Murdoch's plan to block News stalker

NEWS Corp, the media company controlled by Rupert Murdoch, launched a shareholder rights plan today that appeared designed to fend off the possibility of a hostile bid.

The defensive tactic followed last week's move by John Malone' s Liberty Media to raise its stake in News Corp substantially, triggering market murmurs that Malone was plotting further buys.

A News Corp spokesman 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.'

At present, Malone - often dubbed the 'Cable Guy' for his US television clout - owns 9% of News Corp's voting shares, about one-third of the power wielded by the Murdoch family's holdings.

But last week, Liberty said it had agreed to a complicated share swap with investment bank Merrill Lynch that could potentially hand it an additional 85m shares. If concluded by next April, that deal would raise its voting stake to about 17%.

Murdoch initially appeared unruffled by the Liberty deal, saying last week that he regarded it as a vote of confidence in the commercial health of News Corp.

'I am not losing any sleep about it. We are quite relaxed,' he said.

Under the new rights plan, however, shareholders would be eligible to buy heavily-discounted new News Corp shares if any party raised its holding beyond 15%.

The plan excludes a party boosting its stake beyond the 15% threshold, placing it at a significant disadvantage.

In effect, the defensive arrangement draws a line in the sand, enabling existing shareholders - including the Murdoch family - to acquire cheap new stock that would dilute the relative size of the shares held by the party that breached the 15% limit.

The News Corp spokesman admitted to reporters today that the group had not been told in advance of Liberty Media's intention to conduct its share-swap deal with Merrill.

News Corp is the most powerful media group in the world and controls a large number of newspapers in Australia and Britain, as well as significant television assets worldwide.

Murdoch has signalled that he wants the sprawling company to remain effectively within control of his family.

His sons Lachlan and James - the new head of BSkyB - have been lined up to continue the Murdoch influence.