Vincent Bolloré to pick up £53m windfall in wake of Ipsos Synovate deal

July 28, 2011

The small print in Aegis’ decision to sell its market research arm Synovate to Ipsos for £525m is easily overlooked. Vincent Bolloré, principal Aegis shareholder, will take a windfall commission of £53m.

‘Commission’? Whatever the business logic on both sides of selling Synovate to Ipsos, no deal was possible without Bolloré’s say-so, as 26.5% Aegis shareholder. We now know his price, to be extracted in the guise of a 15.5p special dividend payable to all shareholders once the deal has gone through in September.

Bolloré’s opportunistic windfall fits well with his recent self-styled image as merely a “financial” stakeholder in the media buying giant, who is theoretically ready to sell out if the price is right. But don’t be deceived. Aegis, as a pure-play media planner/buyer, is now a lot more vulnerable to a break-up bid. And Bolloré, as chairman of and 33% stakeholder in Havas, has greater strategic reason to promote one than any other potential player.

Bid speculation about Publicis Groupe and WPP, which has fueled Aegis’ share-price recently, looks wide of the mark. A senior source at WPP has dismissed a break-up bid as “pure BS”, while Maurice Lévy implicitly ruled out the idea of Publicis being a prime mover in his H1 earnings call last week (although, note his cryptic point about a “game-changing opportunity in one of our operations” in the ‘M&A’ section of this interview).

A break-up bid initiated by either party would lead to severe regulatory problems. Havas, on the other hand, has every reason to snap up a global media buying operation if the price is right. The perceived problem is that Bolloré does not have the financial resources to act on his own.

That’s not to say he could not, or would not, collaborate in a carve-up. After he has picked up his windfall, of course.

Maurice Lévy bats Naouri’s leadership credentials into the long grass

July 22, 2011

Jean-Yves Naouri has a great future behind him as the next leader of Publicis Groupe. Don’t just take my word for it. Check out Publicis’ H1 earnings call, which group chief Maurice Lévy used as a platform to “deep-six” Naouri’s much-touted candidature into the long grass.

Naouri, it will be recalled, had acquired much of the symbolism of a leader-in-waiting: explicit blessing by Lévy but, more materially, a special executive role to sort out the group’s muddled affairs in China. And, most recently, he has added to this list with his appointment as executive chairman of Publicis Worldwide, the group’s most prestigious network; an event that triggered the resignation of long-serving chief operating officer Richard Pinder.

Lévy is now regretting his earlier enthusiasm. Either that or the all-powerful supervisory board, headed by principal shareholder and daughter-of-the-founder Elisabeth Badinter, has rejected the graft.

At all events, Lévy has made it abundantly clear he is looking at alternatives. According to AdAge, Lévy is spending time with “a few people” without letting them know he is monitoring them (that bit I rather doubt): “I’m training more than one person because I don’t want only one horse in the race. It is my responsibility to give the board many options,” he tells us.

Who might these dark “horses” be? Two candidates come to mind.

The first is Arthur Sadoun. Sadoun, about 40, has been president and chief executive of Publicis France for some time but, in a highly significant move this spring, his role was expanded when he was elevated to managing director of the network – with direct responsibility for operations in Western Europe (meaning Germany, Austria, Switzerland, Spain, Italy, Belgium and Holland as well as France).

Sadoun ticks many of the boxes for Publicis leadership. He is a quintessential part of the moneyed, French elite. A graduate of the European Business School and an INSEAD MBA, he is also admirably well connected – not least through his glamorous wife Anne-Sophie Lapix, a leading French television presenter.

That may make him sound like a Naouri clone. Not so. Sadoun is also an accredited entrepreneur and an adman of some flair. After graduating from EBS in his early twenties, he moved to Chile where he set up his own agency – later sold to BBDO. Returning to France in 1997, he joined TBWA\Paris and in 2003 became CEO. Under his management, TBWA\Paris received the Cannes Lions International Advertising Festival ‘Agency of the Year’ Award 4 years in a row. Spookily, he replicated this success with Publicis Conseil – to which he made a sideways move in 2006 – for 3 years running. Say what you like, M. Sadoun is a man who gets things done.

That’s my 7/1 on bet. A darker horse still – say 19/1 – is Simon Badinter. Badinter, 43, comes enormously well pre-packaged as the aforesaid Elisabeth Badinter’s elder son. Badinter mère is married to eminent lawyer and former justice minister now senator Robert. Besides being the company’s heavy-hitting shareholder, she is an intellectual celebrity in her own right. (A point she would no doubt heavily underscore, being one of France’s leading feminists to boot.) Nepotism in a French public company is not the barrier to advancement it might be in Anglo-Saxon economies (the Murdochs being the trying exception to prove that rule). A fact perhaps reflected in Simon Badinter’s long-term presence on Publicis Groupe’s supervisory board, despite his relative youth.

Against him, his hands-on experience is hardly the match of Sadoun’s, or even Naouri’s. He was installed as chairman and chief executive of Medias & Regies Europe – Publicis’ airtime and space sales house – in 2003. But a good deal of his time since has been spent in the USA, to the extent that he was recently made a US citizen. Earlier this year, he handed over his M&R Euro responsibilities to kid brother Benjamin, 40, and took on US duties in their place. To cap this Yankophilia, Simon is an enthusiastic amateur radio star. He recently quit as host of “Simon Rendezvous”, a Sunday night slot broadcast by Chicago-based WGN-AM, to take up a similar role at Boston’s WTKK-FM.

So, Lévy does indeed have “options” other than the colourless Naouri. What he will do with them remains to be seen. He himself seems keen not to outstay his extended welcome: “My board would like me to stay for a full term (ie 4 more years), which is not something I am prepared to do. I prefer for it (the settlement of the succession issue) to happen now.” Well, not now perhaps, but very soon. Lévy, as he has hinted, would like to sort out the vexed issue of the 10% or so of the company still owned by increasingly disconsolate Dentsu. A share buy-back early next year seems on the cards.

Then he can go. If he really wants to.

Piers Morgan and Daily Mirror tainted by phone-hacking allegations

July 20, 2011

As predicted in my recent post on Trinity Mirror, the toxic effluent of NoWgate is beginning to lap around other hitherto untainted tabloid titles.

Curiously enough, the sluice gate has been raised by some – apparently careless – obiter dicta uttered by Louise Mensch MP in the closing moments of yesterday’s select committee grilling of the Murdochs.

Seeking to broaden the context of NoW journalists’ criminal activities, she suggested that Piers Morgan – currently CNN’s fabulously remunerated anchorman, but between 1995 and 2004 editor of the Daily Mirror – had “personally” profited from phone-hacking.

Morgan is, understandably, spitting tin tacks, but he’s been kebabbed by Mensch’s absolute parliamentary privilege – which prevents him from suing her. Almost needless to say, she has not been so foolish as to repeat her allegations outside parliament. Which has left Morgan impotently huffing and puffing about her “cowardice”. In a nutshell, he and his reputation have been hung out to dry.

The truth is, Mensch has skilfully elided an excerpt from Morgan’s autobiographical book The Insider (in which he makes coy reference to the joys of phone-hacking) with some of her own conjectures about his complicity in the Mirror’s murky Ulrika Jonsson/Sven Goran Eriksson “love rat” scoop – that broke during Morgan’s editorship. Many seem to believeJonsson prime among them – that the story could only have been broken as a result of phone-hacking.

Strictly speaking, Morgan is right to point out there was nothing “personal” in his involvement with phone-hacking and nowhere in his book does he state that there was (but then, there wouldn’t be, would there? He’s no fool).

Alas for him and his reputation, the slur will persist. There is, after all, reasonable suspicion that it might be true…

…until proven otherwise.

In the meantime, the lady’s not for turning – judging by this heated exchange between Morgan and Mensch on CNN.

Wizard of Oz loses his magical powers

July 19, 2011

True, there were some neat forensic jabs from Tom Watson and Louise Mensch MPs, and a beautifully executed left hook from Wendi Murdoch. In the end, though, we were little wiser about why James Murdoch signed a £700,000 cheque to silence Graham Taylor without quizzing his lawyers over the price being so unfeasibly high. Which is surely the unanswered question on which Murdoch Jr’s career hangs.

Yet that’s not to say we learned nothing of importance in today’s culture, media and sport select committee hearing. On the contrary, the theatre of the occasion spoke volumes. It was rich in symbolism; a microcosm of the scandal that threatens to pull down NewsCorp.

First, there was Plod, ineptly struggling to protect Rupert Murdoch from harm’s way. Although this time it was from the smear of a white substance hurled by a protester, rather than any allegations of corporate malpractice.

And then there was the Wizard of Oz himself, spooning the egg-white (or something very like it) off his face – a crumpled paper bag of a man diminished, like his fictional counterpart at the end of the Yellow Brick Road, by having the veil of mystique unceremoniously ripped from his self-created smoke-and-mirrors illusion.

As Watson pointed out, it was what Murdoch père didn’t know, rather than what he did, which should most concern us. Gone for ever was that image of the all-powerful micro-manager who used to roll up his sleeves and appear unannounced on the floor of the Sun, confounding the staff with his mastery of encyclopedic detail.

What we saw instead was a patriarch verging on senility, propped up by his family and wife (what an oriental tiger she is); and held prisoner in his ignorance by deceitful footmen. His answers were halting in delivery and lame in content. As he himself admitted, he’s got no one but himself to blame: “No one kept me in the dark. I have been lax in not asking the right questions.” Quite – especially of Les Hinton, Jon Chapman and Tom Crone.

Maybe this image was deliberately fashioned, or at least hammed up, to give his son James a better stage part. If so, it was a sorely misconceived idea. Institutional investors in NewsCorp watching the proceedings (as they surely will have been) can have drawn only one conclusion. They have a choice between an old man who is clearly out of touch, and a young one who can’t be trusted. Perhaps they’re better off without either. Perhaps that’s what they are already thinking…

My penny’s worth? Fast-track Lis Murdoch. She is the family’s last chance.

Saucy Canterbury tale brings about Rev George Pitcher’s fall from grace

July 18, 2011

There it was – a coy beauty peeping up at me from the bottom of page 11 of The Guardian. True, I’d had to wade through pages 1, 2, 3, 4, 5, 6, 7, 8 (oh, and pages 26, 27 and 28 for good measure) of muck and Murdochgate to get there. But what a corker when I finally arrived.

The little pearl was sensationally headlined: “Archbishop’s PR chief to leave after attacking coalition policies”. Actually, this wasn’t strictly accurate, as it was the archbishop himself who had done the attacking, and his PR chief who has taken the rap. Never mind: the article was rich in revelations of a different kind.

It transpires this “PR chief” was none other than my old chum, the Reverend George Pitcher – late of Marketing Week’s parish (where he was for many years business columnist).

I’d always seen George as a droll and affable clubman with a talent for anecdote. Little did I realise he was, in reality, Svengali in a dog-collar, ruthlessly manipulating the primate’s political strings and making him say all sorts of things he didn’t really mean.

Pitcher it was who engineered that guest-editorship of the New Statesman, an act – it seems – of gross and culpable irresponsibility that encouraged the unworldly old boy to take leave of his senses.

How else explain the extraordinary metamorphosis of the Tory Party at Prayer’s principal representative into a foaming radical berating our poor, beleaguered prime minister for being a political charlatan?

In the understandably incandescent aftermath of this treacherous assault on coalition pieties, Lambeth Palace officials took fright and began frantically casting about for a scapegoat.

Luckily for them, Pitcher had already offered his head on a platter. According to The Telegraph (he did a stint as religion editor there, so they know their man), he was speared by his own cocktail offensive.

It happened like this. In the wake of the New Statesman fusillade, Dr Williams was taken to task at a party by political and religious affairs commentator Cristina Odone. Entirely characteristically Pitcher, playing Boswell to the Telegraph’s Mandrake, reported that the archbishop had responded to the confrontation by taking her “roughly over the canapés”.

Odone saw the joke, but Lambeth Palace did not. With the result that Pitcher is now out on his ear.

Somewhat ruefully he admitted to The Guardian: “I am returning to journalism, a culture to which I am better suited.”

That’s not entirely true, though, George, is it? You’re modestly doing down your talent for PR. No other reasonable conclusion can be drawn from the £4m you earned on exiting Luther Pendragon, the PR company which you co-founded.

Will Cadbury’s Bond quit Kraft in the wake of Clarke’s defection to Premier Foods?

July 14, 2011

The City has given Mike Clarke, Premier Foods’ incoming chief executive, the most rousing welcome imaginable: a 35% increase in the beleaguered conglomerate’s share price.

Maybe institutional investors were simply cocking a snook at his predecessor, Bob Schofield, who saddled the company with a mountain of increasingly unmanageable debt. But I don’t think so.

Clarke comes well recommended as a capable pair of hands, and for good reason. A former Coca-Cola and Reebok man, he has run Kraft’s $12bn European operation since early 2009. As such, he was entrusted with the delicate and difficult task of hitching Northfield Illinois’s lumbering HumVee to Cadbury’s Roller – something he achieved with surprising adroitness, given the circumstances.

Clarke’s departure will not be welcomed by the dwindling number of Cadbury executives who opted to stay on, post-merger. His successor Tim Cofer, who took over the confectionery division in the wake of Tamara Minick-Scokalo’s unscheduled departure last year, is seen as a bit of a Kraft clone who doesn’t really “get” Europe.

More materially – I’m told – Cadbury’s most senior remaining executive, Trevor Bond, coveted the top job given to Cofer. Bond, who used to be in charge of Cadbury’s UK operation, initially made a successful transition to overseeing Kraft’s European division. But with the career ladder wrenched away from him, he may well feel it’s time to turn his back on life in Zurich and return to his Birmingham roots.

If he goes, will the last Cadbury executive standing please switch off the light?

Jamie Oliver – the ingredient brand that became the whole meal

July 14, 2011

So farewell, Sainsbury brand ambassador Jamie Oliver. You were the exception that proves the rule – the celebrity endorser untouched by scandal or degrading personal conduct. The ultimate ingredient brand that spiced up Sainsbury’s fare without overcooking it.

Oliver’s uncompromising stand on food and animal welfare gave Sainsbury’s brand an unimpeachable wholesomeness at a time when its reputation and performance were being winded in the solar plexus by Tesco and Asda. Like all such felicitious relationships, an element of luck was involved. Right at the beginning of his tenure in 2004, chief executive Justin King was advised to drop Oliver from the advertising (agency, AMV BBDO), on the grounds that his reputation was overexposed and past its sell-by date. How wrong that judgement was, and how wise King to ignore it. One year later, Oliver was leading the charge as the great white knight of children’s healthy nutrition in the School Dinners TV series.

There was, of course, rather more to the success of the 11-year marriage than Jamie’s teflon-coated moral demeanour. In truth Oliver’s crusading fervour could be very trying; several times, he seems to have entirely forgotten who was paying £1m a year into his bank account for services rendered.

Five years ago, King must have been sorely tempted to fire Oliver when he condemned parents for putting junk food (for which read typical Sainsbury products) into children’s lunchboxes. Two years later, Oliver drew even closer to the line when he very publicly condemned Sainsbury’s refusal to take part in a television debate on battery-farmed chickens during his programme Jamie’s Fowl Dinners.

To the credit of both parties they twice pulled back from the brink, rightly judging the overall benefits of the relationship to be more important than the occasional tiff.

However wayward Oliver can be, it’s worth reflecting for a minute on what he is not: Marco Pierre White. MPW epitomises the once great chef whose celebrity has fallen on hard times. Seemingly, no brand endorsement is anathema –  Knorr and Bernard Matthews spring to mind – so long as it fends off the next alimony demand.

With Oliver, the problem is the polar opposite. His brand value has waxed to the extent that it now threatens to eclipse that of the product he is endorsing. Analysts were quick to point out that Oliver’s latest book – 30 Minute Meals, the fastest selling non-fiction book of all time – played a major role in boosting Sainsbury sales by over 10% last Christmas. No doubt, but the ingredient has now become the meal and it’s time to move on – for both parties.

None of this detracts from the Oliver/Sainsbury partnership being one of the most successful endorsement relationships of all time. As a brand ambassador only Gary Lineker – who began fronting Walkers ads in 1995 and continues to do so to this day – bears comparison.

Holier-than-thou Trinity may come a cropper over Sunday Mirror

July 8, 2011

I note, with some amusement, that shares in Sunday Mirror publisher Trinity Mirror have soared to their highest level in a year. A development not unconnected with Rupert Murdoch’s draconian decision yesterday to close down its principal rival, the News of the World.

Which gooseberry bush were these City folk puffing Trinity’s stock born under? The knee-jerk thinking seems to be that the NoW’s nemesis is the Sunday Mirror’s good fortune. All that £40m-worth of advertising formerly populating the News of the Screws will have to find a new home. And where better targeted than the Sunday Mirror, whose own annual revenue is languishing at something under £20m? According to City analyst Alex de Groot, that figure could increase by over 50% to £30m.

Er, not necessarily Alex. Beyond the perspective of the next few Sundays, this is no zero sum game. Murdoch’s misery is a reverse for the whole red-top sector, and the Sunday Mirror may well turn out to be one of the prime collateral casualties.

Why so? The phone-hacking scandal and associated police corruption is now to be the remit of a judicial inquiry. Not that I have much faith in the individual acumen of the judge, whoever that may be, presiding over it. Lord Hutton’s wilfully eccentric conclusions drawn from his own inquiry into the ‘sexed up’ WMD dossier cured me of any such illusions. What did impress me about the Hutton Inquiry was the wealth of uncontrollable detail that spilled into the public domain. I suspect a similar torrent of information will pour out of this, as yet unnamed, inquiry (relayed verbatim, no doubt, on The Guardian’s website, if nowhere else).

The key word here is “uncontrollable”. It is no longer possible, if it were ever desirable, to restrict the terms of reference of such an inquiry to the News of the World. It will, inevitably, have to investigate the whole culture of phone-tapping and police bungs rife within the tabloids these past 15 years.

Trinity has vigorously denied any complicity. That’s not strictly true, though, is it? In terms of sensationalism, the case of Paul Marsden MP may not be up there with NoW’s blatant and cynical tapping of war widows’ voicemail messages. But it tells an unsavoury tale all the same.

The Lib-Dem MP decided to step down in 2006 after a spate of revelations in the Sunday Mirror detailing various adulterous affairs. No doubt the Sunday Mirror had every right to expose the “love cheat” exploits of the errant MP. Less evidently justifiable are the means by which it seems to have acquired its information. According to Marsden these involved voicemail hacking and impersonating a policeman. It may be of more than passing interest that the Sunday Mirror reporter responsible for the Marsden story subsequently moved to NoW, at a time when Andy Coulson was editor. I’m sure Marsden himself would happily update us on the details.

If the Marsden case proves more than a bizarre lapse of judgement, I wonder how long advertisers will remain at the Sunday Mirror? And what will become of Trinity’s share price then?

UPDATE 23/7/11: I wonder who the ‘Master of the Dark Arts’ is? Sure enough, the Sunday Mirror is now up to its neck in phone-hacking scandal, after a Newsnight exposé. Here’s an excerpt, reported in The Guardian:

The source said: “One reporter, who was very good at it, was called ‘the Master of Dark Arts’. At one point in 2004, it seemed like it was the only way people were getting scoops. If they didn’t just randomly hack people in the news, they would use it to stand up stories that people had denied.”

According to the former employee, the “dark arts” were used to try to beat the News of the World at its own game.

Why McCann’s Lee Daley wants his life back

July 6, 2011

Sad to see, if not entirely surprising, McCann Erickson Worldwide chief strategy officer Lee Daley throwing in the towel. Few people can have worked harder at Mission Impossible.

It’s important to note that at the time of Daley’s return to IPG-owned McCann, as chief strategist EMEA, in 2009, the troubled leviathan was under a very different leadership: that of ageing patriarch John Dooner.

Dooner was due for retirement, as he himself cheerfully admitted. The question was, who would succeed him? The most obvious candidates were Brett Gosper, CEO of McCann EMEA, Eric Keshin, the network’s COO, and Mark Dowley, network creative content and entertainment chief. Though popular in varying degrees, these candidates were also divisive. Enter Daley as a potential compromise candidate. He was an old McCann hand, having first joined the London office in 1990 where he rose meteorically to board director level. But he also had wider managerial experience in a variety of rival organisations. In 2001 his career began an odyssey which took him, successively, to WPP as worldwide CEO of Red Cell (later United), group chairman and CEO of Saatchi & Saatchi’s London office and eventually (if briefly) to Manchester United as commercial director.

IPG chairman and chief executive Michael Roth did indeed have a compromise candidate in mind, but it was not Daley. The man who seized the crown in early 2010 was Nick Brien, worldwide CEO of Mediabrands – who had done a sterling job of restructuring IPG’s ailing mediabuying behemoths Universal McCann and Initiative.

Since  when Brien has barely paused for breath in applying the age-old maxim ‘a new broom sweeps clean’. Keshin and Gosper have headed for the exit (though Dowley, I believe, remains).

Daley, in the meantime, was promoted to the network’s global leadership team and his present role – a consolation prize of sorts. Some consolation. In his lengthy resignation letter, reproduced in Ad Age, he makes it clear he hadn’t exactly landed on a bed of roses. The brief was to shore up McCann’s crumbling core clients, GM, Nestlé and L’Oréal. No time for the more rewarding task of pursuing new business – just 80 hours a week in an aeroplane relentlessly circumnavigating the globe in an effort to defuse one client crisis after another.

No wonder he gave up. Anyone would, in the circumstances.

Bad news for Rebekah Brooks, but good news for BSkyB’s Jeremy Darroch

July 6, 2011

Jeremy Darroch, chief executive of BSkyB, now looks in an even more powerful position to inherit the News International mantle of power (should he wish to) than when I flagged up his significance to the Murdoch empire in my last Marketing Week column.

Rebekah Brooks, NI’s current chief executive, is terminally damaged goods, in the wake of ‘Millygate’. Not to mention ‘Jessica-and-Hollygate’ and ‘7/7-gate’.

For the moment, of course, it’s Andy Coulson, ex-News of the World editor and David Cameron’s former director of communications, who has been thrown to the lions. Thanks to some NI emails which have mysteriously surfaced just in time, Coulson is now a proven liar. He procured, or authorised procurement of, paid information from the police while he was News of the World editor – something he has previously strenuously denied. And for good reason: it is quite illegal.

It’s an astute, if cynical, sacrifice, and proves the Murdochs are still thinking on their feet. Coulson’s disgrace tarnishes both Cameron (by association – after all, he picked Coulson, despite his dodgy reputation, and then backed him to the hilt in his hour of need) and Knacker of the Yard (assistant commissioner John Yates, once the officer in charge of investigating the phone-hacking scandal at the epicentre of the Murdoch crisis, who is now looking woefully ‘under-informed’ and incompetent, after previously vociferously denying the merest scintilla of police complicity in the matter).

Even so the Coulson gambit is, at best, a delaying tactic. It will make our leading politicians and policemen tread a little more carefully, but it will not prevent them from taking decisive action. Public opinion is now too inflamed for them to do anything else.

Inescapably, the smoking gun is pointing at Brooks, née Wade, and editor of News of the World when – it now emerges – NI’s private investigator of choice Glen Mulcaire was hacking into the phones of Milly Dowler’s distressed relatives. She says she knows nothing about it. Do we believe her, any more than we believed Coulson’s protestations of ignorance? I’ll leave that one hanging in the air.

Ordinarily, implicated NI and former NI executives have been able to take refuge in prevarication, in the sure and certain knowledge that rapidly abating public interest will soon allow them to emerge from their burrows relatively unscathed. This crisis is different.

It has an unprecedented commercial dimension to it. Top advertisers, led by Ford, are boycotting News of the World, and that really will hit the Murdochs where it hurts. Ford is the single biggest advertiser, contributing about £4.5m annually to NoW’s £40m display advertising revenue. Halifax (owned by Lloyds Banking Group) has now joined Ford. Other major advertisers believed to be considering their options are T-Mobile/Orange, Vodafone and nPower. The danger, from the Murdochs’ point of view, is that this commercial contagion spreads to other NI newspapers, such as the Sun – which Brooks also edited. It could easily do so, given a swelling social media campaign goading consumers to boycott advertisers who refuse to align themselves behind Ford. (There’s a useful live update on the brands boycott at Marketing Week.)

All of which may well rapidly result in Brooks becoming surplus to NI requirements.

OK, you say, but what has this got to do with Jeremy Darroch? I’m coming to that. Whatever the backwash from the phone-hacking scandal, it will not prevent culture secretary Jeremy Hunt from giving his blessing to Murdoch-vehicle NewsCorp’s acquisition of the 61% of BSkyB it does not already own. Legally, a challenge to that assent is now well-nigh impossible. Indeed, Hunt and the Government would probably be on the receiving end of a writ it they were obstructive.

Let’s assume for a moment that the deal is done, that the Murdochs have pacified BSkyB shareholders with an eye-watering amount of money and are now the proud possessors of the rest of the organisation. What are the repercussions for NewsCorp and in particular its UK-centric arm, NI, in the wake of a full takeover?

BSkyB is one of the UK’s most powerful companies with, just to give the flavour, a marketing communications budget of £1.2bn a year. It is phenomenally cash rich. One estimate reckons that, once acquired, it would contribute 30% of NewsCorp’s cashflow. Like the Murdochs’ newspapers, it is UK-centric. Unlike the newspapers, it is highly profitable. Unlike the newspapers again, it is still a dynamic growth business, which has made good use of product innovation.

In short, it would be the jewel in NI’s crown. Who better to manage that jewel in the new, enlarged organisation – a man of untarnished reputation who intimately understands subscription TV; or Brooks, with her yesterday’s tabloids background?

Of course, I have no idea whether Darroch would actually be interested in such a proposition. He may well take his money and run. But it’s worth thinking about, isn’t it?

UPDATE 17.30 – 7/7/11: So, The News of the World is no more. The Sunday edition, shorn of advertising, will be the last in the newspaper’s 168-year history. Nothing could more graphically illustrate the gravity of the crisis engulfing NewsCorp than that its chairman and chief executive Rupert Murdoch should take the drastic step of closing his most profitable newspaper and the one – to boot – he started out with back in 1969. The suspicion lingers that a skeleton NoW staff will be retained to flesh out a 7-day version of The Sun. “The Sun on Sunday” has long been rumoured as a cost-cutting project. How typical of Murdoch that he should turn a disaster into a publishing opportunity.

UPDATE 7/7/11: Determination not to be the last advertiser at the News of the World has now reached frenzied proportions, as Vauxhall, Virgin Holidays, O2 (£1m), Boots (£800,000) and  Sainsbury’s stampede to the exit with Ford, nPower and Lloyds Banking Group. Morrisons next, I suspect. Will anyone be buying the paper anyway? Newsagents expect a boycott on Sunday.

%d bloggers like this: