Do the Murdochs have more wealth outside News Corp?

When News Corp shares hit a low of $13.32 on August 9, the overall market capitalisation bottomed at $34.1 billion and the Murdoch family’s 12.65% stake was down below $4.5 billion.

For the first time, it was looking like the family could one day have more wealth outside News Corp than inside.

After surging an impressive 24% from the lows of last Tuesday, the voting shares stock finally took a breather and retreated 36c to $16.08 in morning trade today.

The $US5 billion buyback promised for 2011-12 has clearly helped and the opening effort on Tuesday saw News Corp spend $US66.47 million buying 4 million non-voting shares at an average price of $US16.61.

There have been several ways that News Corp cash has leaked out to the Murdoch family over the years, including increased dividends, huge salaries, related party transactions and share sales. It will be interesting to see if there is any selling into the buyback.

However, the biggest payout came after Rupert almost sent News Corp to the wall in 1990. As the company recovered throughout the 1990s, he paid about $US600 million to his three sisters to buy them out of the family trust.

Given the performance of markets over the past 15 years, it is fair to assume this payout is now worth between $1 billion and $2 billion, although it is unclear how much has given away to loss-making ventures such as the $10 million of funding from the Kantor family for the Climate Institute.

The next biggest transfer of value came when Rupert’s four adult children were each given $150 million payouts after Lachlan left the business. This largely comprised non-voting shares and was in exchange for opening up the family trust to Wendi Deng’s two daughters with Rupert.

Lachlan subsequently sold most of his News Corp shares to fund investments in DMG, Indian cricket, Network Ten and various other smaller ventures.

James Murdoch has retained 4 million non-voting shares worth about $63 million and it is not known what Rupert’s two adult daughters, Elisabeth and Prudence, have done with their shareholdings.

However, it has been disclosed that Elisabeth Murdoch pocketed about $200 million of cash in April from the sale of her stake in television production company Shine.

This was the biggest ever one-off cash pay day delivered to a member of the Murdoch family and makes Elisabeth the wealthiest of Rupert’s children and probably second only to Rupert’s sister Janet Calvert Jones when it comes to direct accessible wealth controlled by an individual member of the Murdoch family, other than Rupert himself.

However, when Rupert passes away, it is clear his four adult children, and the combined wealth of Wendi Deng and her two daughters, will see them all qualify as billionaires, assuming the News Corp share price doesn’t collapse.

Rupert has traditionally attempted to build family wealth through share price appreciation, most of which has been tax free as it pre-dated the 1985 introduction of capital gains tax by the Hawke government.

However, the US9.5c dividend payable on October 19 is the biggest in News Corp history. This alone will deliver the family about $35 million on the 317 million voting shares and 12 million non-voting shares that they control.

Then you have the salaries. We won’t get the 2010-11 figures until the proxy statement for the AGM is sent out early next month, but James and Rupert shared about $30 million last year.

It will be very interesting to see if Rupert’s $US22.7 million package in 2009-10 or James Murdoch’s $US10.3 million have been clipped courtesy of the phone-hacking scandal.

The answer is probably no because phone hacking didn’t really blow up until July 4, after the latest financial year had finished.

While News Corp was notoriously unco-operative with the authorities throughout the phone-hacking scandal, they aren’t being any more helpful with shareholder groups at the moment.

Peter Barnes is arguably the only independent Australian-based News Corp director so after lucking out with the New York-based company secretary Laura Cleveland, I sent him the following text last Saturday:

Hi Peter, it is Stephen Mayne here. I’ve been appointed ASA company monitor for News Corp and would like to talk to you and Sir Rod as the Australian-based independent directors about some governance issues. Also could you please advise the AGM date as need to get some flights sorted. Regards, Stephen Mayne

Alas, still News Corp resists providing any information on the AGM. Many companies announce the AGM date up to a year in advance in the calendar section of their websites. A good example is the Peter Barnes-chaired Ansell, which has revealed the 2011 AGM will be on October 17.

Amazingly, when you go to the investor relations section of the News Corp website, the events listed under the calendar are as follows: