MURDOCH DRAWING INTEREST; MANY DEALS TURN TO GOLD : OUT OF THE SHADOW.

Byline: Dave McNary Daily News Staff Writer

June 11 was a vintage Rupert Murdoch kind of day, the kind that sets the Australian-born mogul apart from his rivals.

Not only did he make a $1.9 billion a deal to acquire Pat Robertson's Family Channel, he also reached a complex $1.1 billion agreement with a consortium of cable-television operators to swap his domestic direct-broadcast satellite assets in exchange for a 31 percent holding in the rival Primestar satellite service.

``Doing a lot of deals is pretty much the way he's always operated,'' said Gary Farber, an analyst with NatWest Securities.

In less than two weeks, Murdoch struck again. He agreed with cable giant Tele-Communications Inc. to buy 40 percent of Cablevision Systems' sports assets for $850 million in order to launch a national sports network on cable TV.

In the booming business of worldwide communications, no one is more analyzed - or more feared - than Rupert Keith Murdoch. Because so many of his deals have turned out to be winners, his moves are the subject of intense interest in the communications industry.

The goal of the Cablevision deal was relatively simple - to compete directly against Walt Disney Co.'s lucrative ESPN - but Murdoch's June 11 deals still have analysts buzzing. Were they a means to befriend cable companies so they will run his programming on their systems? A way to get out of the domestic direct broadcast satellite market entirely? A mechanism to get his programming on the cable systems with little resistance via the Family Channel? Or all of those reasons?

Ultimately, it's all speculation. Murdoch keeps his strategy - beyond the apparent overriding desire to grow revenues - a mystery.

``The strategic appeal is clearly on a long-term basis,'' Farber said. ``He's well ahead of the competition in most areas but it's usually unclear when the payoff is.''

The most consistent characteristic of a Murdoch deal is that he appears to acquire companies without hesitation, analysts say.

Murdoch, 66, promised during a late February meeting with investors and analysts - many of them frustrated over News Corp.'s dismal stock performance - that he had reformed from his gunslinger ways. He said News Corp.'s goal would be to cut debt and sell $800 million in assets.

``So he makes this great upbeat presentation and then at the end of it, we hear that he's going to make this massive investment in Echostar,'' recalls Arthur Rockwell, an analyst with Yaeger Capital Markets.

The Echostar deal, dubbed Death Star before it fell through in early May, was followed by a series of announcements of more acquisitions, including a possible $350 million purchase of the Los Angeles Dodgers. News Corp.'s stock price has taken a hit, down from the $21 range to about $18. It closed Tuesday at 19-1/4, up -3/8 from the previous day.

Despite Wall Street's dissatisfaction with News Corp., no one is especially alarmed. No one expects Murdoch to repeat his 1990-91 dance with financial death, when a faltering economy and News Corp.'s three decades of free spending nearly killed his company.

``He keeps Wall Street just happy enough to keep doing deals without losing the investment-grade rating on the debt,'' Rockwell said.

Some trace Murdoch's drive to an event 16 years before he was born in Melbourne, Australia. His father, Sir Keith Murdoch, became a national hero in 1915 after breaking a sensational, if somewhat exaggerated, story about British officers' incompetence leading to massacres of heroic Australian and New Zealand troops at Gallipoli against the Turks.

``Some people live forever in the shadow of distinguished fathers. Rupert was always determined that he would cast the longer shadow,'' Murdoch associate Larry Lamb once said.

Starting in 1953 with a meager inheritance, the failing Adelaide News, Murdoch has become one of the single most prominent businessmen of the late 20th century. As the global Information Age accelerates, Murdoch owns 31 percent of News Corp., which carries an asset value approaching $25 billion.

``He wants to own the world. Everything he sees for sale, he wants to buy,'' said Australian newspaper executive John D'Arcy after being fired in 1988 by Murdoch.

Murdoch's purchases have made News Corp. the world's largest newspaper publisher. It also owns dozens of magazines, the Fox Network, 20th Century Fox, 22 U.S. television stations, nine regional sports networks, several national cable and foreign satellite networks, and HarperCollins Publishing. Two Fox series, ``The Simpsons'' and ``The X-Files,'' recently won the prestigious Peabody Award for excellence in broadcasting - a first for the network.

Along the way, Murdoch management of News Corp. has reacted to changing circumstances far faster than rivals. Often, deals in which he appeared to overpay in the short term turned out to be bargains over the longer term.

Against the status quo 

There's more to Murdoch's success than buying at the right price. He has exhibited a willingness to upset the status quo, most evident in starting the Fox Network a decade ago with raunchy comedy programs like ``Married With Children,'' reality-entertainment shows like ``America's Most Wanted'' and offbeat offerings like ``The Simpsons.''

``If you're a spoiler, why not come in with your elbows swinging?'' asked retail consultant Frederick Marx of Marx Layne Management.

``The key with the Fox Network has always been that they're not a traditional player and that any disruption will shake loose fruit from the tree,'' Marx said. ``Here's this company that came from nowhere, headed by this guy from the frontier of the world who does not come off as very privileged, and they're rewriting the book on communications with sheer irreverence.''

As far-flung and massive as News Corp. is, analysts believe Murdoch generally operates the disparate parts effectively, much more so than rivals, because its strategies make sense on a long-term basis. Former managers say Murdoch's techniques, described by one as ``calculated terror,'' can include brutal tongue-lashings, unexpected appearances and months of no communication.

``News Corp. does messy things but, by and large, it's a well-run company,'' Rockwell observed.

Murdoch has given no hint of retiring and it's still unclear what kind of legacy he'll leave. Three of his four children - James, Lachlan and Elizabeth, all in their 20s - work for him. Lachlan, 25, is viewed as the front-running successor and was recently named chairman of the Australian arm of News Corp.

An empire begins

Murdoch grew up quickly. His father's debts forced the family to sell off the Brisbane Courier-Mail, leaving only the Adelaide News for Rupert to run when he returned from Oxford University and began what he once called ``a life of constant calculated risks.''

By 1960 he owned the rival Adelaide paper as well as papers in Perth and in hyper-competitive Sydney - markets he conquered with a combination of intense promotion, deep cleavage and screaming headlines (``Leper Rapes Virgin, Gives Birth to Monster Baby,'' ``Whipping For Husband - Wife's Rage'').

By the end of the 1960s, Murdoch had begun operations in Britain by taking over the Sun and the News of the World. He then invaded the United States in 1973 by buying two papers in San Antonio, followed by starting the tabloid National Star, which later became the Star. In each case, Murdoch followed the same formula: lurid sex and crime stories coupled with severe internal cost-cutting.

There were also moves into more prestigious publications, such as buying the Times of London and starting the Australian, that nation's first national paper. But the massive profits from tabloid journalism were what fueled News Corp.'s growth and enabled Murdoch to make the crossover into broadcasting in the mid-1980s.

He gained a reputation as tough and charming with no hesitancy to take on a fight and usually winning no matter what the odds - whether for control of assets or opposing liberal politicians. (Columnists at his Boston Herald-American often referred to Sen. Edward Kennedy as ``fatso'' or ``the fat rich kid.'')

``My past,'' Murdoch has said, ``consists of a series of interlocking battles.''

Ultimately, though, he is a pragmatist, able to do whatever it takes in pursuit of a long-term strategic goal. ``When political principle and business expediency clash, you can be pretty sure expediency will win,'' wrote former Sunday Times Editor Andrew Neil.

Never was this clearer than in 1985 when he renounced his Australian citizenship and became an American citizen in order to continue ownership of the TV stations he had recently acquired for $2 billion from John Kluge. The stations would become the cornerstone of the Fox Network when it relaunched two years later.

Andrew Schwartzman, president of the Media Access Project, who is concerned about News Corp.'s growing array of media assets, is nonetheless impressed with Murdoch's business bravado. ``He is unquestionably more gutsy than anyone in the media business. It's hard not to admire him in an abstract kind of way,'' Schwartzman said.

Mellowing with age?

One might easily conclude that Murdoch's deal with Primestar - owned by his longtime adversaries, the nation's major cable operators - indicates that he may be mellowing. That seems unlikely, given a recent example of the bare-knuckles Murdoch style.

In late January Fox shifted telecasts of the Clippers, Mighty Ducks and Dodgers from Fox Sports West to its new Fox Sports West 2. Most cable operators didn't offer the new cable channel because Fox was charging them an extra fee for it, effectively putting three Southern California teams out of the reach of most cable subscribers.

Fox urged fans in TV commercials and newspaper ads to call cable operators to include the new channel. Disney filed suit in February to force the Ducks telecasts back to Fox Sports West but lost in court.

Cable operators were infuriated but eventually fell into line. By early June, deals had been signed for Fox Sports West 2 to be carried in 2 million of the region's 3.1 million cable homes. News Corp.'s expected purchase of the Dodgers may have been a powerful incentive for the cable companies to sign up since striking a deal may be more expensive once Murdoch controls the Dodgers.

For now, Rockwell said, Murdoch's major underlying goal is to get maximum value from his brands - whether newspapers, TV networks, book publishers or the movie studio - by making them dominant players in their business, particularly in overseas markets. ``He knows, like Ted Turner knows, that content is king and eventually an acquisition like the Dodgers will pay off,'' he said.

20th Century Fox is a key example in this strategy. It has taken the lead among studios in shunning midbudget movies in favor of more expensive, but potentially much more profitable, projects like ``Independence Day,'' which generated worldwide profits of about $400 million.

``The studio is only going after the big stuff,'' Rockwell said. ``They've realized that you really need to create franchises, like `Batman' or `Jurassic Park,' and you need products you can exploit on an international basis.''

The strategy worked well for ``Independence Day'' but has faltered with ``Volcano'' and ``Speed 2'' likely to be highly unprofitable. It's no coincidence that Fox is the key backer of ``Titanic,'' already the most expensive movie of all time. Even with Paramount kicking in $65 million for the domestic rights, Fox is on the hook for at least $120 million more for just the foreign rights.

To be profitable for News Corp., ``Titanic'' will have to gross an estimated quarter of a billion dollars in overseas markets - a long shot but certainly not impossible. And ultimately, ``Titanic'' reflects the same sort of gamble Murdoch is making in setting up global satellite TV networks, betting that cultures in Asia, South America and Europe can't get enough of American entertainment.

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PHOTO Rupert Murdoch

Has the Midas touch