Unprecedented Business News: Only Late on Friday in August
Standard and Poor’s downgrades the United States and a step has been taken towards ending nepotism at News Corp. Who would have ever thought these things possible a few weeks ago?
A mere four days ago a writer for this publication predicted that Messrs Standard and Poor would not have the proverbial cojones to downgrade the United States. A worthier publication would have fired that writer on the spot for such an egregious prognostication, but since I am the only one currently working here, my online reportorial career goes on …
The announcement of the downgrade, of course, took place at a time when most of the rest of the world was both asleep and on vacation. This is the month of August after all, and Europeans must keep their traditions no matter messed up their respective economies are.
But the S&P downgrade of the United States was one of two revolutionary bits of news to make the wires on Friday. The other was a measure, albeit small, taken this week to curb family favoritism at News Corp, according to a report in News Corp’s Wall Street Journal.
Elisabeth Murdoch won’t join News Corp’s board as expected. Still, we imagine she will find some way to overcome the disappointment. Her father Rupert did spend $680 million in News Corp money to buy her company, Shine, earlier in the year.
Rupert also bought one of James’s companies once upon a time. What are the chances of that?
Will Murdoch Scandal Bring Change at The New York Times and Washington Post?
One of the interesting aspects of the current News Corp affair is the striking corporate boardroom similarity the parent company of The Wall Street Journal bears with the owners of the other serious national broadsheet, The New York Times.
Both companies are Wall Street dinosaurs in at least one sense; each relies on a dual-class share structure. Dual-class stock, as the name suggests, creates a class society amongst shareholders. In most public companies there is at least some semblance of investment democracy: one share equals one vote. But in a dual-class stock, one type of share may be the equivalent of one vote, another could represent ten.
Hence, Rupert Murdoch can own 12 percent of News Corp but have 40 percent of its voting rights. Other companies with dual-class stock are Washington Post and Ford, as well as tech darlings LinkedIn and Google.
News Corp, The New York Times and The Washington Post have each represented a horrible investment for shareholders in recent years, and not all to do with reasons associated with the decline of print journalism. All are controlled by families – the Murdochs, Sulzbergers and Grahams – with a disproportionate amount of influence compared to actual shares owned.
One consequence of the News Corp fiasco will almost certainly be a shakeup of the company’s share structure and its somnambulant board (comprised of mostly Murdoch family and a coterie of Murdoch pals). Both factors contributed to a string of questionable decisions within a company in which one man essentially dictates what will be done.
Most likely, shareholders in The New York Times and Washington Post would not put up too much of a fuss if a little control were wrested from the grips of the head honchos of those companies as well.
If Murdoch Leaves Google …
Here are some of the stories we would have missed recently if we did not go directly to the sites owned by Rupert Murdoch’s News Corp.
The imminent Brad Pitt and Angelina Jolie break-up. According to a story in Sunday’s New York Post, Brangelina are going to split (yet again). A new book claims that Pitt’s marijuana addiction and Jolie’s psychological instability will lead them to part ways sooner than later. The couple are arguing day and not, says Ian Halperin in “Brangelina: The Untold Story of Brad Pitt and Angelina Jolie.”
If you were unable to buy a copy of The Sun or go directly to the paper’s Web site, you would have missed these shots of George Clooney’s new girlfriend Elisabetta Canalis.
More serious minded readers would have not had the opportunity to read this piece on deficits by Karl Rove, a man who has some experience with deficits.
