Backlash at News Corp over listing switch

A rebellion of News Corp's Australian shareholders looked possible after it emerged yesterday that the planned move of the company's primary listing from that country to the US may remove it from a key Australian stock market index.

A rebellion of News Corp's Australian shareholders looked possible after it emerged yesterday that the planned move of the company's primary listing from that country to the US may remove it from a key Australian stock market index.

Australian fund managers feared that if News Corp was dropped from the benchmark S&P/ASX200 index, some shareholders would be forced to sell the shares as it no longer met their investment criteria.

Others said that, even if it remained in the index, changing the listing in Australia from a primary to a secondary quotation, would dramatically reduce the liquidity and weighting of News Corp shares traded in the country. The company currently has the largest weighting, at more than 7 per cent, in the benchmark Australian index.

The investor concerns could wreck Rupert Murdoch's grand plan to move the official corporate home and primary listing of his News Corp empire from his native Australia to the US, where most of the company's operations are now based. For the deal to be approved, it needs support from owners of 75 per cent of the shares voted and 50 per cent of the shareholders voting for each class of shares.

Some Australian fund managers suggested that the vote would be close. Lucinda Chan, of Macquarie Equities in Australia, said: "Fund managers who hold the stock are starting to think that if News Corp's main listing is not here, should they stay in the stock, and how long will it take for overseas investors to start buying."

News Corp shares were sold off yesterday in Australia, dropping 2 per cent, as investors reacted to a statement from Standard & Poor's that appeared to say the company could not be included in the index of more than one country.

A key reason cited by Mr Murdoch for making the move to the US was inclusion of News Corp in the country's key indices, including the S&P 500. This, Mr Murdoch said last week, would attract some of the US investors who have so far shunned News Corp shares.

A news report in the Australian Financial Review quoted the S&P index committee chairman David Blitzer as saying it would be highly unusual to allow News Corp to be part of the S&P 500 index in New York while remaining in Australia's S&P/ASX 200 index.

S&P later clarified the situation, stating that Mr Blitzer was talking generally, not about News Corp in particular. It said that no decision had been made about News Corp.

The agency said: "The Standard & Poor's Index Committee does not comment on the potential index treatment of individual companies. Any official announcement in relation to the index treatment of News Corp would be made via press release once shareholder and regulatory approval has been gained."

This means that shareholders would have to vote on the proposed change of primary listing and domicile without knowing how S&P would treat the Australian listing once the proposal is approved.

Lynn Cohn, at S&P in New York, said it was:"unusual but not unprecedented" for a company to be included in more than one country's index.