News Corp Buys Shine For $673M; Liz Murdoch To Join Board; Will Endemol Be Next On Rupe’s Shopping List?

The £415 million price tag is on the low end of what analysts had expected News Corporation to pay for the Brit independent TV company. The deal had been valued at anything up to £700 million ($1.1 billion). News Corp has bought Liz Murdoch’s company on a multiple of 8 times its estimated 2011 profits of £50 million. Liz Murdoch, who owns 53% of the company, is poised to make a personal fortune from the deal, worth up to £220 million. Rupert Murdoch, Chairman and CEO of News Corp, says he expects his daughter to join the News Corp board once the deal goes through. The Shine deal will now intensify the palace intrigue behind Rupert’s Big Media giant. Bringing Liz back inside the tent puts her back at the heart of decision making in News Corp. Though James Murdoch is the heir apparent, Rupe controls the company through a 37% voting interest and keeps saying he wants a family member, or even more than one, to run it when he’s gone. It’s not thought that Liz wants to replace James as her father’s heir apparent though.

Analysts say News Corp wanted to buy Shine — the 6th-largest independent TV production company in Britain, according to Televisual magazine — to boost its pipeline of programming for cable TV stations such as Sky in Europe and Fox in America. Shine produces hit shows such as The Tudors and Life On Mars. However — despite shows such as Masterchef on Fox, Live to Dance on CBS and NBC’s The Biggest Loser — Shine is perceived as being strong in drama but weak in unscripted. Rival Hollywood studios such as Time Warner and NBC Universal have bought UK independent TV companies that are strong on unscripted. This is because the UK rules the roost when it comes to unscripted formats, which are road tested in Britain before being sold to the U.S. News Corp/Fox will now be looking to buy a big UK formats producer such as Endemol (101 Ways To Leave a Gameshow) or All3Media (Undercover Boss), I’m told.

The buy-out makes News Corp an even more powerful player in the British TV sector at a time when its bid to take full control of BSkyB is under scrutiny. What rivals such as the BBC, Channel 4 and newspaper Daily Telegraph are worried about though is Murdoch’s control of news, not entertainment. There are no implications for the Sky transaction. But the deal will alarm those already worried about Murdoch’s grip on the wider media. If News Corp succeeds in fully taking over BSkyB as well as fully owning Shine, then it will be by far the most significant vertically integrated broadcaster/production combine in the UK after the BBC – but without any of the Beeb’s public service duties.

The deal could be bad news for other Brit independent TV companies used to selling to BSkyB. Independent producers fear that having Liz Murdoch’s company in-house will choke off Sky as a market for them. Mike Darcey, COO of BSkyB, said recently that he would not like to see this happen –- that he preferred the idea of Sky’s commissioning editors being able to choose from a wide range of suppliers. PACT, the UK independent producers’ body –- which Shine sits on the board of — is relaxed about News Corp now owning Shine. The total cable-and-satellite sector accounts for just 10% of UK original programming. John McVay, CEO of Pact, tells me that Sky’s commissioning editors will not want to be hamstrung by just working with Shine. News Corp could have insisted Sky takes all of Shine’s programming already. “Sky is smart enough to know that you want to get the best programming ideas,” he says. “If you don’t, then you’re shooting yourself in the foot.” But Sky may not have any say-so if it is taken over by News Corp.

Liz Murdoch and her husband Matthew Freud, head of UK PR firm Freud Communications, were already the most influential couple in Britain before this deal. Guests who came to Liz’s 40th birthday party in 2008 included David Cameron, Tony Blair, Bono and Bob Geldof.

The News Corp sale will pay off Shine’s £55 million debt load. Shine has £275 million turnover in 2009, the last year for which figures are available.

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