The global tax return


Murdoch's global business gives key roles to low-tax countries, including the Dutch Antilles, Hong Kong and the Cayman Islands.

Murdoch's giant 20th Century Fox Films directs much of its profit flow through the Cayman Islands.

To judge the success of these strategies, you've only to compare the tax paid by the Murdoch flagship, News Corp, with the tax paid by its peers.

Paul Farhi says in the most recent fiscal year reported, Murdoch's company, News Corp, paid taxes at a rate of 7.8 per cent on operating income.

He says that compares with companies like Walt Disney which had a tax rate of about 28 per cent, Viacom, which owns MTV and Paramount Pictures, paid 22 per cent; Time-Warner, a US-based company that is about the same size as News Corp, paid at about a 17 per cent rate.

"This was not an unusual year for News Corp in terms of its taxation, in fact if anything it was a high year," Farhi says .

Farhi says throughout the 1990s the company averaged about 5.7 per cent taxation on its operating income, and the other three companies, averaged anywhere from about 27 per cent to more than 32 per cent.

"So he is clearly way, way under his peer group," Farhi says.

Murdoch's success in minimising his worldwide tax bill means more ready cash to service debt, and more to grow new business.

Ironically, investment hungry governments sometimes encourage those new ventures by offering tax breaks.

For example, the New South Wales Government is lightening Murdoch's tax load by $7 million to aid the Fox Studios developments at the Sydney Showground.

Wall St celebrates Murdoch's birthday

Recently, Rupert Murdoch turned 67, and Wall Street celebrated with a record day of trade in his shares.

After years out in the cold, he's come of age in the US market. In the last half year alone, his share price has doubled.

Paul Farhi explains why Murdoch's stocks are so high:

"Following his brush with bankruptcy back in 1990 during the recession in which he was over-leveraged because of his investments in Sky Television in Great Britain, Rupert has restructured a lot of his debts, stretched out the payments over a longer period of time; his businesses are growing very handsomely and very strongly.

"He's also a brilliant entrepreneur who senses opportunity probably better than any other company or set of executives, and he's been able to find great investment, smart ideas and his profits are beginning to roll in after years and years of building this company bit by bit.

"So it's a reflection of the fact that Rupert is an outstanding businessman, and he happens to be in not only the most glamorous businesses around, but some of the fastest growing businesses as well."

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