It may be no coincidence that Rupert Murdoch's News Corp put its Sky Television stake on sale yesterday just as the Government was preparing to float shares in Mighty River Power. It suggests the sharemarket is going to get a bigger injection from the privatisation programme than even the Government might have hoped. Sky may not be the only offering that seeks to capitalise on heightened interest in the market, or perhaps fears that power companies will absorb the available new capital unless others move quickly.
They will need to move very quickly to match the pace the Government set yesterday at the Cabinet's first meeting since the Supreme Court ruled the float would not materially harm Maori claims to flowing water and geothermal resources. The case has caused the Government to miss its deadline for completing the Mighty River float within the first quarter of this year but it now expects to have the company listed on the stock market shortly before the Budget on May 16. The offer will be advertised from today, with pre-registration of interest opening immediately and acceptances starting in mid-April.
A property as attractive as Sky TV should give a power company a good run for the available funds of small investors. Sky will be a popular property, having given New Zealanders good service in News Corp's hands. It has backed rugby to the mutual advantage of the company and the game. The company has sold subscription channels to half the television audience in this country and there can be no doubt its splendid sports channels have been the main attraction.
News Corp's sale of its 43.6 per cent controlling stake gives the New Zealand operation every chance of becoming locally owned. With no potential takeover in sight, no stake is likely to be as high as the 20 per cent that requires a full takeover offer. News Corp is offering its shares at $4.80, considerably less than the Todd family sold their 11 per cent for in November and a 7 per cent discount on the share's closing price last Friday.
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Quite a number of good stocks have been sold down on the NZX since late last year, notably 50 per cent of Steel and Tube in October, 51 per cent of the online auction site Trade Me sold by Fairfax Media in December, and $277 million of Auckland Airport last month. The News Corp and Fairfax divestments are a reminder that foreign ownership, for all the fears it generates, is not permanent. Companies bought or started with foreign investment are no more "lost" to the country than any other business purchase.
Their dividends may be lost from domestic circulation or savings but that is the price we pay for putting domestic savings predominantly into property and leaving business to rely on foreign capital. The Government hopes that its partial asset sales will rekindle some confidence in the sharemarket among small local investors who will be given precedence in the allocation. It plans to offer a bonus for holding the shares for a certain period.
But the NZX has relied for too long on privatised infrastructure such as Telecom, Chorus, Contact Energy, Auckland Airport and Port of Tauranga. These solid, dependable stocks are now likely to be joined by Mighty River, Meridian and Genesis Energy by the middle of next year. But they alone will not do much to encourage a culture of risk investment in the general population. If they can generate a flurry of sharemarket activity that brings other possibilities out of the woodwork, the public asset sales will achieve much more than proponents dared hope. Sky TV is an encouraging sign.