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News Corp. to acquire Elisabeth Murdoch's television production firm Shine

February 21, 2011 |  9:46 am

News Corp. on Monday announced that it had reached an agreement to buy Elisabeth Murdoch's London-based television production firm for nearly $674 million.

Rupert Murdoch said his daughter would join the News Corp. board as soon the deal closes, bringing to three the number of his children who are directors of the media conglomerate.  Murdoch's two sons, Lachlan and James, already serve on the board.  Elisabeth had been attending board meetings on an informal basis for more than a year.

News Corp.'s purchase of the Shine Group allows the company to get a piece of the European television production industry. That area of the business has become increasingly important as  production companies take successful reality-show formats and replicate them around the globe, creating some of the world's biggest hits. The acquisition of Shine also comes as News Corp. is trying to consolidate control over British Sky Broadcasting, which has sparked controversy in Britain.

"Shine has an outstanding creative team that has built a significant independent production company in major markets in very few years, and I look forward to them becoming an important part of our varied and large content creation activities,"  Rupert Murdoch said in a statement.

Murdoch, who turns 80 next month, has long been interested in welcoming back to the corporate fold his second-eldest daughter, whom insiders say is like her father with an entrepreneurial streak and an affinity for deals. Elisabeth Murdoch, 42, has spent the last 10 years building the Shine Group into one of Britain's largest independent TV production companies.

She quickly expanded Shine through acquisitions that have given it operations in France, Germany, Sweden, Norway, Australia, New Zealand and the U.S., along with a reputation as a leading producer of reality shows such as "MasterChef," "The Biggest Loser" and "One Born Every Minute."

Elisabeth Murdoch is expected to oversee Shine, but News Corp. did not specify whether she would play a larger operational role within the parent company. The Shine group will report to News Corp. chief operating officer Chase Carey.

Several factors weighed in favor of Elisabeth Murdoch's sale of Shine at this time. Minority shareholder Sony Pictures Entertainment has been looking to cash out, and Elisabeth was not interested in bringing aboard new partners that would dilute her stake. On top of that, the European television production industry is in a consolidation phase, and Shine has considerable debt and lacks the financial resources to amass its way up to the next level, the people said.

“In a rapidly consolidating global TV industry, this alliance uniquely provides the conditions in which Shine Group can continue to lead and prosper," Elisabeth Murdoch said in a statement. "News Corporation is the partner that enables us to maintain our aspiration to be best in class across all our sectors, and prepares and equips us for future growth. Shine shares News Corporation's long-standing belief in creative excellence and ambitious expansion. I could not be happier or more proud that from such modest beginnings Shine will join such an extraordinary group of companies." 

Elisabeth Murdoch owns 53% of Shine; Sony owns 20%; British Sky Broadcasting owns 13%, and a smattering of minority shareholders hold the remainder. After a slew of acquisitions, Shine's revenues have soared. In 2009, Shine reached revenue of more than $400 million, up from $38 million five years earlier. The most-recently reported annual profit was $45 million.

News Corp. said the two parties have signed a non-binding letter of intent and would now proceed to seek  regulatory approval for the transaction.

-- Meg James  

Photo of Elisabeth Murdoch and father Rupert Murdoch at last year's Cheltenham Horse Racing Festival in Cheltenham, England. Credit: Indigo/Getty Images