ADELAIDE, Australia (AFP) - News Corp. shareholders backed Rupert Murdoch's plan to move his media empire to the United States from the sleepy Australian city of Adelaide where he laid the company's foundations more than 50 years ago.
Murdoch began what has become the world's fifth largest media group with a single Adelaide newspaper but from November it will be run from the from the United States, reflecting what he said had been the reality for decades.
"We are holding out the promise of a new and more prosperous era for News Corp.," Murdoch said.
He said the move would boost News Corp.'s growth by improving access to the US capital markets and support its share price by allowing greater access to the stock by the giant US financial institutions. These US institutions are limited in how much money they can invest in foreign-listed companies.
The move is also expected to strengthen Murdoch's succession plans, with son Lachlan, currently running News Corp.'s Australian operations, the favourite to eventually take over from his 73-year-old father.
Murdoch said 75 percent of News Corp.'s revenues were now generated in the United States and it was the US market that would provide the majority of future growth.
The media magnate said the move would also improve News Corp.'s ability to compete against its US peers although he said the re-incorporation "in no way marks a retreat from the Australian market.
"It is from Australia that this company derives its entrepreneurial energy, its brashness and, if you walk through our New York corridors, often our accents," he said.
The move, proposed by Murdoch in April, was approved by more than 90 percent of shareholders.
News Corp. will now re-incorporate in the US state of Delaware and move its prime listing to the New York-based SP 500 index. It is expected to list on the New York Stock Exchange on November 12, with its inclusion on Australia's benchmark index phased out over time.
Analysts said the US move was a logical step for News Corp., which had outgrown its Australian roots.
News Corp. shares rose 32 cents or three percent to 10.76 dollars (7.86 US) on the vote, helping support the overall market which added 0.63 percent.
"It's seen as being a positive step," said CMC chief dealer Brian Griffin.
Murdoch and his family interests, which control about 30 percent of the company, did not vote on the proposal.
After inheriting the now-defunct Adelaide News from his father Keith in 1952, Murdoch's strategy of pursuing global growth turned News Corp. into one of the world's largest media companies.
It has assets of more than 50 billion US dollars, with well-known brands such as the Fox movie and television empire, publisher HarperCollins, British newspapers The Times and The Sun, and US tabloid The New York Post.
The plan was under threat earlier this month when institutional investors threatened a revolt over News Corp.'s refusal to include shareholders' rights it currently observes under Australian law into its new Delaware incarnation.
Murdoch backed down in order to win over the institutional investors who decided the vote.
Addressing News Corp.'s overall performance, Murdoch said the company was on track to achieve operating income growth "in the mid- to high-teens" in the current financial year.
"After a strong 2004, all of our operating divisions expect further earnings growth in fiscal 2005," he said.
News Corp.'s move is not expected to have a major impact on the Australian market, even though it represents about seven percent of the capitalisation of the benchmark SP/ASX 200 index.
Shaw Stocksbroking research director Scott Marshall said the departure of a dynamic global media player would increase the Australian market's already strong weighting towards the finance and resources sectors.
"It's a minor problem," he said, adding that the full privatisation of telecoms giant Telstra Corp., expected in the next three years, would address any concerns about the market's weightings.
10/26/2004 - 08:49 GMT - AFP