News Corp braced for $5bn US TV group purchase

News Corporation, the media group headed by Rupert Murdoch, will today seek a massive expansion of its US television empire with a $5bn bid for Chris-Craft Industries, the US TV group.

News Corporation, the media group headed by Rupert Murdoch, will today seek a massive expansion of its US television empire with a $5bn bid for Chris-Craft Industries, the US TV group.

News Corp insiders yesterday said the group will offer $85 per share for Chris-Craft, a 37 per cent premium on Friday's closing price of $62. It is understood that about 40 per cent of the consideration will be in cash, with the remainder in the form of News Corp American Depositary Receipts.

The deal will lift the number of television stations in News Corp's US portfolio, centred on the Fox Entertainment Group, from 22 to 32.

The bid comes in the wake of a relaxation of the rules on broadcasting ownership in the US, which means broadcasters can own two stations in the same market.

However, the purchase will lift News Corp's share of the US television audience over the maximum 35 per cent allowed, forcing Mr Murdoch to sell some of his smaller franchises.

It strengthens Mr Murdoch's hand in New York, Los Angeles and Phoenix, where the group expects to reap cost savings from synergies with its existing stations. It also takes News Corp into the television markets of San Francisco, Baltimore and San Antonio. Over three quarters of News Corp's sales already come from the US.

Most of Chris-Craft's stations are within United Television, a company 59 per cent owned by Chris-Craft subsidiary BHC Communications.

The Chris-Craft deal will give News Corp a station in New York affiliated to rival Viacom. Talks between Chris-Craft and Viacom collapsed on Friday night. Viacom owns Paramount Studios, MTV and the CBS Network and United Paramount Networks (UPN).

It is thought that Sumner Redstone, Viacom's chief executive, pulled out of talks late on Friday in a dispute over the price that Herbert Siegel, his counterpart at Chris-Craft, was demanding.

Chris-Craft recently sold its 50 per cent stake in loss-making UPN to Viacom, which already owned the other half.

Rupert Murdoch's ambitions for his global television and satellite network are set to come under scrutiny when News Corp unveils full-year results this Thursday.

In June Mr Murdoch published the prospectus for one of the largest media floats in history, with the proposed creation of Sky Global Networks, which comprises his various satellite interests and is to be spun off in October.

News Corp describes Sky Global as a platform to distribute pay television, data and internet services to over 85 million homes. One of its key components will be BSkyB, the British satellite TV network.

News Corporation shares closed at A$21.3 on Friday, valuing the business at A$83.6bn.