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Tax Office investigating Lachlan Murdoch’s Nova radio assets

Sam Buckingham-JonesMedia and marketing reporter
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The Australian Taxation Office is auditing billionaire Lachlan Murdoch’s Nova Entertainment companies, the complex group of Australian and UK-based entities that run the highly profitable Nova and SmoothFM radio brands.

New documents filed with Australia’s corporate regulator reveal various Nova Entertainment companies have spent hundreds of thousands of dollars on “tax compliance and advisory services” from PwC. This is on top of paying for routine audit work.

Lachlan Murdoch pocketed $35 million from his investment in radio network Nova.  Dean Sewell

“Certain companies in the group are currently subject to an ATO audit,” one of the entities noted as part of its contingent liability disclosures. “At this stage it is not practicable to estimate a possible cash outflow, if any.”

Mr Murdoch, the chairman of News Corp and executive chairman of Fox Corporation (the owner of Fox News), controls Nova Entertainment through his personal investment company, Illyria Nominees Television.

It is chaired by his close adviser, Siobhan McKenna, who also chairs News Corp-controlled Foxtel and Australia Post. Mr Murdoch is good friends with Nova presenter Michael “Wippa” Wipfli.

But Mr Murdoch’s ultimate ownership of the Nova group is complicated; he paid about $112 million to buy half the business from the Daily Mail and General Trust in 2009, and took full control in 2012 for a reported $100 million.

The main corporate vehicle for the radio assets is Nova Entertainment (Australia), which is a subsidiary of Nova Entertainment Radio Investments. Those two companies paid more than $650,000 to PwC for tax compliance services, and a further $350,000 for audit services, over the past two years.

The Tax Office said it could not “comment on tax affairs of any individual or entity due to our obligations of confidentiality and privacy under the law”. A spokesman for Mr Murdoch confirmed the companies were being audited.

“In 2009, Lachlan’s companies bought a half share in what became Nova from the UK-based DMG. In 2012, he bought the remaining 50 per cent. So, some Nova assets remained owned and pay tax in the UK,” he said.

“It is not unusual for large companies to be subject to an ATO audit, particularly when assets are owned in Australia and the UK.”

Nova declined to comment.

The Nova and SmoothFM brands have not been immune from a pullback in advertising. Nova Entertainment reported $185.9 million in revenue in 2023, from $194.3 million in 2022.

But at the same time, Nova kept costs largely in check, with almost all categories – production, advertising and promotion, employee benefits – falling year-on-year. Nova’s annual profit was $27.9 million, up 14 per cent. It paid $6.4 million in income tax last year.

Nova Entertainment (Australia) declared a $35 million dividend for the second year in a row, which followed two pandemic-affected years in which it withheld shareholder returns. It loaned $108.4 million to Nova Entertainment Radio Investments interest-free, extending this to May 2031.

Meanwhile, those two entities paid a combined $20.4 million in “exclusive use agreements” in 2023 to three UK-based companies, Nova Entertainment (UK Radio 1), Nova Entertainment (UK Radio 2) and Nova Entertainment (UK Radio 3).

Those vehicles paid the UK’s current 24 per cent tax rate, then funnelled their dividends to parent Nova Entertainment Investments Limited, also based in the UK.

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