The heat has gone out of the media sector with the news that Rupert Murdoch no longer thinks the Fairfax Media group worthy of his attention.
He has bigger fish to fry in the US, in New York.
Murdoch yesterday sold his 7.5 per cent stake ahead of trading in Fairfax shares stopping ahead of finalisation of the merger with Rural Press: a move that would have cut the number of shares by an unknown number.
The deal saw Murdoch sell at the discounted price of $5.07 a share, while Fairfax shares fell 12c on the news to $5.15 and they closed at $5.13.
It means News has recovered the money outlaid, despite paying $5.25 a share for FXJ shares last October. The rise in the Australian dollar has cushioned the 18c a share loss(plus holding costs) on the foray onto the Fairfax register which was done merely to keep it out of the hands of either James Packer or Kerry Stokes.
Now Fairfax is merging with Rural Press the resulting company will be too expensive for Murdoch who now has those ambitions for the Wall Street Journal and its owners the Dow Jones Company.
But Murdoch didn’t tell the market of the sale. He told Fairfax whose chairman, Mr Ron Walker, told the market.
“The Company has been informed by News Limited that it has sold its 75 million shares in Fairfax Media at $5.07 per share. The two companies will continue to work together, where appropriate, to strengthen the overall newspaper publishing industry in Australia.”
Murdoch’s $6 billion offer for the Wall Street journal last week gave the flagging Australian media sector a bit of a kick along with Fairfax shares rising.
By quitting Fairfax, Murdoch has told the rest of the takeover industry that he thinks the company is now takeover-proof because the Rural Press merger has installed John B Fairfax and his family as the most key shareholders with 13 per cent.
For that reasons the Fairfax share price will now suffer a bout of weakness as it beings to trade more on the fundamentals of the merged group rather than with a control premium built into a price much higher than it would normally be.
The $300 or so million will certainly come in handy for the Dow Jones bid, which is Murdoch’s biggest cash offer in history.
