In 1979, the peaceful nature of the Australian media industry changed forever. On 17 November of that year, Rupert Murdoch and one of his directors, Ken May, called on Keith Macpherson in Flinders St and advised him that News Ltd was making a takeover bid for the Herald & Weekly Times on the stockmarket that day. When the market opened, Murdoch bid $4 a share. The shares the previous day had closed at $2.70. Murdoch made it known he was looking for 50% of the 63 million HWT shares on issue.

Potter Partners were representing the HWT and they acted for John Fairfax and Queensland Press as a defensive measure against Murdoch’s offer, which was managed by JB Were. It was an unbelievable day, with millions of shares changing hands. The buying by News Ltd, or Murdoch, only lasted the one day, and when Murdoch realised that he had no chance of acquiring a controlling interest in the company, he made a very smart move.

Although JB Were had bought all his shares, Murdoch asked stockbroker May & Mellor to do the selling. News Ltd, through Were’s, had purchased about 3.5 million shares on 19 November 1979. On the following day, John May was charged with the duty of getting rid of these shares. Just before he died in late 2000, I had a conversation with John May at Moonee Valley Racecourse over a quiet drink and he recalled the incredible realisation by Murdoch of about $3 million profit. He told a lovely story about ringing a broker at Potter’s and offering him a million shares at a couple of cents higher than the Potter offer, which was legally necessary. I think Potters at that stage were offering about $5.50 and John May said he could have the shares for $5.52. The Potter man took the first million. Half an hour later, May rang again and said he had another million and he got rid of those, and in the same day he unloaded the 3.5 million shares that Murdoch had bought the previous day at a much higher price. Murdoch withdrew the offer at 11.30am on 20 November, and the shares then moved back to $3.75.

All in all, 13 million shares were traded over that period, with Potter’s leading the surge. Fairfax purchased 9.5 million shares, which cost them $50 million and represented 14.9% of the issued capital of HWT. Queensland Press, which had already owned 8.4%, purchased in excess of another 4 million shares at a cost of $20 million, taking them also up to the allowable limit of 14.9% of the issued capital.

CRIKEY: Haven’t we come a long way since those cowboy days? It seems our Rupert always took the corporate governance low road. Fancy lobbing a bid on the table, artificially inflating the HWT’s share price, then secretly dumping the stock through another broker and turning a $3 million profit in just three days. Suffice to say, such duplicity is illegal these days.