Murdoch buys stake in Fairfax

Rupert Murdoch

News Corporation last night emerged with a strategic 7.5 per cent stake in rival Fairfax as the takeover frenzy triggered by new Australian media ownership laws continued to escalate.

News instructed stockbroker JB Were Goldman Sachs to buy shares in Fairfax, which publishes The Sydney Morning Herald and The Age, several hours after the close of stock market trading.

It emerged with a stake worth about A$364 million ($418.2m) after paying A$5.20 a share.

News said last night it viewed the A$364m holding as a strategic stake during the shake-out of the media sector triggered by the Government's new media laws, The Australian newspaper, which is owned by News, reported today.

News spokesman Andrew Butcher said last night the stake was "merely an investment and it is entirely friendly to the existing board".

In other moves following the new laws Kerry Stokes's Seven Network on Tuesday starting buying a 14.9 per cent stake in West Australian Newspapers -- publisher of The West Australian and owner of radio stations and a string of regional newspapers.

On Wednesday, James Packer's Publishing and Broadcasting Ltd confirmed it had sold a 50 per cent stake in key media assets, including the Nine Network and magazines such as The Australian Women's Weekly, to private equity group CVC Asia Pacific.

And yesterday Southern Cross Broadcasting -- owner of radio stations 3AW in Melbourne and 2UE in Sydney -- admitted it had been holding preliminary talks with other media companies.

Southern Cross and Fairfax, with no single controlling shareholder, unlike many other media companies, have long been viewed as likely takeover targets.

Some analysts believe Fairfax could be bought and broken up, with different companies interested in its New Zealand newspapers, its regional titles and the financial tabloid The Australian Financial Review.

Australia's Rural Press, over 50 per cent owned by the Fairfax family, former owners of John Fairfax Holdings, has expressed an interest in the New Zealand newspaper assets of Fairfax Media.

Following the media ownership laws being passed, Rural Press chief executive Brian McCarthy said the company could be interested in buying the national business title The Australian Financial Review and the regional and New Zealand newspaper assets of the Fairfax group.

In New Zealand, Fairfax publishes The Dominion Post and The Press among its nine daily newspapers. It also has extensive magazine and community newspaper interests.

News, one of the world's biggest media and communications companies, is forbidden by Australian law from owning more than 15 per cent of Fairfax under the current media regime.

Even under the new laws, its 70 per cent control of the Australian newspaper market meant it could not take control of Fairfax or its newspapers without selling some of its other titles.

But the strategic stake gives News, whose chairman and chief executive is Rupert Murdoch, an opportunity to take part in any corporate moves at Fairfax.

- NZPA