News Corp announced today that if any party raised its stake in the company above 15%, News Corp would then give its other shareholders the right to buy one News Corp share at half price for each share they already own. If taken up, the move would result in the dilution of the stake built up by the party raising its stake above 15%.
Liberty Media, under chairman John Malone, is attempting to take a 17% stake in News Corp. It currently owns 9.2% of voting shares, but last week it said that it has an option to buy another 8% of News Corp's voting shares from Merrill Lynch in a share swap deal. News Corp has said that it was not given prior warning of the move and has therefore put the new plan in place.
A News Corp spokesperson said: "It has been prompted by the decision last week by Liberty to enter into a contract that would allow it to acquire additional stock. It's too early to tell what Liberty's intentions are, but we're not necessarily treating them as friendly."
By increasing his voting shares it is believed that Malone, who would also have greater control of News Corp, would encourage Murdoch to buy shares in Liberty-owned organisations like Discovery Communications, which is co-owned by Liberty and Cox Communications.
Last week, Murdoch said he was relaxed about the Liberty move, which he described as a compliment to his company. "I'm not losing any sleep over it," he said.
Liberty currently owns 17% of News Corp's non-voting shares and 9.2% of voting shares. This is set to increase to 17.2% by next April if the swap deal with Merrill Lynch goes through smoothly.
Malone secured the deal with Merrill Lynch International in which the broker bought 8% of the voting shares and gave Liberty the right to buy them next year.
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