Fox Group is the latest corporate manifestation of Rupert Murdoch’s ambitions. I wonder if its corporate logo will feature the eponymous canine?
It’s an animal which generates mixed feelings, as will the two corporate beasts which result from News Corporation’s plans to split itself in two.
Murdoch is keeping the pace up on plans to demerge, due to complete by the end of next June. The personnel changes announced on Monday bring clarity to the publishing business, which will include Harper Collins and the ill-fated UK newspapers and will retain the News Corp name which, frankly, could have done with being axed altogether. The group’s television and entertainment assets will be owned separately by the new Fox Group. But for the future News Corp there’s plenty still to do before the market will be convinced.
The detail of its balance sheet, for instance, will be crucial, particularly how much debt it will carry. I’d imagine the sexier TV and entertainment assets of Fox will carry the most debt, so Robert Thomson, the new News Corp boss, will enjoy a relatively strong balance sheet to start with.
And that will be needed to ensure it can withstand any legal settlements relating to phone hacking that may well come post demerger. Monday’s announcement is another step along the way of separating the liabilities of the UK newspapers, both legal and reputational, from the Fox businesses. It also puts a few more leagues between James Murdoch and the newspaper debacle as Murdoch jnr will be staying with the Fox side of things. So as part of the detoxification process it is significant.
But News Corp shareholders will also expect to see a lot more progress in making the publishing business a more commercial beast, which will be one of Thomson’s most pressing priorities ahead of its stockmarket debut. Cost cutting and efficiency must be part of his mantra if growth strategies are to have legitimacy, too.
As for Fox, Murdoch will be keeping his trusted ally Chase Carey as chief operating officer and his son as deputy. All of this, however, has to be seen in the wider context of BSkyB (LSE: BSY.L - news) . Fox will still own 40pc of the UK satellite broadcaster and I don’t believe Murdoch has given up on his wish to own the rest, a desire thwarted last year when he was forced to withdraw an offer at the height of the phone hacking scandal.
That was a result of the political storm that Murdoch faced and which, even for him, was quite simply impossible to navigate. That may be starting to change, however.
The demerger is an important part of that. But of equal significance could prove to be last week’s Leveson report. Yes it contains reams on the awful goings on at News International. But buried on pages 424-435 is a glowing endorsement by Leveson of how Murdoch reacted in the shape of the Management and Standards Committee set up by News Corp which ensured the effective exchange of information between News International and the Met otherwise known as “draining the swamp” in Wapping parlance. Few judicial documents in recent years have been so effusive in their praise of a Murdoch initiative and it will probably serve as important evidence when Murdoch returns for Sky.
Having completed a clean separation of the newspapers from Fox, he will also be able to show backing from Leveson (as endorsed by both Nick Clegg and Ed Miliband) for his clean-up operation, thus outflanking any future objections to his, or Fox’s, fit and properness to attain his ultimate goal full control of Sky.
= How the audit game really works =
Schroders (Berlin: PYX.BE - news) , the FTSE 100 (FTSE Index: EO100.FGI - news) fund manager, has just appointed a new finance director Richard Keers. He’s a partner at PricewaterhouseCoopers. At the same time, Schroders is about to name the result of a tender process for its audit account. The incumbent? PwC. What then are the chances of Schroders appointing a different audit firm in the coming days? Pretty slim I expect. In fact, when you consider that Keers is not only a PwC partner but actually ran the Schroders audit himself from 2006-2010 I’d imagine they are non-existent.
Is this important? Yes, very. The Competition Commission has already pointed out how the preponderance of “big four” alumni working as finance directors and audit committee chairman in the FTSE 350 could be stifling competition. If that’s happening then not only is the profession being starved of new blood but is imposing a dangerous cloak of group think across the top echelons of the profession and big business. This, as we’ve seen in the financial crisis, increases risk levels. Incestuous networks which allow vested interests to thrive are dangerous.
Now, Schroders could prove me wrong about this and appoint one of the other “big four”. If so I promise to apologise for my unwarranted cynicism although if it really wanted to prove capable of fresh thinking it would appoint from outside this inner circle and I’m certain there’s absolutely no chance of that.
= The royals can’t do it all on their own =
We really must stop relying on the Royal family (or Olympians for that matter) for our economic growth policies. It seems only a royal event (now including a royal birth ) has the power to deliver the feel-good factor. Surely it’s time George Osborne did his fair share and came up with something to give everyone some cheer Mark Carney wasn’t bad but he’s still a pale male with a grim job on his hands.
Wednesday’s Autumn Statement can deliver something to relieve the gloom if the Chancellor focuses on job creation. A National Insurance holiday for employers would be a start. No doubt tax avoidance will dominate important but simplifying and tightening up the tax system could and should have been sorted years ago. Politicians remain relentlessly behind the curve. Royal events show people will respond to good news while politicians seem only to respond to bad.