Dynasty: The Murdochs

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Dynasty: The Murdochs | Official Trailer | Netflix

Dynasty: The Murdochs offers an unprecedented look at one the world's most powerful families at a crossroads, as its scion, Rupert Murdoch, makes one last play to ensure his legacy at all costs. Drawing on thousands of pages of documents, emails, and text messages that have never before been seen on television, this limited series exposes the private machinations of a family torn apart by power, politics, and a desperate desire for their father’s love. While Rupert Murdoch has spent over 80 years building an empire that shapes governments and democracies, the series poses the ultimate question: Is a dynasty a family or a business?. For the Murdochs, the two have never been separate. (Netflix)

Media Man Group

$11b takeover fight gives Team Murdoch another thing to worry about

As the battle over the media mogul’s family trust heats up, a key driver of the empire’s financial success is trying to start a new era of growth in a big deal.

While the world breathlessly awaits the Murdoch family’s latest Succession-like drama set to play out in a courtroom in Reno, Nevada, another fascinating tussle central to their financial success is gathering pace in London, England.

The legal battle over a Murdoch family trust will decide how Rupert Murdoch’s fortune will be split up following his death. But exactly how big a pie Rupert’s children – Lachlan, Elisabeth, James and Prudence – will have to divide will depend in no small part on whether Australia’s dominant property classifieds player, REA Group, can start a new era of growth by buying British group Rightmove.

REA Group has been one of News Corp’s best investments. The media conglomerate owns 61 per cent of the company, a stake worth about $16 billion. By way of comparison, News Corp’s entire market value is $23 billion.

So the rumble in Reno will be seen through the prism of whether Rupert and Lachlan can defend News Corp’s mainstream media assets from the more liberal-minded children. But it is News Corp’s property classifieds investments – predominantly REA and its US cousin Move – that really move the financial dial.

REA said on Wednesday that the Rightmove board had rejected its $10.9 billion cash and shares bid. The offer valued the British group at 705 pence, representing a 27 per cent premium to Rightmove’s share price before news of the bid leaked.

It’s a healthy premium. But it’s not nearly as much as analysts, Rightmove shareholders and – evidently – the board were expecting.

Some Rightmove shareholders suggest REA will need to bid 800 pence or more to get this deal over the line. That would represent a premium of at least 44 per cent. Rightmove’s shares have been under pressure in the past 12 months due to the aggressive growth plans from a smaller competitor called OnTheMarket (funded by a US group called CoStar). But those investors say Rightmove’s stock traded briefly above 800 pence in 2021, and the business is in better shape today.

MST Marquee analyst Fraser McLeish reckons a premium of 35 per cent to 45 per cent would be reasonable. He’s keen on the deal, arguing that the valuation gap between the two companies – REA trades on 48.6 times 2025 earnings, and Rightmove on 26.1 times – means REA can afford to pay up and still extract solid value. On McLeish’s numbers, even paying 40 per cent premium would still lift earnings by about 16 per cent to 17 per cent, depending on the structure and funding of the offer.

That structure is now a key point. Under British takeover laws, REA has until September 30 to make a final, firm offer to Rightmove shareholders. But it can make further non-binding approaches to the Rightmove board between now and then.

How much REA is prepared to push up its bid is one question. But how it would structure and fund a further bid is important, too.

E&P analyst Entcho Raykovski says if REA wants to sweeten its deal, it will probably have to do so with cash, arguing News Corp is unlikely to want to see its stake in REA diluted below 50 per cent, making an increase in the share component of the offer unlikely.

But an increase in the cash offer may require an equity raising – and it’s that prospect which pushed REA shares down a further 1.9 per cent on Wednesday, taking the stock’s losses over the past week-and-a-half to more than 9 per cent.

Like several Rightmove shareholders, McLeish sees this as a smart deal for REA given the growth that can be extracted from Rightmove. Despite a housing market two times the size of that of Australia, Rightmove’s revenue from its core listing products is 40 per cent lower than that of REA, which has mastered monetisation from Australian property ads.

The question for REA investors – led by the Murdoch family – is how much more they are willing to bid to grab this growth opportunity. (AFR, AI News, Wries)

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