To most people, Fox Entertainment (NYSE: FOX) and Rupert Murdoch's News Corp. (NYSE: NWS) seem inextricably linked. And News Corp. already owns 82% of Fox. So it makes perfect sense that the publishing empire should acquire the last bit that it doesn't own.
In a nearly $6 billion deal for the unit that includes Fox Television, cable news and sports, the 20th Century Fox movie studio, and the DirecTV satellite service, News Corp. will pay approximately $33.53 a share to simplify the ownership structure.
Fox was originally created to allow investors to buy into the Australian-based parent, which also owns British Sky Broadcasting (NYSE: BSY) and The New York Post tabloid. But the rationale no longer stood after News Corp. moved its headquarters from Down Under to the U.S. and switched its primary listing from the Australian Stock Exchange to the New York Stock Exchange.
The acquisition maneuver is also being seen as a way to block Liberty Media (NYSE: L) from expanding its ownership base and launching a hostile takeover. Liberty's chairman, John Malone, boosted his voting share last November from 9% to 17% when the exchange transition was completed. Now that News Corp. is asserting itself with the acquisition, Malone's equity position would drop to about 16%, although his voting share would remain stable.
While Murdoch has blocked Malone from a hostile takeover, a small, privately held company is seeking to block some Fox programming from viewers' television screens. Mokiepokie Enterprises is marketing the FOXBlocker, a filter that attaches anywhere along a TV's cable wire and operates in the same way that the V-chip blocks adult-themed shows? except that this blocks out Fox News. :thumbsup:
You might ask why viewers simply don't use their remote to switch channels. For each filter Mokiepokie sells for $8.95, it also sends an email to Fox advertisers telling them a viewer is blocking a show on which they're spending money. Profits from the sales of the FOXBlocker are then shared with various left-leaning groups. Even though I actually like watching Bill O'Reilly and Sean Hannity, I find the company -- whose motto is "Shut the Fox Up" -- to be quite entrepreneurial. I don't know whether I'd spend nine bucks if my beliefs were aligned with Mokiepokie's, but you gotta admire the moxie.
Fox News has been trouncing the newscasts of Time Warner's (NYSE: TWX) CNN, Viacom's (NYSE: VIA) CBS, Disney's ABC, and General Electric's (NYSE: GE) NBC in the ratings, and the cry over Fox's assertion of "fair and balanced" reporting has grown louder. I'm sure Rupert Murdoch isn't losing much sleep over the FOXBlocker, but maybe he'll jigger it to drown out those who say the 7% premium he's offering for the remaining outstanding shares isn't enough.
Analysts expect that News Corp. is going to have to sweeten the 7% deal, particularly since shares of Fox rose nearly 10% to over $34 on the speculation. Some shareholders have already filed a lawsuit on the grounds it's a grossly inadequate offer. The deal is expected to close in the next few months, so watch your local Fox channel for more details. Unless, of course, you've installed the FOXBlocker.
