Family ownership hindered News Corps’ ability to choose its own destiny, as a company

So James Murdoch is to be retained as head of BSkyB. If you missed Simon Jenkins on the matter on Newsnight last night, try Alison Smith in the FT this morning

As for BSkyB, the case for refreshing the board is compelling and goes well beyond the position of James Murdoch, newly bolstered as chairman. It has been for a long time. The enduring thought that Rupert Murdoch’s News Corp would buy the outstanding 60.9 per cent stake undoubtedly hindered the group’s ability to behave like a company without this destiny before it. The removal of that prospect in the immediate future should make it easier for the broadcaster to join the corporate mainstream.

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  • Independent Ulster

    Mr Murdoch and his son did not get where they are today without stepping on a few toes(and as is alleged, eavesdropping on a few conversations.) and of course actually opting out of the ‘corporate mainstream’.

    They have built up a brilliant and innovative company which has revolutionised the print and broadcast media and it is to be expected that now that they find themselves in more difficult times, albeit of their own making, many will take the opportunity to tell us that they have got it all wrong.

    The direction the company takes now may well be determined by the courts rather than the trading environment and that will probably dictate if there are to be any moves towards the ‘corporate mainstream’.

  • pippakin

    Perhaps the Murdochs are discovering that they were not liked they were feared. I wonder how many friends they have now.

    I don’t think the Murdochs are fit owners of Sky, particularly Sky News but then I have always thought that.

    The question is why do so many people think that? If its because our politics is the opposite of theirs then that’s not good enough.

  • Simon Jenkins as I recall was making two distinct points (from my recollection).
    One was that Journalism was over-doing the story and there were bigger issues (Famine and the collapse of the European and american economies) and that there was too much sackcloth and ashes. Coming from a lot of other journos this would seem self-serving but Jenkins is a serious journalist to whom serious people should listen.

    The second point was the “shareholder” thing and the Murdochs do seem to be in a difficult spot. MONEY might yet be the key to this. A Chairman/Chief Exec is in the business of making money for shareholders.
    People and Pension Funds who thought they were “quids in” have been bitten and those City types are unforgiving.

    But Pippakin perhaps calls it exactly right …the Murdochs have lost the “fear” factor. THEY are the folks who look scared. Its that Ceausescu Moment.

  • Independent Ulster


    You say

    “Perhaps the Murdochs are discovering that they were not liked they were feared. I wonder how many friends they have now.”

    As long as they have the viewing rights to Premiership football they will be ok for friends particulalry in Asia.

  • pippakin


    Oh Sky is safe enough. The question really is will the Murdochs keep control of it. At their level the corporate world is very small. If they do and I suspect they will it will have cost them and Murdoch senior has been known to bear grudges…

    I hope their power and the power of any successor/s will be contained by increased power to the PCC and OFFCOM.

  • Stu DeNimm

    I take it this means our host here will not be passing management of the Slugger O’Toole media fortune down to his heirs.

  • What doesn’t go away is the News Corp financing.

    Bloomberg quote News Corp as carrying $15½ billion — yes, billion — in long-term borrowing. Put that alongside growing doubts of Murdoch’s abilities — coughing up $5.6billion for the Dow Jones deal and the meagre return to Class A shareholders (over the last decade just 3/10ths of the return in unadventurous Treasury bills).

    The mushroom growth of News Corp has been at the expense of everything else. That empire building has now been severely checked. At some point comes the retreat from empire, which in itself might not be bad for shareholders. Were, for example, all parts of the News Corp empire, including 20th Century Fox, but especially the print operations, to be sloughed off, and the focus to be exclusively on TV, the A-shares would still be worth above $14 (the current value is just over $16).

    Those A-shares are down over 10% in July. Some $5billion of the $11+billion notionally released by the failure of the BSkyB purchase is being used to pay down stock market debt — and so support the share-price. That, in itself, may not entirely be a panic measure; but it’s certainly not a company’s vote of confidence in its own growth potential.

    I’m not up to date, but I recall in mid-July S&P were threatening to downgrade News Corp’s BBB+ rating, while the cost of insuring against News Corp’s default had risen sharply (from 84 to 142 base points). Yes, all corporations have suffered a degree of uncertainty, thanks to Speaker Boehner and his motley crew; but News Corp’s ratings have fallen at least four times further than their obvious comparators (e.g. Disney).

    News Corp isn’t going to fold in any immediate prospect. Even so, when its officers have repeatedly to affirm how stable the organisation is, the immortal dictum of Mandy Rice-Davies comes to mind.