The media empires ofMurdoch and Maxwell

Press baron Robert Maxwell recently topped a surv.ey of presscoverage of business people while competitor Rupert Murdoch camethird. Both are battling to create huge global media empires, and

Labour Research. investigates their recent moves.

Press.baron Rupert Murdoch.might, lag be~!nd his self-publicisingcompetitor Robert. Maxwell in theamount of publicity he receives but hebas a much larger business empire.News Corporation, MurdochsAustralian parent company hasworldwide sales of £2.3 billion and'trading profits (profits before tax andinterest) of 5:367 million. The impor-tance of the UK arm, and in particularhis newspapers, is. shown by the factthat UK trading profits accounted for40% of News Corporation's profitswhile. the UK accounted for Just onequarter of total sales.

Recently Murdoch has been busyexpanding his empire, on four con-tinents. In the UKhe has been concen-trating Onwhat could be described asvertical integration - extending his in-fluence down the newspaper chain. Inthe post-Wapping .environment Mur-doch has.done a "Wapping Mark II" onthe wholesale newspaper distributionchain. Last October Murdoch announc-ed his intention to turn the traditionalpublisher-wholesaler relationship onits head by saying that supplies of Mur-doch's papers were to be withdrawnfrom wholesalers in England. Instead182 franchises were on offer coveringthe country outside London. Recentannouncements suggest that thedistribution company TNT, whichscabbed for Murdoch during the Wap-pingdispute and in which Murdoch hasa stake, came out the biggest winnerof franchises with 34.

Last September it was announcedthat Murdoch had started moving intonewsagent chains. Murdoch's UKcom-pany News International emerged asowner of a 33% stake in an Australianconsortium, Forcefern, which boughtthe 1,OOO-pluschain of Martins news-agents from Guinness in a £190 milliondeal. Eight weeks later News Inter-national announced that it had boughta half share in the Circle K conven-ience store group which has 13.4-newspaper-selling stores expandingMurdoch's empire even further: .

On the newspaper side, eight6

months ago Murdoch tightened hishold on the UK newspaper, 'industryWith the takeover of the colour tabloid1bday, giving Murdoch titles a: third oftotal national newspaper sales...Mur-.doch bought the 90%"stake 'in 1bdayfrom "Tiny" Rowland's Lonrho. <Nor-mally any newspaper takeover wouldbe referred to the Monopolies andMergers Commission eMMC).However,Lord Young, the 'Secretary of State forTrade and 'Industry, bowing to Mur-doch's midnight deadline for a, to

Daily Mirror picket. Stefano,Cagnoni (Report) ,

go through, did not refer the takeoverto the MMC.However, there has beenno whisper of Murdoch's so-calledplans for a new paper - the LondonPost, which was the flash point for theWapping dispute ..

Bolstered perhaps by the govern-ment's abdication of duty, Murdochannounced in September that ..he hadbuilt up a 14;9,%stake in Pearson, thediversified information, entertainmentand industrial group which.owns theFinancial Ti~es, Penguin Books anda 50% stake 'in the Economist. Lastmonth he int~ea:sed the stake. t~ over·20%, paying ~94 million to Italian

magnate Carlo De Benedetti fora4.Q%stake. He denied any takeovermotive,describing himself as a "friendly in-vestor". 'Any takeover move wouldcertainly bring an MMC referral on-either one of-two counts - concentra-tion in ownership of newspapers.or ofbook publishers; To Own Pearson'spublishing. interests along with NewsInternational's.d'l.Y'e stake in WilliamCollins would give Murdoch anestimated one-third stake in the totalUK book industry.

Elsewhere recent moves by Mur-doch have included the takeover ofHong Kong's. leading Englishnewspaper, 'the South China MorningEast, giving him a major foothold on afourth continent. . ,

,Just one year ago, back on hishome base of Australia, Murdoch com-pleted the biggest newspaper takeoverin the world with the £820 million pur-chase of the Herald and Weekly TimeGroup (HWT) which was once run byhis father, Sir Keith. By reclaimingthefamily jewels Murdoch now ownsnewspapers in all the Australian statecapitals and now.accounts for aroundtwo out of every three newspaperssoldin Australia ..

In North America Murdoch con-cluded the takeover of the oldestablished book publishers Harper andRow for around £190 million in Aprillast year. Six months later he'sold 50%of Harper to William Collins, the'Glasgow-based publishers, which issmall loss to Murdoch, as News Inter-national owns 41. 7% of Collins.

While Murdoch got his way withToday in the UK, he has hit barriers inboth Australia and his adoptedAmerica over his media ambitions.Australian legislation bans the cross-ownership of print and broadcast insingle centres, and other legislation im-poses a 15% ceiling on foreign owner-ship of broadcasting companies. Bothpieces of legislation forced Murdoch to'sell off TV stations and radio, stationswhich were.part.of HWT. Murdoch'sAmerican citizenship has also proveda stum5lirt~'blockin his attempt to gain

Lab'QW Research Febru?ry 1988 -

a controlling interest in Australia'sdomestic news agency, AustraliaAssociated Press (AAP).

Cross-ownership of media has alsohit Murdoch in the USA.Governmentpolicy, through the media agency ofthe Federal CommunicationsCommission (FCC), does not allowownership of both TV stations andnewspapers in the same city. Murdochowns both TVstations and newspapers

Labour Research Februarv 1988

in New York and Boston. He has up toMarch this year to get rid of eithernewspapers or TVstation. As his greatambition in America is to establish afourth TV network it looks as if thenewspapers will go. That's unless hegets his way and keeps both.

One person reportedly interestedin buying the loss-making New YorkPost if Rupert Murdoch has to sell ispublishing's biggest self-publicistRobert Maxwell. Maxwell's empire isheaded by Pergamon but how it rankscompared, for example, to Murdoch'sempire is difficult to say as constituentparts have not filed the required up-to-date company information. Maxwell'sempire has three major constituentparts, Maxwell CommunicationCorporation (MCC),the new name forBPCC;Mirror Group, bought in 1984;and the engineering concern Hollisbought in 1982. Taking the threetogether sales are likely to total around£1.3 billion - slightly more than halfof Murdoch's empire.

WhileMurdoch was building up hisempire during the 1970sMaxwell wasin the business wilderness, damned byDepartment of Trade and Industryinspectors in 1973as "unfit to exerciseproper stewardship of a publiclyquoted company". His rehabilitationcame when he moved in to "rescue"the ailing British, Printing and

Communication Corporation (BPCC)in1980. Since then Maxwell has rarelybeen out of the news.

In the MCCpart of the empire hislatest move has been to buy anotherpart of the Pergamon empire. OnNewYear's Eve he got the go-ahead for thepurchase, at an initial price of £56million, of three companies -Pergamon Orbit Infoline, a supplier ofonline information services; Pergamon.Books, a scientific, technical andmedical publisher; and MolecularDesign, a supplier of software andinformation systems to chemical com-panies. AllMCC'smoves are to achievethe stated corporate goal of becoming"a global information and communic-ations company before the end of thedecade, with annual revenues of £3-5billion."

Acquisitions to achieve that goalover the last year include the purchaseof a.79% stake in United Trade Press,a UK chain of 36 trade and technicalmagazines from the Ladbroke Group,and the £24m purchase of a 70%stakein Nimbus Records, Britain's largestindependent compact disc presser. InAmerica last November he alsocompleted the takeover of printersAlcoGravure for an undisclosed sum,making it Maxwell's fourth USpurchase of printing companies overthe past 14 months. In February last

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year he bought into the Canadiannewsprint business in a £157 milliondeal while two months later he clinch-ed a £100 million deal for the USprint-ing business of Diversified PrintingCorporation.

Speaking to Newsweek last yearMaxwellsaid that "For the informationand communications revolution, theUnited States is the largest market, andyou cannot be a global communicationsbusiness if you're not large in theUnited States."

Despite his purchases Maxwell hasfailed to make the quantum leap in theUS, and in the past year failed in twomajor takeover deals. One was withpublishers Harcourt Brace Jovanovichand the other was the later lapsed bidto take a 50% stake in the Americanpublishing group and informationstorage equipment manufacturer Belland Howell. Two tentative Europeandeals also fell through - one with aDutch group Elsevier and another with

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Dutch publisher Kluwer.On the newspaper and magazine

side Maxwell has also had his failures.A weekly sports magazine Sportsweekstarted in September 1986 but foldedfive months later; and the much her-alded 24-hour London newspaper, theLondon Daily News (LDN), launchedearly last year was closed by Maxwellin July after just five months on thenews stands. Just one month beforeLDN's closure the Financial Timeswas quoting Maxwell as saying •'Youneed a deep pocket to break a mono-poly ... I'll give it two or three years ."

Maxwellhas, however, managed toreverse the decline in the circulationat Mirror Group Newspapers (MGN)which is reportedly in profit -although by how much is not clear as

up-to-date accounts have not been fil-ed as required at Companies House.

The one mystery about the Max-well empire is the identity of thebeneficial owners who hide behind theanonymity of the LiechtensteinPergamon company. For one so volu-ble Maxwell has very little to say onthat matter. A statement in 1984fromhis merchant bankers declared thatrelatives of Maxwell's grandparentswere Pergamon's owners but no nameswere revealed. More recently, in theAugust 1986 issue of BusinessMagazine, Maxwell declared: "Therewill be major announcements comingout of Leichtenstein soon." Sixmonthslater there are no details and readersare advised not to hold their breath foran announcement. 0

March to Murdoch's Wapping plant Andrew Wiard (Report)

Labour Research February 7988