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Shining example – Elisabeth Murdoch sets up a mirror to James

February 22, 2011

In Outcasts, a Shine Television production currently airing on BBC1, the mysterious comeback-kid Julius Berger has managed to weasel his way onto the governing board of the Carpathian colony, armed with a silver tongue and a bulging power agenda. What will he do next – overthrow president Tate?

It’s hard to believe that James Murdoch isn’t – like Carpathia’s president – feeling the teensiest bit paranoid. Having his sister Elisabeth back on board (literally) after a decade’s absence from News Corporation is a mixed blessing.

On the one hand, the £415m acquisition of Shine makes News Corporation that much more a creative content and entertainment company, and that bit less a TV platform with a legacy newspaper business tied in. Then again, Liz is clearly an asset. She has won her spurs as a talented entrepreneur and manager during her near 11 years of independence from NewsCorp. Even if £415m is a tad generous (but hey, what’s wrong with a bit of nepotism if you can afford it?), no one seriously doubts that Shine is a good business, operating in the right place. How different her standing from the year 2000 when she quit as managing director of Sky Networks, apparently in mounting frustration over her father’s reluctance to give her full executive responsibility for BSkyB.

On the other, that’s just the problem for James. As someone with credible executive experience gained outside the family business, she must now pose a subtle threat to his role as heir presumptive to the Murdoch empire. Not an overt threat, of course. Merely a reminder that Rupert Murdoch, now nearing 80, has other options when it comes to handing over the reins of power.

Significantly Liz, 42, will not report to younger bro James, 38, but to Chase Carey, NewsCorp’ US-based deputy chairman, even though her business is centred in London.

Every time James makes a club-footed move from now on, it will be contrasted (fairly or not) with the more circumspect and reserved behaviour of his sister. And James has made a few club-footed moves, hasn’t he? The dawn raid on ITV shares, so audacious at the time, now looks less well-conceived. Then there was that intemperate raid of another kind – on the offices of The Independent’s editor-in-chief Simon Kelner, driven by blind but misguided rage. And finally, we have the ongoing News of the World bugging scandal, in which James’ handling of the situation has been called into question.

I mention this because the issue of James’ character and leadership qualities has just been raised (at some length) by an authority more eminent, and certainly more informed, than me: Tim Arango in The New York Times. Arango concludes: “James Murdoch is trying to succeed at the company his father built, but he is a very different character: more blunt, more bureaucratic and less able to smooth ruffled feathers. He has his father’s aggressiveness but not his tactical sense or temperance.” Just in passing, I suggest that his sister, though arguably less aggressive, is also less blunt, less bureaucratic and a lot more able to smooth ruffled feathers. I’m not sure about her “tactical sense”, but more so about her “temperance”.

All this would matter less if James’ leadership qualities were not about to undergo their supreme test. If the current chief executive of  NewsCorp Europe and Asia can shepherd the other 61% of BSkyB’s equity into NewsCorp’s stable, his future looks assured. He will then be in charge of roughly half the media empire’s revenues.

But what if he doesn’t? Suppose, for example, that the takeover is referred to the Competition Commission after all, and that Murdoch père decides the matter is no longer worth pursuing. How would that leave James’s leadership credentials looking? Impaired to say the least.

Which leads me to one last thing. The timing of the Shine deal seems very odd. Why was it concluded shortly before culture secretary Jeremy Hunt reached his decision on whether to invoke the CC, rather than afterwards? Having Shine – a considerable presence in British TV programme production – on board can only heighten anti-Murdoch paranoia, and put more pressure on Hunt to refer.

UPDATE 25/2/11: Silly me. Jeremy Hunt had already reached his decision, and it’s not to refer. That’s the gist of a report in today’s Financial Times. The FT suggests that Hunt and Rupert Murdoch have agreed to remove Sky News from a fully Murdoch-owned BSkyB, while at the same time guaranteeing its financial security. Strictly in the interest of ‘media plurality’, you understand. Mind you, the Murdochs still have to launch a successful takeover bid.

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Digby down, but never mind. ITV bonanza on the way – CRR is going too

January 13, 2011

Say what you like about him, veteran ITV sales director and professional rough diamond Gary Digby will be sorely missed.

One rival, reported in the FT recently, put it this way: “Media buyers will now see ITV as an easier place to do their negotiations and will expect to save millions.”

A back-handed compliment if ever there was one. Digby and the three senior members of his staff who also got the boot have been closely associated with ITV’s Lazarus-like commercial recovery last year. Conservatively, ITV made about £1.55bn from advertising revenue in 2010, an increase of over 15%.

Fru Hazlitt, the new ITV commercial director who did the booting, evidently sees root-and-branch restructuring of the sales department as a vital prerequisite to streamlining ITV’s analogue and digital offer. Which it may well be. But the media buying community has a different take on things: Kelly Williams (ex-Channel 5) and the rest of the Hazlitti imports are going to be a push-over by comparison with the Digby regime.

Personally, I wouldn’t like to speculate on how weak the ITV ratecard will be from now on. I make just one observation. If relief is ever needed in the ITV Alamo, then the cavalry is certainly on its way.

Yes, Jeremy Hunt – the newly empowered government media czar and part-time culture secretary – has unambiguously signalled that he intends to abolish Contract Rights Renewal – the advertiser-friendly sales corset that squeezes tens of millions of pounds off ITV’s revenue line every year. The only trouble (from ITV’s point of view) is that some waiting is involved before the relief arrives. Hunt intends to bundle repeal of the hated constraint into the Communications Bill which may, or may not, pass into law by the end of next year.

What Hunt’s motives are we can only guess. Some point to his ideological preference for laissez-faire capitalism. Others, more politically cynical, suspect that the CRR gesture may not be unconnected to Hunt’s invidious task of adjudicating the Murdochs’ controversial bid for the 61% of BSkyB they do not already own. After all, what could be more even-handed than to wave through both measures? Strictly in the interests of media plurality, you understand.


BSkyB – nearly the company with the UK’s biggest marketing budget

January 4, 2011

Will BSkyB soon become the UK’s biggest marketing company? It’s a sobering thought  – especially for those who, like culture secretary Jeremy Hunt, must now consider whether Rupert Murdoch and his son James are fit and proper guardians of the 61% of the broadcast media company they do not already own. What will they do with unfettered control of all that money – not so much when it is directed at ITV and the BBC (the case already), but at BSkyB’s non-broadcast rivals?

In fact, BSkyB is still some way from being the company with the biggest marketing budget. The latest Nielsen figures, which leaked out just before Christmas in The Telegraph, reveal that BSkyB has now moved into number two position behind Procter & Gamble in the advertisers’ league table: not quite the same thing, but the most reliable indicator we have in these matters. The main casualty – inevitably given what has happened to it – is the Central Office of Information. For some years the COI sat on, or very near, the top of the pile. Its fall from grace has been melodramatic: despatched from top to fifth place, with spending slashed 47% to settle – for now at – £112m. There’s no likelihood of it getting back.

BSkyB, on the other hand, increased its spend 20% to reach £161m. But even that wasn’t nearly enough for it to become top dog in the near future. P&G put on another third – giving it an unassailable lead at £189m. Unless of course BT, currently 7th with a spend of £104m, continues its phenomenal 44% multiplication of spend for the next three years (unlikely, I suggest).

These Nielsen figures are interesting indicators, but they need to be viewed with considerable caution. Although they purport to record expenditure to the end of the calendar year, there are a number of caveats; for example, there is no internet spend included for the last quarter (a significant omission). They are, moreover, merely a ratecard indicator: they do not tell us what was actually spent after discount. Finally, they do not record all forms of marketing activity. And some of these excluded sectors, like POP, are absolutely massive.

For all these imperfections, however, the Nielsen figures reveal a remarkable truth. BSkyB has become one of the UK’s most powerful companies, and it has done so in large measure through the intelligent application of marketing.


Vince hands BSkyB to Murdoch on a platter

December 21, 2010

It would appear the Scourge of Capitalism (aka business secretary Vince Cable) was bent on doing exactly what I earlier predicted. That is, committing a gross act of hypocrisy – in the clandestine manner of the bankers he so despises – by rigging the market to get the result he wanted.

This is the only reasonable interpretation of his unguarded remarks to two Telegraph undercover reporters about “declaring war on Mr Murdoch”. He is of course referring to his supposedly impartial role in adjudicating the acceptability of NewsCorp’s bid for the 61% of BSkyB it does not already own. For the avoidance of doubt the guileless minister of the crown went on to explain to the two reporters – posing as constituents: “I have blocked it [the bid] using the powers that I have got and they are legal powers that I have got…”.

Actually, that last bit is a tad premature. Ofcom is not supposed to report back on whether there is a prima facie case for referral to the Competition Commission until December 31st. But Vince was clearly confident that he had Ofcom in his pocket and could press ahead with a referral on the public interest grounds of an infringement of “media plurality”. The beauty of such grounds is that they reside entirely in the realm of political value judgement rather than the rigorously factual analysis of any threat to competition. And given that Cable would have had the final word, Murdoch & Co were clearly going to be thwarted.

No longer. Vince is off the case (indeed, he is off any adjudication of media competition cases from now on), although he has narrowly managed to retain his job. And culture media and sport secretary Jeremy Hunt will take his place. As a Tory, Hunt does not carry Cable’s Lib Dem ideological baggage; and if he does harbour any personal animosity towards the Murdoch clan it has so far remained scrupulously off the record.

Which is just as well. In the circumstances he will find it politically excruciating to deliver the thumbs down. The European Commission has just waved through the bid on competition grounds. That leaves the public interest argument. But this, too, is looking increasingly shaky when assessed on any fair-minded basis – as it will have to be in the wake of Cablegate. The legal precedent was set when the last government forcibly caused BSkyB to divest most of its 18% stakeholding in ITV. Ironically, the stated grounds were that NewsCorp’s then 39% holding in BSkyB posed a threat to UK media plurality. If you’re already a threat to media plurality when you hold a controlling 39% interest in a company, how is owning the rest of the shares going to make a material difference?

As political fiascos go, this is a corker. The Scourge of Capitalism has ended up performing a humiliating act of public self-flagellation. In the process, he has damaged Ofcom’s independence and almost certainly brought about the result he most feared: the strengthening of Rupert Murdoch’s commercial interests.

En passant, he has also damaged The Telegraph – one of his allies in the Murdoch matter, if no other; although Cable can hardly be blamed for that. The Telegraph deliberately suppressed Cable’s anti-Murdoch comments, presumably on the grounds that they harmed its commercial interests. Only because some nameless Assangeite felt that editorial integrity had been inexcusably compromised did the scoop come into the capable hands of BBC business editor Robert Peston.

I bet they’re laughing up their sleeves at Osterley Park and Wapping. I can’t say I blame them.


Arts Council prepares to give Tweedy’s business sponsorship body the heave-ho

September 28, 2010

Doyen of business sponsorship of the arts Colin Tweedy is in rueful mood these days, and for good reason. He’s waiting on tenterhooks to find out whether Arts & Business – the organisation he has built up over 27 years to champion commercial participation in the arts – has become the victim of a stitch-up hatched by his host body, the Arts Council.

The Arts Council, like every other quango, is under intense pressure to make deep cuts in its budget. And the suspicion is growing that, in order to save its own hide, it’s quite prepared to sacrifice A&B – which depends on the Arts Council for over half of its funding.

Naturally enough, that’s not going to be the way the proposal is presented to culture secretary Jeremy Hunt. The pitch is more like this: [Much wringing of hands] “…so, Secretary of State, unfortunate sacrifices have had to be made for the greater good of the arts community and we feel Colin’s organisation… well, it does receive quite a lot of private funding, and it’s about time it stood on its own two feet…” Or words to that effect.

Actually, it does receive quite a lot of public money – about £4m a year – which for obscure reasons is within the remit of the wholly subsidised Arts Council rather than being funded directly by the DCMS (the case before 1999 with the then Department of Heritage). Pulling the plug of public finance, however, would not be the best calculated method of ensuring it stood on its own two feet. In fact, quite the contrary. Much of the 45% private funding might disappear if it is not matched by a pledge of public money. And even if it did not, A&B would be crippled by the drastic restructuring that would have to take place to ensure some pale ghost of an afterlife.

It says a lot about the arts world that some would greet this outcome with ill-disguised glee. To them, commerce is a grubby word contaminating the purity of the artistic dialogue. And, let’s face it, Tweedy – tireless champion of commercial support of the arts over nearly three decades – has made a few enemies on this account along the way.

But he’s not without friends, either. And one of them is George Osborne, Chancellor of the Exchequer. It is a peculiar irony that Osborne, in whose name these swingeing cuts are being made, was – until his present elevation – a passionate advocate of the engagement of art with commerce. As you would expect, given he sat on the board of A&B.

Maybe the Arts Council should have a rethink. Not just because of Osborne either. The whole idea of doing away with our best-known and most successful arts sponsorship body seems daft, given that public subsidy of the arts is about to crater.

More about this in my magazine column this week.


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