This week I had what must be a unique experience in the current maelstrom surrounding the Murdoch empire: I was in New York and I was interviewed for Sky TV, the company Murdoch’s News Corp was bidding for, in the midst of News Corp’s Fox News newsroom in New York. It was a strange experience to be interviewed in the epicentre of the Murdoch news business in New York by the UK company he controls and was trying to buy. The way the interview went seemed to me to indicate much of what is wrong in this situation.
When I arrived, the News Corp building in Midtown was under siege from TV crews and reporters. News Corp has clearly committed the mistake of itself becoming the story which it has to report on.
The interviewer from Sky demonstrated a blatant pro Murdoch bias.
I posed the question to her that I am the CEO of a public company. If I had indulged in the following:
1. Paid >$500m for MySpace and then sold it for $35m;
2. Paid $5.7bn for Dow Jones and written off $2.8bn;
3. Paid $615m for my daughter's business;
5. My company’s shares had underperformed for 15 years;
6. And some of my staff had engaged in criminal phone hacking and bribing Police officers and this had been covered up by my management.
I think the shareholders would have had me fired.
So I asked, why hasn't Murdoch been fired?
The answer of course is that nobody can fire Rupert Murdoch because the Murdoch’s control News Corp through differential voting rights: the Murdoch’s own 40% of the B voting shares. The much more numerous A shares have no votes, so the Murdoch’s are able to control a company in which they own only 13% of the issued share capital.
My responses about the Murdoch situation were clearly not what the Sky interviewer was expecting or wanted to hear. She mounted a defence of Rupert Murdoch’s achievements in building a ‘big empire’. The word ‘empire’ was a Freudian slip. I reminded her of a remark I made some years ago** when Jean-Marie Messier was in the midst of his ultimately disastrous acquisition spree to turn French water company Vivendi into a media empire, Vivendi Universal: children can construct quite big and complex structures in Lego, but that does not make them a good business. To be that they need to generate, for example, a decent return on capital - something which News Corp, like Vivendi, has failed to do.
The interviewer ended by cutting me off after she said she would like to take me through the achievements of James Murdoch and Elisabeth Murdoch. I would have welcomed that debate on live TV, especially in light of Elisabeth Murdoch’s recent achievement in getting the company her father controls to pay $615m for her business, largely with other people’s money. The fact that the interviewer, who works for Sky where James Murdoch is Chairman, thought she was capable of any objectivity on this subject not only beggars belief, it also shows how pervasive and pernicious the influence of the Murdoch’s had become. This situation has to change.
As well as the outside shareholders in News Corp wondering why they should support the Murdoch’s control of that company when they own just 13% of the equity, surely the shareholders in Sky should be asking whether James Murdoch should remain as Chairman?
*With apologies to Indiana Jones
** See “The Man Who Tried to Buy the World; Jean-Marie Messier and Vivendi Universal” by Jo Johnson and Martin Orange, ISBN-10: 159184018X