Greg Ansley: Murdoch off the front page

COMMENT

With barely a nod and nary a wink, Treasurer Peter Costello this week gave his blessing to American control of two-thirds of the nation's newspaper readership.

A brief, two-paragraph, statement - on which his office declined further comment - said that under the Foreign Acquisitions and Takeovers Act 1975 Costello had decided to raise no objections to News Corp's decision to reincorporate in the US.

The news hardly raised an eyebrow - scarcely even making the business pages and overshadowed by News' sale of its theme park and retail complex at its troubled Fox Studios in Sydney - such was the sense of fait accompli.

Whatever the rules (and they very clearly limit the holdings of any one foreign investor to 25 per cent in major newspapers) Rupert Murdoch was already an American citizen and News Corp was in the real world effectively a foreign corporation.

Ergo, the rules did not apply.

In truth, this is the case. For all Murdoch's protestations that he, his family and News remain in their hearts Australian to the bootstraps, the conglomerate had long ago outgrown Australia, with its Adelaide headquarters an eccentricity and its focus squarely on the Northern Hemisphere.

Murdoch himself recognised the realities when he became an American citizen and whatever he may feel in his heart, his life and family hardly reflect a passion for Australia.

He is divorced from his Scottish-born, Australian-raised and American-educated first wife, Anna, and is now married to former Hong Kong television executive Wendi Deng. Their daughter, Grace, was born in Manhattan in November 2001.

Only one of Murdoch and Anna's children - Elizabeth, the oldest - was born in Australia. She was educated at Vassar and now lives in London, where youngest son James, the British-born, Harvard-educated, chief executive of BSkyB, also lives.

Oldest son and second child Lachlan, with his lizard tattoo, was also born in London, graduated from Harvard, and now is the New York-based deputy chief operating officer of News Corp.

And the whole tangle of the conglomerate's Australian holdings and the nation's media ownership laws has so confused the picture that it would have been all but impossible for a Government that in any case wants to dump existing controls to block a primary listing on Wall St.

News began its domination of Australian newspapers well before the articulation of present limits on foreign holdings, spurred by the 1986 laws on cross-media ownership that hit News' television stations in Sydney and Melbourne.

News took over the Herald and Weekly Times group, in the process of which Murdoch's private company, Cruden Investments, acquired HWT's biggest shareholder, Queensland Press, publisher of Brisbane's Courier-Mail.

In 1993, Paul Keating's Labor Government tinkered with foreign ownership laws, keeping the 25 per cent limit on individual overseas investors but raising total allowable foreign holdings in major newspapers to 30 per cent.

According to a Senate inquiry, Keating introduced these changes to allow now-departed Canadian Conrad Black a larger stake in the Fairfax group in an attempt to ensure favourable election coverage. Australian Governments have always had a pragmatic approach to the media.

Be that as it may, all this left News with about two-thirds of the readership of both major metropolitan dailies and suburban newspapers, three-quarters of the nation's Sunday readers, and 25 per cent of regional daily readership.

When News in April announced it was shifting to Wall St - albeit retaining a secondary listing in Australia - few gave any serious consideration to the prospect that News might have to reduce its holdings, or that the proposed share swap that would see News acquiring Queensland Press from Cruden would be refused.

Whatever the formality of the inevitable Foreign Investment Review Board inquiry, no lesser personage than Prime Minister John Howard said from the start that as News was already considered to be a foreigner, the Government was unlikely to stand in the way of what was effectively the status quo.

This does not mean that any new potential investor will be able to use News' move overseas, or its acquisition of Queensland Press, as a precedent. Murdoch is a special case, and the foreign investment limits remain in force.

Any change must come through new laws. Canberra has been throwing around this idea for years but so far has consistently and repeatedly consigned it to the too-hard basket.

The Government wants to simply dump the lot, including the cross-ownership laws that prevent any one operator from controlling more than one of the major media - newspapers, radio or TV - in a given area. Labor supports dumping foreign ownership controls, but not cross-ownership rules. The Democrats and Greens balk at either change.

None of this concerns News for the moment. The group's real issue with its future in Australia is the possibility that shareholders might vote down the US move because of concerns that incorporation in the US will mean its removal by Standard and Poor's from the S&P/ASX Index in Australia. Standard and Poor's will not allow dual listing with the American S&P 500 Index.

In his statement this week, Costello thus in effect left it to News shareholders to determine the question of foreign ownership, noting after announcing his decision not to oppose the move that the proposal was subject to their approval.