Inside Rupert’s Big Aussie Sale: Murdoch smuggles Foxtel – and its government grants – out of the country

by | Dec 1, 2020 | Business

Rupert Murdoch has funnelled Foxtel out of News Corp Australia to a mysterious entity in the secrecy jurisdiction of Delaware. Michael West reports on the secret transactions which appear designed to sell News Corp’s Australian media business.

Foxtel is a monopoly. It is controlled by media tycoon Rupert Murdoch and operates with the privilege of a government licence. But this privilege, and its attendant freebies, have not stopped Murdoch’s News Corporation from smuggling Foxtel out of Australia to a mysterious entity in the secrecy jurisdiction of Delaware.

Keeping tabs on this breathtaking chutzpah of the Murdoch clan:

  • News Corp wins Pay TV licence for Foxtel.
  • Foxtel makes billions in profits.
  • Pays almost no tax.
  • Is allowed to take over rivals such as Austar to entrench its monopoly.
  • Is given government grants without reasonable explanation.
  • News Corp then quietly shifts it overseas.

This sheer brazenness of Rupert Murdoch – or perhaps it is his son Lachlan reshaping the group – is but part of the changing News Corp picture, one part in a radical restructure of the Australian assets whose purpose appears to be cleaning up the Murdoch house for sale.

News Corp is a veteran of corporate chicanery, of tricky manoeuvres mostly designed to denude some tax authority somewhere of revenue. Rupert’s latest caper however is of greater historical significance.

Murdoch built his global media empire from a single newspaper in Adelaide. The empire is now unravelling quickly, his old media revenue fortress under fatal attack from new media and News has been scrambling for three years to dump assets and cut costs. So it is that he has restructured his Australian operations and reduced the Australian footprint by putting $6.3 billion of assets up for sale.

He has done it in such a way as to disguise the impact on his finances, indeed the very solvency of News Corp in Australia. Both the revenue of his top company News Australia Holdings, and the value of its asset base, are dropping sharply.

To the corporate plot. News Corp has broken its Australian operations into three groups: Foxtel, the City Mastheads and the Regional Mastheads. Bear in mind that the group has already been in talks – most notably with Antony Catalano’s Australian Community Media – to sell its regional newspapers.

Whither Foxtel?

Foxtel has disappeared from News Australia’s balance sheet, but the accounts don’t say where it went. What happened?

Nothing happens at News Corp without a plan.

Under serious attack from the incursion of streaming giants such as Netflix, things turned more sharply south for Foxtel’s 35% shareholder Telstra in February this year, when it accepted that Foxtel may not be paying its cable transmission fees any time soon. Telstra agreed it would wait till the end of 2027.

In the meantime they’d be receiving interest at just above 7.75%, but the interest could capitalise and may not be paid till 2027 either. In a worst case Telstra could wait to get around $330m in seven years.

Three months later, in May, Telstra wrote down its investment in Foxtel by $300m.

It did not have much choice, News Corp had just announced in New York that it was writing down its 65% of Foxtel, by $931m, backdated to March 31. By the time it published its accounts in October, News Corp was saying up to another $900m was at risk.

The next step was for News Corp to remove Foxtel from the Australian segment of its accounts, the ones published by News Australia Holdings.

Over two days in June, it prepared News Pay TV Financing, an Australian company, to take Foxtel. News Corp tidied up News Pay TV’s capital structure and then transferred it from News Australia to News Corp itself and to another Delaware company: News Australian Holdings LLC.

Delaware filing – no shareholder disclosed

News then waited for the June 30 balance date to pass and, on July 2, it capitalised News Pay TV. News Pay TV then paid $865,781,326.66 for 65% of Foxtel, removing it from the Australian Group.

Michael West Media has traced the structure to Delaware. Alas, it is possible to entirely hide shareholders and directors if you set up a company in Delaware. That is precisely what News has done and the broadcasting regulator, the Australian Communications and Media Authority (ACMA) seems none the wiser.

Has ACMA been told by News? Does it know that Foxtel has disappeared from Terra Australis? We put questions to the chair Nerida O’Loughlin but there has been no response.

The Regionals

Meanwhile, back to June. News Corp moved the regional Australian mastheads from the Australian reporting group by releasing control of their owner News Corp Australia. A plausible explanation is that it is cleaning up the newspapers for sale (despite having accepted millions in government grants in regional newspaper subsidies earlier this year).

The City Mastheads

The Melbourne Herald Sun, Sydney Daily Telegraph, Brisbane Courier Mail – along with a few other bibs and bobs – is all that’s left now under News Australia. News Australia won’t be reporting next year about Foxtel or the Regionals.

A Noisy Stub: Rupert Murdoch’s Australian news assets valued at zip

ABOUT THE AUTHOR

Michael West

Michael West

Michael West established michaelwest.com.au to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

21 Comments

  1. Avatar

    Antony Catalano is some piece of work too. The AFR claims he ran Domain like a boy’s club which denigrated female employees. He played a clip from the Wolf of Wall of street at a conference for about 200 Domain sales staff in 2015. That night, Catalano and other employees went to a restaurant at the Star casino in Sydney where many got drunk and some danced “suggestively” with young employees.

  2. Avatar

    Delaware – dodgy deeds done dirty cheap is about it.

    • Avatar

      Delaware, in the USA was where Murdoch originally set up his operation in the USA. It is a Tax Haven. Rupert Hates paying tax anywhere on Earth……..

      • Avatar

        Oh yeah, that’s our dirty digger Rupert.
        A lower life-form is hard to imagine…….and nothing like his saintly mother.

  3. Avatar

    You forgot to mention taste.com.au, GQ, Kidspot, Vogue, News.com.au, realestate.com.au (majority shareholder). Huge Aussie sites weilding influence.

    • Avatar

      Hahaha ha….

  4. Avatar

    Ten of millions of taxpayers money handed over by the COALition Government to Rupert , NO STRINGS ATTACHED.! ……….still No Transparency and No Accountability.!
    Rupert is a foreigner, he is not an Australian citizen.
    Still they pay no tax……… Morrison you are corrupt and negligent in your duties, no marketing spin will cover up your lies and actions.

    • Avatar

      Yep, Morrison IS negligent and corrupt. Given he is a member of a religious cult, he is also a nutter.

      • Avatar

        He also gave his Religious friend $40,000,000+ for Free(and Religions pay NO TAX anywhere on Earth). If Morrison was a company director, he would be sued for Fraud.
        How the Hell is Morrison NOT in Gaol?

      • Avatar

        Whey do you think the 38 Hillsong passengers onboard the Ruby Princess were disembarked so quickly without visa or quarantine checks.?

  5. Avatar

    Two things certain with Rupert Murdoch: Murdoch looks after Murdoch and he will burn anyone in his way. What a cancer.

  6. Avatar

    It’s disgusting that the Liberal party chooses to give this greedy billionaire tax payer money when our schools and hospitals desperately need the funding.

  7. Avatar

    Great sleuthing work Michael, and no doubt there will be more to come.

    I’m sure that ACCC, ASIC and other regulatory bodies will take a lot of pleasure investigating whether News Corp has been trading insolvent for some time, with all the dancing finances and figures being thrown around.

    • Avatar

      Rupert wont give a Damn. By the sound of it, there’s nothing left in Australia to sue…….

  8. Avatar

    Reading this article gave me so much pleasure, the sooner this cancer is excised the better for the entire planet, not just Australia.
    Murdoch will go down in history as the most evil ever media proprietor up until now, the prick makes Randolph Hearst look like a choirboy.

  9. Avatar

    wow – great article.

    I held News Corpse shares for over 20 years – my returns barely beat inflation – I read it was a trading share – hmm – more fool me

    I tried to dump those shares after they went through many transformations from FOX towards Disney – took the cash option – thought I was done with them – then found they’d issued me a fractional few extra FOX shares – just can’t seem to scrape that $#it off my shoes

    Delaware – yeah I read that was where companies set up when they wanted not to have to pay tax or disclose anything about their dodgy dealings – so moving Foxtel to Delaware follows exactly that course – again …

    I would have said ‘we can only hope Rupert will die soon’ – but then I read Lachlan looks like he’ll be worse.

    So get ready for the a$$hole wars …

  10. Avatar

    Michael , you make claims that there is no evidence to support . You seems to be in the Rudd/Turnbull; camp who do not want any views > I think you have an obilgation to explain . I wiil wait for it but no doubt you will not unless Dan advises you
    .

    • Avatar

      WTF!!!-you have told us about yourself-thats about all!!!

    • Avatar

      Did you actually read the article? Because even the mere suggestion that it somehow places Michael in the Rudd/Turnbull camp tells me that you obviously didn’t, which would explain why your rant is not only irrelevant and out of left field but also bat crazy stupid.

  11. Avatar

    Corporate bastardisation at its best. I hope MW media is successful in their bid to take over the Murdoch entity so real news can be heard. I will grab the popcorn and would watch with glee if a Royal Commission was to unfold on this company. Time for the truth to be heard.

  12. Avatar

    So the Morrison govt. gave Foxtel $10 million to present under-represented sports; yet, when ABC wanted to show a Matilda game, ABC had to pay Foxtel for the priviledge. Paid twice by tax-payers as well as by paid subscribers.

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