Murdoch enters the ring with Fairfax share grab

News Corporation's share purchase has delivered it 7.5 per cent ownership of rival media group Fairfax, publisher of newspapers The Sydney Morning Herald, Melbourne's The Age and The Australian Financial Review. However, News Corporation has insisted the move will not be followed by a full takeover bid. A spokesman for the company has labelled the purchase as “purely an investment” and Rupert Murdoch CEO of News Corporation, has gone on record saying he has no plans to buy Fairfax.

David Kirk, chief executive of Fairfax, has dismissed claims that his company is ripe for a takeover following the changes in media laws last week, because of its open share register. “It's not right to say that without a major shareholder the company is a sitting duck,” Evans said in a speech to the National Press Club in Canberra.

Kirk described News Corporation's purchase of Fairfax stock as “defensive”, claiming he trusted the rival publisher's assurance that it was only taking a friendly interest. “I take Mr Murdoch at his word,” he said.

Kirk has also dismissed claims that the different assets of Fairfax would be more valuable if they were carved up, emphasising that many of Fairfax's newspapers were sold as packages to advertisers and that both its online and print interests were heavily integrated.

“From some quarters, I have seen reports saying that Fairfax would be more valuable if it was broken up. This is unadulterated rubbish,” said Kirk. “The dis-synergies of breaking up the company are substantial.”

News Corporation's $385 million share raid on Fairfax represents only a fraction of the changes taking place in print media ownership. The Federal Government's overturning of restrictions on foreign and cross-media ownership last week sparked a frenzy of buying activity as Australia's media barons positioned themselves to take advantage of the new laws.

Kerry Stokes's Seven Network purchased what would eventually rise to a 14.9 per cent stake in West Australian Newspapers, while James Packer entered a $4.5 billion deal with private equity group CVC Asia Pacific that saw him sell half of Publishing & Broadcasting Ltd (PBL), which contains APC Magazines among other television and online media assets.

Speculation is also building that Hannan's IMPG Group, which owns Craft Printing, Offset Alpine, Inprint and Hannan Printing among others, is readying its own sell-off of its FPC stable of magazines. Reports suggest that ACP and the Seven Network's Pacific Magazines are among the parties interested in the sale with Michael Hannan seeking a price of between $150 to $200 million for the business. FPC currently accounts for approximately 5 per cent of Australia's magazine market.