Murdoch set for massive TV expansion

News Corporation, the media group headed by Rupert Murdoch, is on the brink of a massive expansion of its US television empire with a $US5 billion ($NZ11.1 billion) bid for Chris-Craft Industries.

News Corp insiders said the group would offer $US85 a share for Chris-Craft, a 37 per cent premium on last week's closing price of $US62. It is understood that about 40 per cent of the consideration will be in cash, with the remainder in the form of News Corp American Depositary Receipts.

The deal will lift the number of television stations in News Corp's US portfolio, centred on the Fox Entertainment Group, from 22 to 32.

The bid comes in the wake of a relaxation of the rules on broadcasting ownership in the US, which means broadcasters can own two stations in the same market.

However, the purchase will lift News Corp's share of the US television audience over the maximum 35 per cent, forcing Mr Murdoch to sell some smaller franchises.

It strengthens his hand in New York, Los Angeles and Phoenix, where the group expects to reap cost savings from synergies with its existing stations. It also takes News Corp into the television markets of San Francisco, Baltimore and San Antonio. Already, more than three quarters of News Corp's sales come from the US.

Most of Chris-Craft's stations are within United Television, a company 59 per cent owned by Chris-Craft subsidiary BHC Communications.

The Chris-Craft deal will give News Corp a station in New York affiliated to rival Viacom. Talks between Chris-Craft and Viacom collapsed last week.

Viacom owns Paramount Studios, MTV and the CBS Network and United Paramount Networks (UPN).

It is thought that Sumner Redstone, Viacom's chief executive, pulled out of talks in a dispute over the price that Herbert Siegel, his counterpart at Chris-Craft, was demanding.

Chris-Craft recently sold its 50 per cent stake in loss-making UPN to Viacom, which owned the other half.

Rupert Murdoch's ambitions for his global television and satellite network are set to come under scrutiny when News Corp unveils full-year results this week.

In June Mr Murdoch published the prospectus for one of the largest media floats in history, with the proposed creation of Sky Global Networks, which is made up of his various satellite interests and is to be spun off in October.

News Corp describes Sky Global as a platform to distribute pay television, data and internet services to more than 85 million homes. One of its key components will be BSkyB, the British satellite TV network.

News Corporation shares closed at $A21.3 ($NZ27.6 million) last week, giving the business a valuation of $A83.6 billion.

- INDEPENDENT