Murdoch set to price share issue

Rupert Murdoch was last night poised to proceed with his controversial pounds 1bn-plus preference share issue, convertible into shares of BSkyB, his 40-per-cent-owned UK satellite broadcaster.

Dealers were expecting the issue to be priced late last night, following the close of the market in New York.

Meanwhile, it emerged last night that Granada, the media company with an 11 per cent stake in BSkyB, was also considering ways of converting its shares into cash, as part of its attempts to reduce debt following its pounds 3.9bn takeover of Forte this year.

A Granada insider said: "We are looking at ways to mortgage the BSkyB stake, but no decision has yet been taken."

Mr Murdoch's convertible issue, which was originally pitched last week, had to be delayed when it became clear that it coincided with a "close period" just in advance of BSkyB's quarterly results, released last Friday.

Mr Murdoch's News America Holdings, which is issuing the convertible shares, will retain the right to pay converting shareholders in cash after five years if he decides to avoid diluting his stake.

At last night's price of 547p, down 22p on the day, the preference share issue would be convertible into about 10 per cent of BSkyB, or a quarter of Mr Murdoch's total stake. The proceeds are aimed at bolstering News Corporation's development of digital television, particularly in the US.

The issue, news of which has helped send BSkyB shares sharply lower in recent days, was seen by media analysts as proof that Mr Murdoch did not expect the stock to increase further in the medium term, following its rapid rise since the beginning of the year. His decision to raise money on the strength of the stake reminded the City of his issue of shares convertible into Pearson, the media conglomerate, in the early 1990s.

The preference shares, which are to carry a coupon of about 5 per cent, can be converted after five years. They will be marketing in the US, with Merrill Lynch as sole agent.