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Rupert Murdoch’s News Corp. invested $30 million (AUD) in a set of cow and chicken farms part-owned by one of its longtime board members, but didn’t disclose the deal to investors, according to Australian press reports and the company’s annual reports.We asked News Corp.’s investor relations team for comment. We’ll update this story if they get back to us.
The ostensible purpose of the deal — which on its face was far from the core advertising media business of News — was to end farming on the land and thus create carbon credits based on the forest that would grow back in its place. The credits could be sold to other companies to make News more environmentally friendly.
But the deal went sour after the Australian farm company’s managing director was ousted, and doubts arose that the company interested in the carbon credits would go through with the deal. Also, neighbouring farmers expressed worries that new forest on the land might cause fires or lead to a plague of rabbits.
News Corp. gave a unit of R.M. Williams $30 million (AUS) in return for a 26 per cent stake in three cattle stations and a poultry concern in the outback, according to the Australian Financial Review. The owner and chairman of R.M. Williams is Ken Cowley, a longtime board member of News and a confidante of Murdoch.
Although transactions with “related parties” are supposed to be disclosed, News Corp.’s annual reports for 2009, 2010 and 2011 make no mention of the deal. It’s not clear why the disclosure wasn’t made, as News routinely discloses plenty of other related party deals with Murdoch family members and other insiders. One possible theory is that $30 million Australian (about $28.5 million U.S.) is so small that it’s not “material” (meaning financially big enough) to show up in News’ accounts.
The deal does not appear to be going smoothly. The managing director of the R.M. Williams unit, David Pearse, was ousted from the company in September of this year, according to the Australian Financial Review.
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