Tuesday, July 19, 2011

New Corp

Well, the Murdochs came out well didn't they ?

First of all they turned up and dealt good naturedly with Parliament's serious inabilities to cope with basic security (your resignation, Mr Brecow ?). Secondly they acted with what seemed to pass as genuine contrition and ignorance (which is more worrying for shareholders than the authorities - who is looking after the detail at this company ?).

James played a blinder, in a preppy, jargonistic kind of way, and his interjections to defend his rather belligerent, grandfatherly CEO and Chairman (oh, and father..) was almost touching. The share price is up 7% as I write.

And Wendi's modest wardrobe and impressive counter-offensive against the custard pie demonstrator were exemplary - perhaps James with his karate black belt should have moved quicker - maybe she's the biggest chip off the old block.

But perhaps the most telling part of all of this for me has been the coverage by Sky News and The Times. It has been critical and probing and something Murdoch should justifiably be proud of.

Murdoch senior himself looked and often acted all of his eighty years (and the banging on the table perhaps belied his more usual management style). He has been a giant of the media world for all of our lives, but we are in a new age, the age where young dot com owners are the denziens of the media, not wannabe owners of regional newspapers leveraging TV assets. He may still have the capabilities of an Executive Chairman, but CEOs need to be able to delve into extreme detail, even at the largest of companies.

One of the most extraordinary conclusions for anyone reading Michael Wolff's excellent Murdoch biography The Man Who Owns The News is that, despite being one of the world's biggest TV moguls, Murdoch is really only interested in two things - newspapers and politics, and everything else is only there to pay for that (read: TV and film). His decision to go after Dow Jones and the Wall Street Journal at the price of DirecTV shows how ill founded this strategy may turn out to be.

This said, there's a lot about NewsCorp that is problematic: share structures that disenfranchise the majority of shareholders should not, in my opinion, be allowed, despite being common elsewhere; family companies are fine if you're laying carpet, but wholly inappropriate for public companies (even if your progeny are as brilliant as Murdoch's); at NewsCorp shareholders have long indulged a brilliant deal maker in the face of any real coherent strategy and are culpable; finally, there's the future - NewsCorp has no real digital strategy in the way that, say, Comcast has, and its perceived strategy (well perceived by me) to roll up a global quad play business based on satellite has now come off the rails. For the time being at least...

Rarely do multinationals come under the spotlight in this kind of way - it happened to BP in the US recently, and there are many, many companies who do far worse things on a day to day basis than NewsCorp and are never held to account in any way (usually because they employ corrupt politicians - see the Bush regime for ultimate examples).

The only difference here is influence, and Murdoch has built a career by building political influence by using his newspapers. And vice versa. The buck now stops with David Cameron, who has yet to pay his price for this affair where his culpability is both wide and deep. I suspect he will never recover from this affair whilst the Murdochs carry on to the next generation..