Guardian said. Brooks and Coulson’s trials begin in September, when they will face charges related to phone hacking. The appeals were fashioned on the grounds that the law does not extend to voicemails that already had been listened to.
Rupert Murdoch‘s business empire started a new chapter at 4:30 PM ET. The corporate entity that used to house all of his biggest assets became 21st Century Fox. It keeps the main movie and TV properties. Murdoch, who will remain its CEO, calls Fox “a unique force” that will have “a commitment to empowering creative minds and entrepreneurs around the world” — and pay off for shareholders. His newspaper and publishing operations, and several Australian businesses, are part of a new company that inherits the News Corp name. Murdoch — who controls about 40% of the voting shares of both companies — is the chairman. The new CEO, Robert Thomson, says News Corp has “a robust balance sheet and a team of creative, energetic and passionate employees who are determined to make the company a resounding success and to make a positive difference in their communities.” Beginning on Monday, Fox’s two classes of shares will trade on NASDAQ as FOXA and FOX, while News Corp also will have two classes of shares, NWS and NWSA. In its last day of trading, the old News Corp closed at $32.58, giving the company a market value of $75.4B.
Just ahead of News Corp.‘s official split into two entities, its UK press arm, News International, is rebranding. The company that’s parent to The Sun, The Times and The Sunday Times, will henceforth be known as News UK. The new name and logo are “designed to convey a more coherent and logical identity for the new parent company across the globe,” News UK said. News International spiralled into controversy when the phone hacking scandal broke open in July 2011; the company has since shuttered tabloid News Of The World. Mike Darcey, CEO of News UK, said the company was beginning “a bright new chapter.” Referring to the scandals, Darcey said the rebrand “follows the fundamental changes of governance and personnel that have taken place to address the problems of the recent past. News International apologized to its victims and set up a compensation scheme; closed the News Of The World and co-operated with all the relevant authorities. New policies and procedures are in place across the company, its main titles are all under new leadership and the executive team has been transformed.”
Eunice Huthart, a former body double for Angelina Jolie, has become the first person to file a phone-hacking lawsuit against News Corp. in the U.S. Huthart, a British national whose most recent credit is as stunt coordinator on Disney’s upcoming Jolie-starrer Maleficent, filed a civil complaint (read it here) against News Corp, and its UK press arm News International, in federal court on June 13 alleging right to privacy violations. Those include “intrusion into, interception of and interference with” voicemail messages left on her phone while she was working as a double for Jolie in the U.S. in 2005. The suit seeks damages for violations of federal and California laws.
Listen to (and share) episode 39 of our audio podcast Deadline Big Media With David Lieberman. Deadline’s Executive Editor talks with host David Bloom about the brewing battle over boxes, as cable companies, consumer electronics makers and game console providers tussle for control of the relationship with consumers; Gannett’s $1.5 billion bet on local broadcasting; John McCain’s push for an FCC investigation of cable TV pricing; and what the Rupert Murdoch divorce might mean for News Corp. and Twentieth Century Fox.
The upshot of the so-called stockholder rights agreement that the company initiated today is that Rupert Murdoch can make it prohibitively expensive for someone he doesn’t like to buy News Corp‘s soon-to-be-created publishing company (which will retain the News Corp name) or the entertainment one (to be called 21st Century Fox). The terms enable either company to flood the market with shares, which News Corp investors as of June 21 can buy at half price, if a hostile bidder acquires 15% of the stock. Murdoch also can buy shares to keep his voting stake at about 40%. News Corp says that the anti-takeover plan — popularly known as a “poison pill” — is “intended to protect the stockholders” from a move that directors of either new company deem to be “not in the best interests of the companies and their respective stockholders.” But it leaves open the possibility of a “merger, tender or exchange offer or other business transaction approved by either the Board of Directors.” In adopting the poison pill, Murdoch no doubt wanted to avoid a rerun of his 2004 run-in with John Malone. The Liberty Media Chairman seized an opportunity to raise his stake in News Corp from 9% to 16% when it reincorporated to the U.S. from Australia. Two years later, Malone agreed to turn over his News Corp shares in return for 38.5% of DirecTV, $550M in cash, and three regional sports networks.
Deadline broke the news yesterday about the Rupert Murdoch-Wendi Deng divorce over “irreconcilable differences”. Now that the media are finishing their feeding frenzy on the split, details are emerging about the corporate holdings held by Murdoch’s families – both his older one and his younger one. News Corp has a market value of about $73B, and family members primarily own stakes via three trusts. The largest and most important is the Murdoch Family Trust, which controls about 38.4% of its voting shares. Financial benefits go to all of Rupert Murdoch’s six children from three marriages. But the trust is controlled by the CEO, who has four votes, and his four oldest children who have one vote apiece: Prudence, a daughter from first wife Patricia Booker; and Elisabeth, James, and Lachlan, his three children with Anna Torv. The four older siblings also will decide who’ll control Rupert’s votes after he dies. Wendi Deng wanted the two daughters she had with Murdoch — Grace, 11, and Chloe, 9 — to also have a vote in the Family Trust, but he declined to force the issue over the objections of his other children. Still, Grace and Chloe own stakes in News Corp via the GCM Trust, which is administered by independent trustees. It includes an undisclosed amount of Class B stock, which carries voting rights, and 8.73M non-voting Class A shares that are worth about $276M at the company’s current trading price.
EXCLUSIVE 9 AM, 4TH UPDATE 11 AM WRITETHRU (new details): News Corp Chairman/CEO Rupert Murdoch filed for divorce from wife Wendi Deng Murdoch this morning in New York State Supreme Court, Deadline learned at 9 AM. The divorce will not impact Rupert Murdoch’s mega-media holdings, according to insiders, and was deliberately announced for maximum transparency before News Corp spins off its publishing assets into a separately traded company by June 28th. (Murdoch will control both of these entities.) Wendi is perhaps most vividly and fondly remembered by the general public in July 2011 for standing up for her husband and clocking Jonathan May-Bowles after he threw a pie at Murdoch during his highly publicized British parliamentary testimony in connection with the News International phone-hacking scandal. (“Mr Murdoch, your wife has a very good left hook,” the chairman of the House Of Commons panel said admiringly. Wendi quickly earned the nickname of ‘Tiger Wife’ on Twitter.) Today’s divorce news comes despite numerous denials by PR man Steven Rubenstein and News Corp PR woman Julie Henderson to me as recently as April and May. (“We get this phone call once every 3-6 months,” Rubenstein and Henderson said at the time, pointing to the fact that Wendi and Rupert had recently hosted a dinner at their home for Oscar-winning Twentieth Century Fox director Ang Lee and were going away together on Spring Break.) But legal sources insisted to Deadline that the Murdochs’ divorce was being planned at the same time that a change in Wendi’s behavior towards Rupert was observed during the Academy Awards in February and after. ”She was snippy with him during Oscar weekend, and she’s really impatient with him these days,” a source told Deadline then. I received a call from an insider telling me, “Now I’m hearing it might be true. Call me,” On the heels of that, for the first time, not even Murdoch’s reps were denying yet another rift between Rupert and Wendi, saying to me there had been marriage trouble but stressing ”it feels like its past whatever that was.” A source who had dinner with them shortly after in NYC told me they were “fine. They’re two people who move a lot in different directions. I don’t know if it’s the marriage I’d want.” But another insider acknowledged to me, “I can’t say it might not be true that they’ll divorce. They have ups and downs. Right now it feels to me, having spent time with them, that they’re in a good place.” There is no question that despite divorce clouds Murdoch’s #1 priority was the News Corp split, not his from Wendi’s, and ”to get it done and get it done right. So he’s had a lot on his plate. What was once one is now two,” an insider explained to me at the time. “The company is so big, so diverse, so complex, and now he has to recalibrate and reaggregate these businesses while the Street determines their true value.” Today I’m told by insiders that, at that time, there were still no divorce proceedings underway so the denials were issued in good faith. “The divorce happened very quickly,” an insider told me today without details.
Media moguls routinely divorce, and Deadline doesn’t cover Hollywood’s personal lives, but this split is notable only because of its possible impact on the News Corp split or the Murdoch family succession vis a vis its corporate holdings given the patriarch’s age of 82. “I don’t see anything to indicate that shareholders have a lot at stake if Rupert and Wendi split,” one prominent media analyst tells me. “News Corp paid her $92,000 in 2010 to provide some ‘strategic advice’ regarding MySpace in China. But that’s not even pocket change, and ended three years ago, She’s not on the board, and not an executive. And since she and her kids don’t have voting rights in the family trust, she doesn’t have leverage to influence succession. I suppose that investors might become nervous if she decided to spill some News Corp secrets, or distracted Rupert so much that he’d spend less time taking care of business. But that’s thin gruel.” As for News Corp’s obligations to keep Wall Street and shareholders up to date on this kind of personal matter, “They have to report ‘material’ information on a timely basis. A lot of wiggle room there.”
UPDATE, 3:10 PM: So much for the speculation that the new News Corp — the publishing company that News Corp is about to spin off — will pounce on some papers that Tribune wants to sell, including the Los Angeles Times. Well, at least for now. Rupert Murdoch told investors and analysts today that U.S. rules designed to bar a company from owning a newspaper and TV station in the same market make a newspaper acquisition here “unlikely.” That’s sure to comfort investors who fear that Murdoch will use the new company to make deals that they’ll hate, like his $5B purchase of Dow Jones in 2007. Many investors still believe that newspaper values haven’t hit bottom. But today’s comment leaves room for him to change direction. The FCC is considering changes in media ownership rules that would make it easier to cross-own newspaper and TV properties in a city.
Murdoch also indicated that he plans to raise The Wall Street Journal’s subscription rates, and could indirectly funnel some cash to investors. He noted that the Journal charges about $44 a month while its rival, The New York Times, charges more than $50. “There’s a dramatic difference in price,” he said adding later that “we’re looking to our readers to pay a heavier load.” What about advertising? “We’re being very realistic” by not forecasting a big increase in spending on print, he said. But execs noted that the new company plans to pay a dividend, and will set aside $500M to repurchase shares if they believe the stock is undervalued. “Ideally we’ll hold on to that money for other forms of expansion,” he says.
New York, NY – May 24, 2013 – News Corporation and the new News Corporation today announced that the separation of News Corporation (the “Company”) into two distinct publicly traded companies, 21st Century Fox and the new News Corporation, has been formally approved by the Company’s Board of Directors. The Company announced appointments to the Boards of Directors of both companies, effective upon the completion of the separation, which is expected to occur on June 28, 2013.