Rupert watch - signaling the end
Rupert watch - signaling the end
By Michael Collins
From The Agonist
Rupert Murdoch's reign over the $33 billion News Corporation hinges on events surrounding the company's ownership share of Britain's dominant pay TV network, BSkyB (Sky). As Business Insider [1] said, "it's the only asset that really matters" in the News Corp collection of media properties.
As a result of Murdoch scandals, News Corp lost the chance to buy 100% of Sky's shares. More troubling for the media monarch, the company may lose the 39% interest it already holds if British regulators determine that Murdoch is not a fit and proper owner. This would fuel the major News Corp shareholder suits in Delaware [2] and New York that seek to remove Murdoch as board chairman and vastly diminish his power and that of his family and cronies.
Sky reaches 25 million viewers in 10 million homes. Revenues are growing at 10% a year with adjusted operating profit growth averaging around 16% of revenues (see 2009 through 2011 [3]). Revenues from 2012 through 2016 should top $70 billion total with adjusted operating profits around $11 billion. What happens with Sky really matters.
Despite this success, Murdoch's son James recently stepped down as chairman of the board at Sky. At the same time, News Corporation announced it would no longer seek to acquire the remaining 61% of the public limited company. Murdoch is in full retreat from his most successful venture.
Imagine how the pension fund managers and beneficiaries must feel right now. Less than a year ago, their News Corp stock was poised for a strong boost when the company increased its 39% share to 100% ownership of Sky. That's over. The failure to acquire the remaining 61% means a loss of $7 billion worth of expected profits over a five year period. That income is gone but not soon forgotten.
Announcing the withdrawal of its bid, News Corp said it was not possible [4] to conclude the Sky deal "in the current climate." What they left out was a definition of current climate. That climate is characterized by an endless series of storms in the form of legal scandals relating to phone hacking, undue political influence, police payoffs, and, most recently, alleged organized hacking and piracy of security codes from pay TV rivals.
Here's what the Murdoch scandals cost News Corp. (see graph, assumptions [5])
[center]
[/center]
A little history
Just as British Prime Minister David Cameron was greasing the regulatory skids for Murdoch's total acquisition of Sky, Nick Davies [6] of the Guardian broke the Millie Dowler story of rampant phone hacking by Murdoch's flagship British Tabloid, News of the World.
The public outrage was instant and enduring. Normally compliant with Murdoch's wishes and whims, British Members of Parliament actually took action. One focus was Murdoch's pending acquisition of Sky shares. The News Corp friendly review process was revised. The British regulatory agency, Ofcom [7], is still determining if Murdoch is a "fit and proper" owner of a public media property. With the flood of scandals, time is Murdoch's enemy.
When Murdoch realized that PM Cameron wasn't able to deliver on the Sky acquisition, he turned on the leader that he'd help elect. Murdoch's Times of London set up a sting [8] of a Conservative Party fund raiser who admitted that large contributions to Cameron's party would gain access and favorable treatment for contributors. This is hardly news to Murdoch. It won’t do him any good with PM Cameron who will no doubt look for an opportunity to return the favor.
The remaining 39% of Sky at risk
As the Wehrmacht retreated from Stalingrad losing almost every battle, deluded Germans tried to comfort themselves with the knowledge that there was still a homeland and a chance to turn things around. Murdoch, his family and cronies are approaching their endgame with similar delusions. That won't change the hard facts that anyone paying attention can see clearly.
The new profits anticipated from the Sky acquisition will not materialize. Murdoch realized that the deck was stacked against him with Ofcom. He withdrew his bid.
The very same government and agency, Ofcam, will decide if Murdoch is fit and proper as the owner for the remaining 39% of Sky. Why would the current climate for that decision be any better for Murdoch than the string of setbacks since the phone hacking scandal was kicked off on July 4, 2011?
By voluntarily withdrawing the Sky acquisition bid and having James step down as chairman, Murdoch told us what will happen with the Ofcom decision. He will likely lose the remaining 39% of Sky.
Rupert's last stand
Losing $70 billion in anticipated revenues with profits anticipated topping $11 billion is exactly the type of evidence the United States shareholder law suit needs to oust Murdoch from the chairman position and effective control of News Corp.
The shareholder claims are strengthened substantially by events surrounding Sky. The full weight of $11 billion in profits, they will argue, proves that Murdoch runs the corporation as a personal fiefdom for his own enrichment and that of his family and, furthermore, that Murdoch's nepotism, questionable legal practices, and political bullying seriously impact company revenues, profits, and as a result, shareholder value.
The shareholder insurgency now has material proof. Lost profit opportunities over five years from failing to acquire the remaining 61% of Sky could be as high as $7 billion. This quantifiable financial damage is necessary to bolster the shareholder case. It is certainly sufficient to prove the key assertion beyond any doubt -- Murdoch is a disastrous manager who loses money and opportunities due to his poor management.
If British regulators force Murdoch to sell off the remaining 39% of Sky, News Corp will take a major revenue and profit hit. The loss of several billion in profits in just the next five years would provide strong support for the claim that News Corp's alleged illegal, demonstrably quasi legal, unethical, and, vulgar behavior is directly responsible for huge financial losses and the diminished shareholder value.
How much more do investment fund managers and the workers who contributed to those funds have to tolerate from Rupert Murdoch? Workers take the losses while Murdoch, his family, and inner circle get richer.
[center]END
This article may be reproduced with attribution of authorship and a link to this article.[/center]
The Money Party [9]
By Michael Collins 2012-04-22 05:04
Links:
[1] http://articles.businessinsider.com/2011-07-28/tech/29999890_1_bskyb-james-murdoch-net-income
[2] http://www.reuters.com/article/2011/09/13/newscorp-lawsuit-idUSS1E78C0JL20110913
[3] http://corporate.sky.com/documents/pdf/publications/annual_report_2011
[4] http://www.bbc.co.uk/news/business-14142307
[5] http://www.themoneyparty.org/main/?page_id=3931
[6] http://www.guardian.co.uk/uk/2011/jul/04/milly-dowler-voicemail-hacked-news-of-world
[7] http://licensing.ofcom.org.uk/tv-broadcast-licences/
[8] http://www.irishtimes.com/newspaper/world/2012/0326/1224313893673.html
[9] http://themoneyparty.org/
URL: http://agonist.org/michael_collins/20120422/rupert_watch_signaling_the_end
= new reply since forum marked as read
Ah here
The Millie Dowler story hit on July 4 and the erruption was beyond anything people could recall. I think it was pent up frustration from having people like Blair and Cameron (Thatcher too) who simply don't listen to the people. Well, this time, the people commanded their leaders to act . It's heartening I agree. We could react that way here t they'd never let the story out
And yet there's one thing that I keep missing but continue to look for in The Final Murdoch Chronicles, which is seemingly being forgotten regarding all that phone hacking.
What really serious dirt does he have?
- In the end, that's what could save his bum from prison (no pun intended)......
K&R
...Goldman Sachs is probably shorting Rupert's ''stock'' as we speak.
- Would I be a bad person if I take out an insurance policy on Rupert, if I promise to give it all to charity?
When James released those emails, that signaled the end. Rupert knows it's over. He's going to drag everyone down with him. There won't be enough lifeboats.
As for insurance, there are several Fortune 500's that take out life insurance policies on employees without ever telling the employees. I suspect that the premium would be through the roof but you never now. Rupert may be bionic
over the long term to the American Peoples' well being and actual knowledge of the world than Murdoch's puppets.
Thanks, everything is cool on this end, I hope all is well with you too.
I think not!
Things are great! Getting shape, as it were
I thought of this REM song after reading :
That's just great!!! I watched it three times before replying Many, many thanks.
I hadn't heard this in so long, it slipped my mind but it is right on target. Bleed the Sky and it will fall on you, Rupert.
:
For some odd reason, our popular media doesn't seem very focused on this. Usually a big scandal that threatens some big shot gets all kinds of play, engendering rampant speculation, paparazzi chasing folks down the street, and all kinds of breathless teasers about shocking, new revelations! I mean, they did it for Amy Winehouse.
I wonder why that isn't happening in this case??? 
The Sky falling on the fox
http://www.independentaustralia.net/2012/business/media-2/the-sky-falling-on-the-fox/
