Murdoch Hedges Bets On Fox IPO

On his last day as chairman of the Board of Governors of the Federal Reserve System, Alan Greenspan presides over his final Federal Open Market Committee meeting at the Fed's headquarters in Washington, Tuesday, Jan.
AP
Another company with plans for a big upcoming IPO hedges its bets as media mogul Rupert Murdoch says Fox Entertainment Group will make its Wall Street debut "as soon as the market settles."

Speaking at News Corp.'s (NWS) annual shareholder meeting in Australia, Murdoch said he expected the broadcasting and filmed programming unit of News Corp. to record another "bullish" year in 1999.

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News Corp.'s (NWS)
For its fiscal 1998, which ended in June, the company had a very impressive year, due largely to the overwhelming success of its Titanic movie, the biggest-grossing flick ever. Fox's fiscal 1999 has been another winner so far, with strong performances from Dr. Doolittle and X-Files (released late in fiscal 1998) and There's Something About Mary.

News Corp., which originally said it would sell up to 20 percent of Fox to the public, plans on selling 13.4 percent of the unit, according to a recent filing with the Securities & Exchange Commission. The company has not yet set how many shares it expects to sell or at what price, but the deal is expected to be one of the biggest IPOs of the year.

So far, large IPOs have had a tough time being completed in 1998. Offerings from Goldman Sachs and Tropicana Products, two large deals that were expected to even top Lucent Technologies' (LU) $3.0 billion 1996 IPO as the biggest ever from a U.S. company, never happened. Goldman called its deal off due to the turbulent market, while Seagram decided to sell its Tropicana juice unit to PepsiCo instead of to the public.

Even big deals that made it out have had a tough go of it. Uranium-enrichment producer USEC (USU) is the only U.S.-based company to raise more than $1 billion that has seen its stock rise from its offering price. Equipment leaser Heller Financial (HF) is off 30 percent while trash collector Republic Services (RSG) has fallen 31 percent.

In a volatile and uncertain market, however, bigger IPOs may have a better chance getting done since they provide investors a bit more liquidity and stability than smaller deals, NationsBac Montgomery Securities syndicate manager Richard Smith said on Monday.

That's certainly what DuPont (DD) is banking on. The chemical giant is spinning off its oil unit Conoco in a gigantic deal expected to come next week. According to the company's IPO filing, Conoco hopes to raise between $3.0 billion and $3.6 billion, which will be used to repay debt owed to DuPont. Morgan Stanley Dean Witter is the lead underwriter.

Conoco management was in New York Tuesday, making the rounds on its pre-IPO road show, a series of presentations given to prospective institutional investors, according to Kathleen Smith, portfolio manager of Renaissance Capital's IPO Fund (IPOSX).

Greenwich, Conn.-based Renaissance has picked Conoco as its IPO Pick of Week.

Theglobe.com is another IPO gearing up to make its Wall Street debut. The provider of home pages on the Web is looking to sell 3.1 million shares at $11 to $13 each. Bear. Stearns is the lead manager on the deal. "The timing may not be too bad given how GeoCities traded [Monday], " Smith said. "But we're still in cautious territory."

On Tuesday, shares of GeoCities (GCTY) dropped 1 5/8 to 18 7/16, about 9 percent above the offering price but more than 63 percent below its high reached only one day after the Santa Monica, Calif. company went public in August.

Written By Darren Chervitz