Story first appeared on WSJ.com
News Corp. and Elisabeth Murdoch have shelved plans for her to join the board of the media giant for now, as the company attempts to defuse shareholder concerns about its corporate governance.
The 42-year-old daughter of News Corp. Chairman and Chief Executive Rupert Murdoch, Ms. Murdoch was expected to join the board as part of her return to the company through News Corp.'s acquisition of the Shine Group, the television-production company she runs.
Mr. Murdoch said in a news release in February that he expected her to do so when the £415 million ($680 million) deal was completed. The deal closed in April.
News Corp. independent director Viet Dinh said in a statement Friday that Ms. Murdoch suggested she felt it would be inappropriate to join the company board at its annual meeting later this year. Mr. Dinh said the company's independent directors agreed.
The eruption of a years-long phone-hacking scandal at the company's U.K. newspaper unit has raised shareholder concerns that the board is too beholden to Mr. Murdoch. The Murdoch family maintains a 40% voting stake that gives it effective control of the company, which owns The Wall Street Journal.
Three Murdochs—80-year old Rupert, 38-year old James and 39-year old Lachlan—already serve on the company board. In all, seven of the company's 16 board seats are held by Murdochs and News Corp. executives.
The Shine deal has also been a lightning rod for corporate governance complaints.
In March, several News Corp. shareholders sued the company in Delaware Chancery Court, claiming the takeover of Shine was a sweetheart deal for Mr. Murdoch's daughter. Among other things, they sought to block her appointment to the board, according to a copy of their complaint.
News Corp. filed a motion to dismiss the suit.
Mr. Dinh said the board and Ms. Murdoch hope the move reaffirms that News Corp aspires to the highest standards of corporate governance and will continue to act in the best interests of all stakeholders.
A spokesman for Ms. Murdoch said she had no further comment beyond the statement from Mr. Dinh.
In recent weeks, pressure has mounted for the company to overhaul its corporate governance.
Some institutional investors, such as California Public Employees' Retirement System, have made public statements criticizing the company's ownership structure and expressed a desire to meet with executives.
Ms. Murdoch's brother James has had to fend off calls from some BSkyB shareholders for him to surrender his chairmanship of British Sky Broadcasting Group PLC. The U.K. pay-TV system is 39% owned by News Corp. The BSkyB board recently reiterated its unanimous support for James Murdoch.
News Corp. directors are scheduled to meet Tuesday in Los Angeles, ahead of the company's fiscal year-end earnings release the next day, according to people familiar with the matter.
The board is expected to discuss what to do with the nearly $12 billion in cash the company had on its balance sheet as of March.
Showing posts with label News Corp. Show all posts
Showing posts with label News Corp. Show all posts
08 August 2011
26 July 2011
AUSTRALIA CONCERNED ABOUT MURDOCH’S MONOPOLY
Story first appeared in the Associated Press
Australia's competition watchdog has expressed concern at a bid by Rupert Murdoch's cable television operation to buy out a rival, saying it would create "a near monopoly" of pay TV service in the country.
The statement Friday by the Australian Competition and Consumer Commission is another setback for Murdoch, whose media empire is embroiled in a phone hacking scandal in Britain. His News Limited, a subsidiary of his U.S.-based News Corp., has substantial stakes in Australian media companies, including in FOXTEL, the country's largest subscription television provider.
Although the ACCC's statement is only on its preliminary finding, it gives a clear indication that it would be opposed to such a merger. The deal cannot go through without the commission's approval.
FOXTEL, which delivers more than 200 channels to 1.63 million subscribers in metropolitan areas of Australia, is seeking to buy Austar, which has over 760,000 subscribers.
Austar, however, is available mostly in regional and rural Australia, and the only place where the two rivals are competing is in the Gold Coast.
The ACCC said that because of the distinct markets of the two companies, there is substantial room for competition in the cable TV business in Australia.
It said its preliminary view is that the proposed acquisition is likely to result in a substantial lessening of competition in the national market for the supply of subscription television services. It said that the proposed merger would therefore effectively create a near monopoly subscription television provider across Australia.
The statement said that disallowing a merger will substantially increase the ability and incentive for FOXTEL and Austar to compete with one another outside of their existing distribution regions, and the proposed acquisition would prevent any such competition from occurring.
The ACCC says free-to-air television networks are not sufficiently close competitors to subscription TV to constrain the actions of a combined Foxtel-Austar.
The ACCC has asked for further submissions from interested parties by Aug. 11, and it intends to publicly announce its final view by Sept. 8.
Australia's competition watchdog has expressed concern at a bid by Rupert Murdoch's cable television operation to buy out a rival, saying it would create "a near monopoly" of pay TV service in the country.
The statement Friday by the Australian Competition and Consumer Commission is another setback for Murdoch, whose media empire is embroiled in a phone hacking scandal in Britain. His News Limited, a subsidiary of his U.S.-based News Corp., has substantial stakes in Australian media companies, including in FOXTEL, the country's largest subscription television provider.
Although the ACCC's statement is only on its preliminary finding, it gives a clear indication that it would be opposed to such a merger. The deal cannot go through without the commission's approval.
FOXTEL, which delivers more than 200 channels to 1.63 million subscribers in metropolitan areas of Australia, is seeking to buy Austar, which has over 760,000 subscribers.
Austar, however, is available mostly in regional and rural Australia, and the only place where the two rivals are competing is in the Gold Coast.
The ACCC said that because of the distinct markets of the two companies, there is substantial room for competition in the cable TV business in Australia.
It said its preliminary view is that the proposed acquisition is likely to result in a substantial lessening of competition in the national market for the supply of subscription television services. It said that the proposed merger would therefore effectively create a near monopoly subscription television provider across Australia.
The statement said that disallowing a merger will substantially increase the ability and incentive for FOXTEL and Austar to compete with one another outside of their existing distribution regions, and the proposed acquisition would prevent any such competition from occurring.
The ACCC says free-to-air television networks are not sufficiently close competitors to subscription TV to constrain the actions of a combined Foxtel-Austar.
The ACCC has asked for further submissions from interested parties by Aug. 11, and it intends to publicly announce its final view by Sept. 8.
19 July 2011
THE NEWS CORP SCANDAL STARTS TO TAKE ITS TOLL ON EXECUTIVES
To his many enemies, Rupert Murdoch is getting his comeuppance.
Murdoch's tabloid newspapers long have reveled in the misdeeds of others with salacious photos and pun-packed headlines. Now, one of the world's most powerful media executives is learning what it's like to be enveloped in his own scandal.
For some there is a feeling that Murdoch has been king of the world for too long and it's about time that somebody brought him back to Earth.
But no one is calling press conferences to gloat about Murdoch's troubles. Even his bitterest media rivals are keeping quiet.
Liberty Media chief John Malone, who engaged in media-mogul head butting with Murdoch over his stake in Murdoch's News Corp and other issues has not commented.
CNN founder Ted Turner, who once challenged Murdoch to a boxing match in Las Vegas isn’t talking either.
New York Daily News Publisher Mort Zuckerman, whose newspaper fights every day for front page dominance with the Post for New York's tabloid audience also has clammed up.
It's hardly surprising, of course. Despite a scandal that has claimed two of his top executives and led him to close one of his British tabloids, Murdoch still runs News Corp., one of the world's most imposing media empires. There's no percentage in gloating publicly about the scandal if you still have to compete - and perhaps do business - with the 80-year-old Murdoch.
But others aren't as charitable. In recent days, Murdoch has drawn comparisons to a cruel monarch, Richard Nixon, even the devil.
The scandal centers on revelations that journalists at his top-selling British tabloid, News of the World, gathered information through a variety of possibly illegal endeavors that included phone hacking and bribery of police officers. Last week, he closed the 168-year-old tabloid and withdrew a hard-fought bid for 100 percent ownership of prized satellite TV carrier British Sky Broadcasting. He even met with and apologized to the family of a missing, murdered girl whose phone was hacked by News Corp. journalists.
On Friday, he accepted resignations from two top News Corp. executives, Rebekah Brooks, who ran News International, which controlled News of the World and the company's other British newspapers, and Dow Jones & Co. CEO Les Hinton, who used to run the same unit.
The unfolding saga threatens to expose Murdoch and his company to further scorn and legal troubles. News Corp. stock has shed billions of dollars in value. And criminal investigations are under way in Britain, while the FBI has begun a preliminary inquiry in the U.S., where the company's holdings include the nation's largest newspaper, The Wall Street Journal, the New York Post, the Fox TV network and the 20th Century Fox movie studio.
For now, Murdoch's job as News Corp.'s CEO is secure because he controls 40 percent of the company's voting stock through a family trust and the board is stacked with directors that shareholder activists have long criticized as his cronies. He also remains one of the world's richest people, although a fortune pegged at $7.6 billion in March by Forbes magazine has been clipped by a 13 percent decline in News Corp.'s stock during the past two weeks.
But the British lawmakers who have traditionally supported Murdoch rather than risk being pilloried in the pages of his newspapers no longer seem to be in his corner because their fear of retaliation is fading. He will surely face tough questions Tuesday when he appears before a Parliament committee eager to grill him about the phone hacking and bribery allegations.
All the powerful allies that used to help him, either publicly or behind the scenes, have appeared to be faded to the sidelines, and now it looks as thought he is on his own, and he is in over his head.
Some Murdoch critics compare the crisis and widespread antipathy surrounding Murdoch to the unraveling of Richard Nixon's presidency in 1974 as details of the Watergate cover-up were revealed. Like Nixon then, Murdoch is in free-fall mode, and there seems to be nothing he can do to stop this story.
The lack of control over the situation seemingly bothers the notoriously autocratic Murdoch, who said he was getting annoyed with the media's unrelenting coverage of the scandal.
If the scandal widens, some believe Murdoch eventually will have to step down as CEO, though he could still retain the chairman's title.
Disgraced newspaper publisher Conrad Black, whose former ownership of The Daily Telegraph turned him into a bitter Murdoch rival, thinks his old foe is more like another polarizing historical figure - French emperor Napoleon Bonaparte. He stated that like Napoleon, Murdoch is a great bad man, and it is as wrong to dispute his greatness as his badness.
Black, who was convicted of fraud in 2007 and still has some prison time to serve, wrote that it would be astonishing if Murdoch's British newspapers didn't commit crimes while reveling in the climate of immunity that has been the group's modus operandi for decades. Although he stopped short of calling him a crook, Black lambasted Murdoch as an an exploiter of the discomfort of others and a malicious myth-maker, an assassin of the dignity of others and of respected institutions.
Murdoch also is despised by union workers who still remember how he used a new printing plant to foil a printers' strike in the gritty London district of Wapping in 1986 and 1987. One area resident, recalls seeing police regularly harass and arrest picketers while making sure delivery trucks got into and out of the printing plant. That fed his suspicions that the police were in Murdoch's pocket.
In the U.S., much of the ill will toward Murdoch has stemmed from the belief that he uses his media properties, especially the Fox News cable channel, to promote a conservative political agenda. There is essentially a partisan reaction against Murdoch and his use of right-wing politics.
Fox News isn't covering Murdoch's scandal as aggressively as other outlets. From July 4 through July 13, Fox aired 30 segments about the story. Rival CNN showed 109 segments and MSNBC 71.
When Murdoch bought Dow Jones, parent company of the Wall Street Journal, for $5.7 billion in 2007, there were fears the Journal's quality would deteriorate. But Paul Steiger, who left as the Journal's top editor shortly after the acquisition was completed and started a non-profit journalism service called ProPublica, credits News Corp. for investing in the newspaper to maintain its quality and increase its circulation.
Some members of the family in control of the company that sold the Journal to Murdoch seized on the scandal to express seller's remorse. They stated that they did a deal with the devil and it really saddens them.
Hinton, 67, became the first of Murdoch's U.S. executives swept out in the scandal. He resigned Friday from his post as CEO of Dow Jones & Co. and publisher of The Wall Street Journal, ending a 52-year career working for Murdoch. Hinton was executive chairman of the division that included News of the World during some of the years in which the phone hacking occurred. He had assured British parliament in 2007 and 2009 that the hacking had been limited to a rogue reporter, an assertion that proved to be untrue. Hinton joined The Associated Press' board of directors in April.
In his resignation statement, Hinton said he never knew about the rampant hacking at the British tabloid.
Murdoch's tabloid newspapers long have reveled in the misdeeds of others with salacious photos and pun-packed headlines. Now, one of the world's most powerful media executives is learning what it's like to be enveloped in his own scandal.
For some there is a feeling that Murdoch has been king of the world for too long and it's about time that somebody brought him back to Earth.
But no one is calling press conferences to gloat about Murdoch's troubles. Even his bitterest media rivals are keeping quiet.
Liberty Media chief John Malone, who engaged in media-mogul head butting with Murdoch over his stake in Murdoch's News Corp and other issues has not commented.
CNN founder Ted Turner, who once challenged Murdoch to a boxing match in Las Vegas isn’t talking either.
New York Daily News Publisher Mort Zuckerman, whose newspaper fights every day for front page dominance with the Post for New York's tabloid audience also has clammed up.
It's hardly surprising, of course. Despite a scandal that has claimed two of his top executives and led him to close one of his British tabloids, Murdoch still runs News Corp., one of the world's most imposing media empires. There's no percentage in gloating publicly about the scandal if you still have to compete - and perhaps do business - with the 80-year-old Murdoch.
But others aren't as charitable. In recent days, Murdoch has drawn comparisons to a cruel monarch, Richard Nixon, even the devil.
The scandal centers on revelations that journalists at his top-selling British tabloid, News of the World, gathered information through a variety of possibly illegal endeavors that included phone hacking and bribery of police officers. Last week, he closed the 168-year-old tabloid and withdrew a hard-fought bid for 100 percent ownership of prized satellite TV carrier British Sky Broadcasting. He even met with and apologized to the family of a missing, murdered girl whose phone was hacked by News Corp. journalists.
On Friday, he accepted resignations from two top News Corp. executives, Rebekah Brooks, who ran News International, which controlled News of the World and the company's other British newspapers, and Dow Jones & Co. CEO Les Hinton, who used to run the same unit.
The unfolding saga threatens to expose Murdoch and his company to further scorn and legal troubles. News Corp. stock has shed billions of dollars in value. And criminal investigations are under way in Britain, while the FBI has begun a preliminary inquiry in the U.S., where the company's holdings include the nation's largest newspaper, The Wall Street Journal, the New York Post, the Fox TV network and the 20th Century Fox movie studio.
For now, Murdoch's job as News Corp.'s CEO is secure because he controls 40 percent of the company's voting stock through a family trust and the board is stacked with directors that shareholder activists have long criticized as his cronies. He also remains one of the world's richest people, although a fortune pegged at $7.6 billion in March by Forbes magazine has been clipped by a 13 percent decline in News Corp.'s stock during the past two weeks.
But the British lawmakers who have traditionally supported Murdoch rather than risk being pilloried in the pages of his newspapers no longer seem to be in his corner because their fear of retaliation is fading. He will surely face tough questions Tuesday when he appears before a Parliament committee eager to grill him about the phone hacking and bribery allegations.
All the powerful allies that used to help him, either publicly or behind the scenes, have appeared to be faded to the sidelines, and now it looks as thought he is on his own, and he is in over his head.
Some Murdoch critics compare the crisis and widespread antipathy surrounding Murdoch to the unraveling of Richard Nixon's presidency in 1974 as details of the Watergate cover-up were revealed. Like Nixon then, Murdoch is in free-fall mode, and there seems to be nothing he can do to stop this story.
The lack of control over the situation seemingly bothers the notoriously autocratic Murdoch, who said he was getting annoyed with the media's unrelenting coverage of the scandal.
If the scandal widens, some believe Murdoch eventually will have to step down as CEO, though he could still retain the chairman's title.
Disgraced newspaper publisher Conrad Black, whose former ownership of The Daily Telegraph turned him into a bitter Murdoch rival, thinks his old foe is more like another polarizing historical figure - French emperor Napoleon Bonaparte. He stated that like Napoleon, Murdoch is a great bad man, and it is as wrong to dispute his greatness as his badness.
Black, who was convicted of fraud in 2007 and still has some prison time to serve, wrote that it would be astonishing if Murdoch's British newspapers didn't commit crimes while reveling in the climate of immunity that has been the group's modus operandi for decades. Although he stopped short of calling him a crook, Black lambasted Murdoch as an an exploiter of the discomfort of others and a malicious myth-maker, an assassin of the dignity of others and of respected institutions.
Murdoch also is despised by union workers who still remember how he used a new printing plant to foil a printers' strike in the gritty London district of Wapping in 1986 and 1987. One area resident, recalls seeing police regularly harass and arrest picketers while making sure delivery trucks got into and out of the printing plant. That fed his suspicions that the police were in Murdoch's pocket.
In the U.S., much of the ill will toward Murdoch has stemmed from the belief that he uses his media properties, especially the Fox News cable channel, to promote a conservative political agenda. There is essentially a partisan reaction against Murdoch and his use of right-wing politics.
Fox News isn't covering Murdoch's scandal as aggressively as other outlets. From July 4 through July 13, Fox aired 30 segments about the story. Rival CNN showed 109 segments and MSNBC 71.
When Murdoch bought Dow Jones, parent company of the Wall Street Journal, for $5.7 billion in 2007, there were fears the Journal's quality would deteriorate. But Paul Steiger, who left as the Journal's top editor shortly after the acquisition was completed and started a non-profit journalism service called ProPublica, credits News Corp. for investing in the newspaper to maintain its quality and increase its circulation.
Some members of the family in control of the company that sold the Journal to Murdoch seized on the scandal to express seller's remorse. They stated that they did a deal with the devil and it really saddens them.
Hinton, 67, became the first of Murdoch's U.S. executives swept out in the scandal. He resigned Friday from his post as CEO of Dow Jones & Co. and publisher of The Wall Street Journal, ending a 52-year career working for Murdoch. Hinton was executive chairman of the division that included News of the World during some of the years in which the phone hacking occurred. He had assured British parliament in 2007 and 2009 that the hacking had been limited to a rogue reporter, an assertion that proved to be untrue. Hinton joined The Associated Press' board of directors in April.
In his resignation statement, Hinton said he never knew about the rampant hacking at the British tabloid.
PARLIAMENTS BREAK MAY BE DELAYED OVER HACKING
British Prime Minister David Cameron, under huge political pressure over the intensifying phone hacking scandal at Rupert Murdoch's embattled U.K. newspaper empire, said Monday that Parliament should delay its summer break so he can brief lawmakers.
Parliament is due to break up for the summer on Tuesday, but Cameron said that it may well be right to have Parliament meet on Wednesday so he can make a further statement.
Cameron was speaking in South Africa, on the first day of a two-day visit to the continent. He had planned a longer trip, but cut it short as his government faces increasing questions about its relationship with the Murdoch media empire amid a scandal that has tainted some of Britain's top political, media and police figures.
London police chief Paul Stephenson resigned Sunday over his ties to a former News of the World executive editor who has been arrested over the scandal. In his resignation speech Stephenson made reference to Cameron's hiring of Andy Coulson, a former editor of the shuttered tabloid who was arrested earlier this month over hacking.
Murdoch's former British CEO - and Cameron's friend - Rebekah Brooks, was arrested Sunday on suspicion of hacking.
Cameron said his government had taken very decisive action by setting up a judge-led inquiry into wrongdoing by the newspaper.
Both Stephenson's resignation and Brooks' arrest are ominous not only for Murdoch's News Corp., but for a British power structure that nurtured a cozy relationship with his papers for years.
The arrest on Sunday of the 43-year-old Brooks, often described as a surrogate daughter to the 80-year-old Murdoch, brought the British police investigations into the media baron's inner circle for the first time. She was released on bail some 12 hours later.
Brooks, the ultimate social and political insider, dined at Christmas with Cameron. His Conservative-led government is now facing increasing questions about its relationship with Murdoch's media empire.
Rupert and James Murdoch are to be grilled by British lawmakers Tuesday over the scandal. Brooks also had agreed to be questioned before a parliamentary committee, but her arrest throws that appearance into doubt.
Stephenson said he did not make the decision to hire Wallis and had no knowledge of allegations that he was linked to phone hacking, but he wanted his police force to focus on preparing for the 2012 London Olympics instead of wondering about a possible leadership change.
Stephenson said he had no knowledge of the extent of this disgraceful practice and the repugnant nature of the selection of victims that is now emerging, and that he will not lose any sleep over his personal integrity.
Cameron's office says he is back in Britain on Wednesday. He will visit South Africa and Nigeria. He had also planned to visit Rwanda and Sudan but a decision was made last week to drop that part of the itinerary.
Parliament is due to break up for the summer on Tuesday, but Cameron said that it may well be right to have Parliament meet on Wednesday so he can make a further statement.
Cameron was speaking in South Africa, on the first day of a two-day visit to the continent. He had planned a longer trip, but cut it short as his government faces increasing questions about its relationship with the Murdoch media empire amid a scandal that has tainted some of Britain's top political, media and police figures.
London police chief Paul Stephenson resigned Sunday over his ties to a former News of the World executive editor who has been arrested over the scandal. In his resignation speech Stephenson made reference to Cameron's hiring of Andy Coulson, a former editor of the shuttered tabloid who was arrested earlier this month over hacking.
Murdoch's former British CEO - and Cameron's friend - Rebekah Brooks, was arrested Sunday on suspicion of hacking.
Cameron said his government had taken very decisive action by setting up a judge-led inquiry into wrongdoing by the newspaper.
Both Stephenson's resignation and Brooks' arrest are ominous not only for Murdoch's News Corp., but for a British power structure that nurtured a cozy relationship with his papers for years.
The arrest on Sunday of the 43-year-old Brooks, often described as a surrogate daughter to the 80-year-old Murdoch, brought the British police investigations into the media baron's inner circle for the first time. She was released on bail some 12 hours later.
Brooks, the ultimate social and political insider, dined at Christmas with Cameron. His Conservative-led government is now facing increasing questions about its relationship with Murdoch's media empire.
Rupert and James Murdoch are to be grilled by British lawmakers Tuesday over the scandal. Brooks also had agreed to be questioned before a parliamentary committee, but her arrest throws that appearance into doubt.
Stephenson said he did not make the decision to hire Wallis and had no knowledge of allegations that he was linked to phone hacking, but he wanted his police force to focus on preparing for the 2012 London Olympics instead of wondering about a possible leadership change.
Stephenson said he had no knowledge of the extent of this disgraceful practice and the repugnant nature of the selection of victims that is now emerging, and that he will not lose any sleep over his personal integrity.
Cameron's office says he is back in Britain on Wednesday. He will visit South Africa and Nigeria. He had also planned to visit Rwanda and Sudan but a decision was made last week to drop that part of the itinerary.
NEWS CORP SCANDAL
News Corp.’s phone-hacking crisis claimed two top newspaper executives as Chief Executive Officer Rupert Murdoch defended his handling of the scandal and the FBI began a U.S. probe of the company.
Les Hinton, chairman of News International in the years the alleged hacking occurred, stepped down as head of the Dow Jones division yesterday. That followed the exit of News International CEO Rebekah Brooks. She was editor of the News of the World, the newspaper implicated in the scandal, from 2000 to 2003.
The spotlight will shift back to Murdoch and his son, James, the deputy chief operating officer, on July 19 when the two testify about the phone-hacking scandal before the U.K. Parliament. With the FBI involved and the company facing civil litigation in the U.S., the scandal is likely to grow.
In a statement announcing Hinton’s departure, the 80-year- old CEO downplayed his own importance to the company he built from two inherited Australian newspapers. He stated that News Corp. is not Rupert Murdoch, that it is the collective creativity and effort of many thousands of people around the world, and few individuals have given more to this company than Les Hinton.
FBI Role
The Federal Bureau of Investigation, prodded by members of Congress, began looking into whether News Corp. employees may have targeted the phones of victims of the Sept. 11, 2001, terrorist attacks.
U.S. Representative Peter King, the Republican chairman of the House Committee on Homeland Security, asked FBI Director Robert Mueller in a July 13 letter to investigate whether News of the World employees tried to access voicemails belonging to the victims through bribery and illegal wiretapping.
The FBI stated they are aware of certain allegations pertaining to a possible hacking by News Corp. personnel and they are looking into those charges.
Hiring Counsel
News Corp. has hired criminal defense lawyer Brendan V. Sullivan Jr.
of the Washington law firm Williams & Connolly LLP, the New York Times reported. Sullivan’s clients have included former Alaska Senator Ted Stevens, ex-New York Stock Exchange Chairman Richard Grasso and Reagan White House aide Oliver North.
Murdoch, in an interview with the News Corp.-owned Wall Street Journal, said an independent committee led by a distinguished non- employee will investigate the phone-hacking allegations. He claims the company has handled the crisis extremely well, with minor mistakes.
He met yesterday with the parents of Milly Dowler, a murdered schoolgirl whose voicemails were hacked by News of the World in 2002.
After meeting the Dowlers, Murdoch said he was appalled to find out what happened. He claims he apologized.
Dropped Bid
Murdoch has been in London since last weekend as the scandal escalated and politicians of all parties called on him and James, 38, to take responsibility. News Corp. is publishing an apology in all national newspapers in Britain, the younger Murdoch said in a letter to employees.
The now-defunct News of the World tabloid is accused of hacking hundreds of voice mails, including those of murder and terrorism victims, and bribing police for confidential information. Last week, News Corp. closed the 168-year-old newspaper. London police have made at least nine arrests as part of their investigation.
The scandal led News Corp. to abandon its $12.6 billion (7.8 billion-
pound) bid for full control of British Sky Broadcasting Group Plc.
News Corp. rose 21 cents, or 1.3 percent, to $15.64 yesterday in Nasdaq Stock Market trading in New York. The Class A shares have fallen about 13 percent since the first reports on July 4 that News of the World had hacked Milly Dowler’s voice mail.
The resignation of Brooks marked a U-turn for Murdoch, who had stood with the newspaper executive and said she would stay on. Murdoch this week backed his son and heir apparent, saying James had acted as fast as he could, the moment he could.
Family Holdings
The Murdochs must cooperate fully with inquiries into the phone- hacking scandal.
Murdoch controls News Corp. through a 38 percent stake in the company’s Class B voting shares. Those shares represent a 12 percent economic interest in the company, when nonvoting shares are counted as well.
In addition to Rupert Murdoch, News Corp.’s board members include his son Lachlan, 39, as well as James. Murdoch’s daughter Elisabeth, 42, was expected to become a director after selling her Shine Group TV production outfit to News Corp. for $673 million in February.
Justice Department
King’s request to Mueller was one of several by elected officials and media watchdog groups to investigate News Corp. King, who represents part of New York’s Long Island, said in the letter that his district lost 150 people in the attacks.
In a July 13 letter, New Jersey senator Frank Lautenberg asked U.S.
Attorney General Eric Holder and SEC Chairwoman Mary L. Schapiro to investigate whether News Corp. or its subsidiaries breached the U.S. Foreign Corrupt Practices Act.
The act makes it a crime for a U.S.-based company, such as News Corp., to pay foreign officials to get or keep business.
Holder yesterday confirmed the existence of a U.S. probe in public comments he made while in Sydney.
He claims there have been members of Congress in the United States who have asked them to investigate the same allegations, and they are progressing in that regard using the appropriate federal law enforcement agencies in the U.S.
Rupert Murdoch said the company isn’t separating its newspaper assets, which also include U.K.tabloid The Sun, the Times of London and the New York Post. The company will establish a protocol for behavior for reporters across the company, he said.
Les Hinton, chairman of News International in the years the alleged hacking occurred, stepped down as head of the Dow Jones division yesterday. That followed the exit of News International CEO Rebekah Brooks. She was editor of the News of the World, the newspaper implicated in the scandal, from 2000 to 2003.
The spotlight will shift back to Murdoch and his son, James, the deputy chief operating officer, on July 19 when the two testify about the phone-hacking scandal before the U.K. Parliament. With the FBI involved and the company facing civil litigation in the U.S., the scandal is likely to grow.
In a statement announcing Hinton’s departure, the 80-year- old CEO downplayed his own importance to the company he built from two inherited Australian newspapers. He stated that News Corp. is not Rupert Murdoch, that it is the collective creativity and effort of many thousands of people around the world, and few individuals have given more to this company than Les Hinton.
FBI Role
The Federal Bureau of Investigation, prodded by members of Congress, began looking into whether News Corp. employees may have targeted the phones of victims of the Sept. 11, 2001, terrorist attacks.
U.S. Representative Peter King, the Republican chairman of the House Committee on Homeland Security, asked FBI Director Robert Mueller in a July 13 letter to investigate whether News of the World employees tried to access voicemails belonging to the victims through bribery and illegal wiretapping.
The FBI stated they are aware of certain allegations pertaining to a possible hacking by News Corp. personnel and they are looking into those charges.
Hiring Counsel
News Corp. has hired criminal defense lawyer Brendan V. Sullivan Jr.
of the Washington law firm Williams & Connolly LLP, the New York Times reported. Sullivan’s clients have included former Alaska Senator Ted Stevens, ex-New York Stock Exchange Chairman Richard Grasso and Reagan White House aide Oliver North.
Murdoch, in an interview with the News Corp.-owned Wall Street Journal, said an independent committee led by a distinguished non- employee will investigate the phone-hacking allegations. He claims the company has handled the crisis extremely well, with minor mistakes.
He met yesterday with the parents of Milly Dowler, a murdered schoolgirl whose voicemails were hacked by News of the World in 2002.
After meeting the Dowlers, Murdoch said he was appalled to find out what happened. He claims he apologized.
Dropped Bid
Murdoch has been in London since last weekend as the scandal escalated and politicians of all parties called on him and James, 38, to take responsibility. News Corp. is publishing an apology in all national newspapers in Britain, the younger Murdoch said in a letter to employees.
The now-defunct News of the World tabloid is accused of hacking hundreds of voice mails, including those of murder and terrorism victims, and bribing police for confidential information. Last week, News Corp. closed the 168-year-old newspaper. London police have made at least nine arrests as part of their investigation.
The scandal led News Corp. to abandon its $12.6 billion (7.8 billion-
pound) bid for full control of British Sky Broadcasting Group Plc.
News Corp. rose 21 cents, or 1.3 percent, to $15.64 yesterday in Nasdaq Stock Market trading in New York. The Class A shares have fallen about 13 percent since the first reports on July 4 that News of the World had hacked Milly Dowler’s voice mail.
The resignation of Brooks marked a U-turn for Murdoch, who had stood with the newspaper executive and said she would stay on. Murdoch this week backed his son and heir apparent, saying James had acted as fast as he could, the moment he could.
Family Holdings
The Murdochs must cooperate fully with inquiries into the phone- hacking scandal.
Murdoch controls News Corp. through a 38 percent stake in the company’s Class B voting shares. Those shares represent a 12 percent economic interest in the company, when nonvoting shares are counted as well.
In addition to Rupert Murdoch, News Corp.’s board members include his son Lachlan, 39, as well as James. Murdoch’s daughter Elisabeth, 42, was expected to become a director after selling her Shine Group TV production outfit to News Corp. for $673 million in February.
Justice Department
King’s request to Mueller was one of several by elected officials and media watchdog groups to investigate News Corp. King, who represents part of New York’s Long Island, said in the letter that his district lost 150 people in the attacks.
In a July 13 letter, New Jersey senator Frank Lautenberg asked U.S.
Attorney General Eric Holder and SEC Chairwoman Mary L. Schapiro to investigate whether News Corp. or its subsidiaries breached the U.S. Foreign Corrupt Practices Act.
The act makes it a crime for a U.S.-based company, such as News Corp., to pay foreign officials to get or keep business.
Holder yesterday confirmed the existence of a U.S. probe in public comments he made while in Sydney.
He claims there have been members of Congress in the United States who have asked them to investigate the same allegations, and they are progressing in that regard using the appropriate federal law enforcement agencies in the U.S.
Rupert Murdoch said the company isn’t separating its newspaper assets, which also include U.K.tabloid The Sun, the Times of London and the New York Post. The company will establish a protocol for behavior for reporters across the company, he said.
11 November 2010
Man Who Blacked Out World Series Blames Politicians
Bloomberg
News Corp.’s Chase Carey, the man who oversaw Fox’s talks with Cablevision Systems Corp. during a two- week blackout, has advice for government officials who want to keep more TV channels from going dark: Stop meddling.
News Corp. last month cut off World Series games and shows including “Glee” to Cablevision’s 3 million customers after the two sides couldn’t agree on how much Cablevision should pay Fox. One problem, Carey said, was that the government wasn’t clear about whether it would intervene, leading Cablevision to think it might get better terms if it held out until the U.S. weighed in.
“This process would have been resolved more easily, more quickly,” said Carey, chief operating officer and second-in- command to Rupert Murdoch. “I would actually contend we wouldn’t have gone off the air at all.”
Clashes between media and cable companies are on the rise as broadcasters such as Fox and Walt Disney Co.’s ABC ask to be paid for programming that used to be free. The number of TV blackouts this year is the most in at least a decade, triggering consumer wrath and lawmaker scrutiny.
Carey, 56, spoke during an interview at News Corp.’s New York headquarters, in a wood-paneled, windowless room barely large enough for an oversized conference table. He said he was eager to clear up what he thinks are misperceptions about the longest blackout for such a large customer group in at least a decade.
“This wasn’t a good experience,” Carey said. “Everybody here found this really painful.”
Kerry’s New Bill
News Corp., controlled by Chairman and CEO Murdoch, fell 5 cents to $14.28 on the Nasdaq Stock Market at 4 p.m. New York time. Cablevision rose 1 cent to $29.33 in New York Stock Exchange composite trading. News Corp. has gained 4.3 percent this year, while Cablevision added 38 percent.
Cablevision, based in Bethpage, New York, declined to make anyone available for comment. A spokesman referred to a conference call last week, when Chief Operating Officer Tom Rutledge said the U.S. Federal Communications Commission should prevent broadcasters from cutting off programming to obtain negotiating leverage.
Senator John Kerry says he plans to introduce a bill when Congress reconvenes next week to keep companies from pulling signals before regulators check for good-faith negotiations. The Massachusetts Democrat is chairman of the communications, Internet and technology subcommittee of the Senate Commerce Committee, which plans to hold a hearing on the issue.
“They’re very high-profile battles because it can turn into the politicians’ constituents losing their TV service,” David Joyce, an analyst with Miller, Tabak & Co. in New York, said in an interview.
‘Not a Nonprofit’
Carey has said Fox needs fees from cable companies, in addition to advertising revenue, to afford marquee events including professional football and baseball games. He’s made subscriber fees a top priority since becoming COO last year, as he strives to return the broadcast network to profitability instead of losing a “few hundred million dollars” each year.
“We’re not running a nonprofit,” Carey said.
Fox and Cablevision reached an agreement Oct. 30 without direct government intervention. Though terms weren’t disclosed, Cablevision called it an “unfair price.” Michael Nathanson, an analyst at Nomura Securities International Inc. in New York, estimates Cablevision will pay Fox about $1 per subscriber a month after a few years.
Carey said he visited politicians in Washington to explain that Fox needs a dual-revenue stream, and to argue that giving Cablevision hope of government intervention encouraged the cable operator to drag out the process.
‘Unfortunate Stalemate’
“As long as they feel they have in places a somewhat receptive audience, it incents them to not resolve this as a business matter but to politicize it,” he said.
At least 50 elected officials sided with Cablevision during the dispute and called for arbitration, the company says. Distributors say they resist paying broadcasters the new fees because they have to pass the costs on to consumers.
“Just because deals are getting signed doesn’t mean that’s going to be the end of the story,” analyst Joyce said.
FCC Chairman Julius Genachowski said in an Oct. 29 letter to Kerry the agency doesn’t have the authority to prevent service disruptions. Congress should revisit current law and examine whether mandatory mediation and binding arbitration could prevent impasses like the “unfortunate stalemate” between Fox and Cablevision, Genachowski wrote.
Kerry’s bill isn’t likely to pass during the post-election session, Andrew D. Lipman, a Washington-based partner with the law firm Bingham McCutchen LLP, said in an interview.
Republican Reluctance
Newly elected Republicans “are going to be less willing to insert government into disputes between cable providers and broadcasters,” Lipman said.
Carey used to be on the other side of the negotiating table. Before returning to News Corp. in mid-2009, he was chief executive of DirecTV, the largest U.S. satellite-television provider. He said broadcasters were “delinquent” in the 2000s for not addressing their faltering business models and not seeking payments from pay-TV operators.
Now that Fox has deals locked up with its four largest distributors, the network is on the path to profitability, Carey said.
Carey said he understands that politicians want to reassure their constituents and show they’re taking action. The problem is that such actions are often counterproductive, he said.
“You’re going to bastardize every negotiation because you’re going to have this specter of arbitration,” he said.
05 November 2010
News Corp. Profit Rises on Higher Ad, Subscriber Fees
Bloomberg
News Corp., the owner of Fox News and the Twentieth Century Fox film studio, said first-quarter profit rose 36 percent because of higher advertising and subscriber fees at its television channels.
Net income climbed to $775 million, or 30 cents a share, from $571 million, or 22 cents, a year earlier, the New York- based company said today in a statement. Excluding a tax benefit, earnings were 27 cents a share. Analysts on average estimated 24 cents, according to Bloomberg data.
Profit was driven by increases in the TV and publishing advertising markets. The company is also wringing higher fees out of television distributors for its broadcast and cable channels. Last week, Fox secured new deals with Dish Network Corp. and Cablevision Systems Corp., which agreed to pay what it called an “unfair price” to end a programming blackout.
“These deals are critical to driving the Fox network’s financial success to reflect its real value,” News Corp. Chief Operating Officer Chase Carey said today on a conference call. “Over the next couple of years as we continue to close new agreements we will be taking this business to a whole new level of profitability.”
Chairman and Chief Executive Officer Rupert Murdoch wasn’t on the call because he’s been traveling overseas, the company said. The last time he skipped an earnings call was November 2006, Bloomberg data show.
Sales in the first quarter ended Sept. 30 gained 3.2 percent to $7.43 billion, compared with the $7.41 billion average of 11 analysts’ estimates compiled by Bloomberg.
Case Closed
News Corp. rose 38 cents, or 2.6 percent, to $15.22 in late trading after U.S. markets closed. The Class A shares gained 23 cents to $14.84 today in regular Nasdaq Stock Market trading and are up 8.4 percent this year.
Cablevision and News Corp. resolved their dispute Oct. 30, after Fox broadcast stations and some Fox cable channels had been cut off to 3 million customers for two weeks. It was the longest blackout of a major broadcast network for a million or more people in at least a decade, and may signal media companies are gaining the upper hand in seeking payment for over-the-air telecasts that used to be free.
News Corp. is turning to so-called retransmission fees after advertising sales took a hit during the U.S. recession. Fox has also seen viewership fall, 16 percent among viewers 18 to 49 in the first six weeks of the TV season, threatening its six-year run as the ratings leader.
Cablevision and Dish probably will pay 55 cents per subscriber per month in the first year, rising to $1 in the fifth year, analyst Michael Nathanson of Nomura Securities International Inc. estimated in a Nov. 1 report.
TV Profit
Operating profit for the television unit more than doubled as a 22 percent jump in local-station ad revenue offset higher programming costs at the Fox broadcast network.
The cable networks, such as FX, increased operating income 28 percent to $659 million, on a 17 percent gain in revenue. At the U.S. channels, advertising grew 16 percent and affiliate fees rose 14 percent.
As part of Murdoch’s efforts to add to subscription operations, the company is bidding for the 61 percent of pay-TV operator British Sky Broadcasting Group Plc it doesn’t already own. In June the biggest U.K. pay-TV operator rejected News Corp.’s buyout offer of 700 pence a share, or 7.8 billion pounds ($12.5 billion). BSkyB’s independent directors are seeking more than 800 pence from News Corp.
Today, News Corp. formally asked for approval from European Union antitrust regulators, which set a Dec. 8 deadline for reviewing the BSkyB transaction. U.K. regulators may still decide to raise objections.
Box Office
During the quarter, the film studio generated $243.6 million at the box office with its top release being “Predators,” according to Box Office Mojo. That compares with $333.8 million a year ago when “Ice Age: Dawn of the Dinosaurs” was released.
Film operating income fell 28 percent to $280 million.
Advertising increased an average of 13 percent at the company’s newspapers around the world, including the Wall Street Journal and the Times of London. Publishing operating profit was up 51 percent to $178 million.
Bloomberg LP, the parent of Bloomberg News, competes with News Corp. and its Dow Jones division in providing financial news and data.
Net income climbed to $775 million, or 30 cents a share, from $571 million, or 22 cents, a year earlier, the New York- based company said today in a statement. Excluding a tax benefit, earnings were 27 cents a share. Analysts on average estimated 24 cents, according to Bloomberg data.
Profit was driven by increases in the TV and publishing advertising markets. The company is also wringing higher fees out of television distributors for its broadcast and cable channels. Last week, Fox secured new deals with Dish Network Corp. and Cablevision Systems Corp., which agreed to pay what it called an “unfair price” to end a programming blackout.
“These deals are critical to driving the Fox network’s financial success to reflect its real value,” News Corp. Chief Operating Officer Chase Carey said today on a conference call. “Over the next couple of years as we continue to close new agreements we will be taking this business to a whole new level of profitability.”
Chairman and Chief Executive Officer Rupert Murdoch wasn’t on the call because he’s been traveling overseas, the company said. The last time he skipped an earnings call was November 2006, Bloomberg data show.
Sales in the first quarter ended Sept. 30 gained 3.2 percent to $7.43 billion, compared with the $7.41 billion average of 11 analysts’ estimates compiled by Bloomberg.
Case Closed
News Corp. rose 38 cents, or 2.6 percent, to $15.22 in late trading after U.S. markets closed. The Class A shares gained 23 cents to $14.84 today in regular Nasdaq Stock Market trading and are up 8.4 percent this year.
Cablevision and News Corp. resolved their dispute Oct. 30, after Fox broadcast stations and some Fox cable channels had been cut off to 3 million customers for two weeks. It was the longest blackout of a major broadcast network for a million or more people in at least a decade, and may signal media companies are gaining the upper hand in seeking payment for over-the-air telecasts that used to be free.
News Corp. is turning to so-called retransmission fees after advertising sales took a hit during the U.S. recession. Fox has also seen viewership fall, 16 percent among viewers 18 to 49 in the first six weeks of the TV season, threatening its six-year run as the ratings leader.
Cablevision and Dish probably will pay 55 cents per subscriber per month in the first year, rising to $1 in the fifth year, analyst Michael Nathanson of Nomura Securities International Inc. estimated in a Nov. 1 report.
TV Profit
Operating profit for the television unit more than doubled as a 22 percent jump in local-station ad revenue offset higher programming costs at the Fox broadcast network.
The cable networks, such as FX, increased operating income 28 percent to $659 million, on a 17 percent gain in revenue. At the U.S. channels, advertising grew 16 percent and affiliate fees rose 14 percent.
As part of Murdoch’s efforts to add to subscription operations, the company is bidding for the 61 percent of pay-TV operator British Sky Broadcasting Group Plc it doesn’t already own. In June the biggest U.K. pay-TV operator rejected News Corp.’s buyout offer of 700 pence a share, or 7.8 billion pounds ($12.5 billion). BSkyB’s independent directors are seeking more than 800 pence from News Corp.
Today, News Corp. formally asked for approval from European Union antitrust regulators, which set a Dec. 8 deadline for reviewing the BSkyB transaction. U.K. regulators may still decide to raise objections.
Box Office
During the quarter, the film studio generated $243.6 million at the box office with its top release being “Predators,” according to Box Office Mojo. That compares with $333.8 million a year ago when “Ice Age: Dawn of the Dinosaurs” was released.
Film operating income fell 28 percent to $280 million.
Advertising increased an average of 13 percent at the company’s newspapers around the world, including the Wall Street Journal and the Times of London. Publishing operating profit was up 51 percent to $178 million.
Bloomberg LP, the parent of Bloomberg News, competes with News Corp. and its Dow Jones division in providing financial news and data.
16 October 2010
Fox-Cablevision Dispute threatens MLB Broadcasts
The Associated Press
News Corp.'s Fox pulled its channels off Cablevision early Saturday after the companies' programming deal expired and negotiations for a new one stalled, threatening broadcasts of baseball playoffs for some 3 million Cablevision subscribers in New York and Philadelphia.
The blackout affects Fox 5 and My9 in New York and Fox29 in Philadelphia. Subscribers also lose access to cable channels Fox Business Network, NatGeo Wild and Fox Deportes.
The channels went dark when the programming deal expired just after midnight Friday. Such deals spell out how much a cable TV system pays the broadcaster to carry its signals over the cable lineup.
The impasse means the subscribers, mostly in the New York area but also in Philadelphia, could lose access to Game 1 of Major League Baseball's National League Championship Series, when the Phillies take the field against the Giants on Saturday night.
Cablevision called on News Corp. to put Fox5 and My9 back on Cablevision immediately and submit to binding arbitration under a neutral third party.
"News Corp.'s decision to remove Fox programming from 3 million Cablevision households is a black eye for broadcast television in America," Cablevision spokesman Charles Schueler said.
Fox released a statement blaming Cablevision for the impasse.
"In an effort to avoid this very situation, we started this process in May and made numerous reasonable proposals to Cablevision," said Mike Hopkins, president of Fox Networks Affiliate Sales and Marketing. "However, we remain far apart and Cablevision has made it clear that they do not share our view regarding the value of Fox's networks."
In separate fee disputes this year, Cablevision customers have experienced brief blackouts of The Walt Disney Co.'s ABC broadcast signal and Scripps Networks Interactive Inc.'s Food Network and HGTV. Subscribers missed the first 15 minutes of the Oscars in the ABC dispute.
Cablevision Systems Corp. has said News Corp.'s Fox is making "outrageous fee demands" for the right to carry the signals of the three cable channels and three TV stations.
Cablevision says it pays $70 million a year for access to 12 Fox channels, including those in dispute, and that News Corp. is now asking for more than $150 million a year for the same programming. It said Thursday that it is willing to submit to binding arbitration and called on Fox not to pull the plug.
Fox rejected the call for arbitration, saying the process would "reward Cablevision for refusing to negotiate fairly."
"Direct business-to-business negotiation is the only way to resolve this issue," it said in a statement.
While Fox didn't dispute Cablevision's claims, it called Cablevision "hypocritical" because it pays more for two of its sister company channels, MSG and MSG Plus, than it does for all 12 Fox channels. MSG and MSG Plus are owned by Madison Square Garden Inc., which like Cablevision is controlled by the Dolan family.
Lawmakers have begun to speak up on the issue, including Rep. Steve Israel, D-N.Y., and Rep. Peter King, R-N.Y., who called for arbitration so viewers wouldn't have their TV programming disrupted.
Israel said in a statement Friday that he had asked the Federal Communications Commission to intervene in the dispute.
The FCC encouraged the two parties to agree to binding arbitration without suspending service and did not specify a mediator, according to Jack Pratt, a spokesman for the Long Island congressman.
Sen. Frank Lautenberg, D-N.J., had urged both sides to extend negotiations.
"New Jersey consumers do not deserve to be treated as pawns in this dispute," he said in a statement.
Rebecca Arbogast, a managing director at brokerage Stifel Nicolaus, said News Corp. and other broadcast company owners risk political intervention if they keep pushing carriage deals to the brink.
"The more that programming disputes escalate and signals get pulled ... the more pressure we believe there will be on the (Federal Communications Commission) and Congress to do something to prevent such consumer disruptions," she wrote in a research note Thursday.
In a separate dispute with satellite TV company Dish Network Corp., Fox cut access on Oct. 1 to 19 regional sports networks, FX and the National Geographic Channel for some 14.3 million Dish subscribers. That fight foreshadows more tough negotiations, as the deal for Fox broadcast signals on Dish expires Oct. 31.
04 February 2010
News Corp. Offers Cash, Debt Assistance to MGM
Bloomberg
News Corp. has expressed interest in providing Metro-Goldwyn-Mayer Inc. with cash and assistance in restructuring debt to keep the studio independent, according to a person with knowledge of the situation.
The non-binding offer from News Corp., owner of the Twentieth Century Fox film studio, was outlined in a letter this week, said the person, who declined to be identified because the talks are private. The person wouldn’t disclose other terms.
MGM, maker of the “James Bond” movies, is evaluating preliminary bids from possible buyers as it struggles with $3.7 billion in debt. News Corp.’s Fox studio distributes DVDs for Los Angeles-based MGM. Chris Petrikin, a Fox spokesman, declined to comment.
The media investment firm Qualia Capital LLC is separately offering MGM $500 million to fund operations as part of a plan that also seeks to convert some debt to equity, according to a another person with knowledge of the situation. In return, Qualia would receive an equity stake in MGM, said the person, who wasn’t authorized to speak publicly.
Susie Arons, an MGM spokeswoman, declined to comment.
News Corp., the owner of Fox television, signed a non- disclosure agreement with MGM on Jan. 15, overcoming a monthlong impasse and allowing it to proceed with an offer, according to a person familiar with the decision.
News Corp., based in New York, gained 9 cents to $12.61 today in Nasdaq Stock Market trading. Class A shares of the company, controlled by Chairman and Chief Executive Officer Rupert Murdoch, gained 51 percent last year.
Interest Respite
MGM said today its lenders extended a respite on interest payments covering the debt until March 31 to give the movie studio time to restructure or find a buyer. The studio will spend “several weeks” evaluating preliminary bids.
Lenders agreed in October to let MGM skip interest payments. The studio has since put itself up for sale.
MGM, created in 1924, made films including “The Wizard of Oz” and “Ben Hur.” The company, owner of a 4,100-film library with titles including “Rocky,” sold many of its early movies prior to its 2005 buyout by a group led by private equity firms Providence Equity Partners and TPG. It has a co-production deal with Warner Bros. on the planned film “The Hobbit.”
Time Warner Inc., owner of the Warner Bros. film studio, was among the first-round bidders, a person familiar with the offers said last week.
Lions Gate Entertainment Corp., the independent film studio run from Santa Monica, California, is also involved in the auction.
Time Warner, based in New York, rose 64 cents to $27.45 today in New York Stock Exchange composite trading. The shares gained 40 percent in 2009. Lions Gate fell 2 cents to $5.20 after rising 5.6 percent last year.
The non-binding offer from News Corp., owner of the Twentieth Century Fox film studio, was outlined in a letter this week, said the person, who declined to be identified because the talks are private. The person wouldn’t disclose other terms.
MGM, maker of the “James Bond” movies, is evaluating preliminary bids from possible buyers as it struggles with $3.7 billion in debt. News Corp.’s Fox studio distributes DVDs for Los Angeles-based MGM. Chris Petrikin, a Fox spokesman, declined to comment.
The media investment firm Qualia Capital LLC is separately offering MGM $500 million to fund operations as part of a plan that also seeks to convert some debt to equity, according to a another person with knowledge of the situation. In return, Qualia would receive an equity stake in MGM, said the person, who wasn’t authorized to speak publicly.
Susie Arons, an MGM spokeswoman, declined to comment.
News Corp., the owner of Fox television, signed a non- disclosure agreement with MGM on Jan. 15, overcoming a monthlong impasse and allowing it to proceed with an offer, according to a person familiar with the decision.
News Corp., based in New York, gained 9 cents to $12.61 today in Nasdaq Stock Market trading. Class A shares of the company, controlled by Chairman and Chief Executive Officer Rupert Murdoch, gained 51 percent last year.
Interest Respite
MGM said today its lenders extended a respite on interest payments covering the debt until March 31 to give the movie studio time to restructure or find a buyer. The studio will spend “several weeks” evaluating preliminary bids.
Lenders agreed in October to let MGM skip interest payments. The studio has since put itself up for sale.
MGM, created in 1924, made films including “The Wizard of Oz” and “Ben Hur.” The company, owner of a 4,100-film library with titles including “Rocky,” sold many of its early movies prior to its 2005 buyout by a group led by private equity firms Providence Equity Partners and TPG. It has a co-production deal with Warner Bros. on the planned film “The Hobbit.”
Time Warner Inc., owner of the Warner Bros. film studio, was among the first-round bidders, a person familiar with the offers said last week.
Lions Gate Entertainment Corp., the independent film studio run from Santa Monica, California, is also involved in the auction.
Time Warner, based in New York, rose 64 cents to $27.45 today in New York Stock Exchange composite trading. The shares gained 40 percent in 2009. Lions Gate fell 2 cents to $5.20 after rising 5.6 percent last year.
08 January 2010
In Search, Microsoft May Race To The Bottom
Business Week
The world is finally waking up to the full implications of Google's business, and they're not all pretty.
Leading the rebellion is News Corp. (NWS) CEO Rupert Murdoch, who is threatening to keep his newspaper content beyond the reach of Google (GOOG) searches. Murdoch wants to keep Google from reaping so many of the financial benefits of advertising placed adjacent to News Corp. content. He's being aided and abetted by Microsoft (MSFT).
In a scenario under consideration, Microsoft would pay News Corp. for making articles from The Wall Street Journal and other Murdoch-owned publications searchable exclusively through Microsoft's Bing search engine. If the effort encourages other powerful content providers to demand compensation from Internet companies that generate revenue from online ads, the Murdoch-Microsoft partnership could create a big problem for Google.
Search is not Microsoft's core business, but it generates a lot of tech industry revenue—and funds Google, Microsoft's No. 1 competitor. So the best play for Microsoft in the Web search market could be to diminish the revenue stream for everyone involved. If Microsoft could reduce the overall market value of Web searches, it could protect its own software revenue while hurting Google.
Changing the Economics of Search
Blogger and entrepreneur Jason Calacanis recently suggested a strategy whereby Microsoft could gain search market share by paying content providers more than they're getting from search referrals.
Google's threat to Microsoft and other software and telecom companies is manifold. Google is competing not only in search engine software, but also in mobile phone services, personal navigation, and operating systems.
In concept, it wouldn't be especially difficult for Microsoft to change the economics of the Web search market, as long as the company can tolerate losses. Microsoft could take advertising revenue generated by Bing and pass it along to media providers, in return for exclusive arrangements to make their content available on Bing. Microsoft would modify the money flow.
Alternative Model: GDS
The search-engine economy doesn't need to work the way it does; there are alternative models. Consider the travel industry's global distribution systems, used by airlines, car rental agencies, and hotels to make their inventory available to travel agents. The systems amount to search engines for the travel industry.
As time went on, the global distribution systems (GDS) had to pass more money from airlines to travel agents in order to motivate them to use the systems. So an airline might pass $8 per booking to its GDS, which then must pass $5 on to Expedia.com (EXPA). Like Google, the GDS centralize great power over finding information. But unlike Google, companies that invest in the travel systems don't keep all the profits for themselves.
Similarly in the Web search market, Microsoft could redirect the flow of funds. The company doesn't need the money from search. In its most recent quarter, Microsoft generated more than $7 billion in sales from its main businesses, Windows and Office. By reducing the value of Web searches for media content, Microsoft could strike a blow at Google, which is challenging its main applications and operating system businesses. In other words, Microsoft could make Internet search more like the GDS model and sap the profitability from it.
Microsoft is likely well aware of the potential. In 2008 it tried to follow exactly the GDS model by "incenting" consumers to use Bing through a program that provided consumers with cash back on purchases made via its search engine. The program wasn't successful, but it reflected Microsoft's willingness to try to shake up the Web-search economy.
Will Others Emulate Murdoch?
Today, Microsoft is focused on working with companies that care dearly about revenues—media companies such as News Corp. Search-related ad revenue is the bonanza on the Internet, and News Corp. doesn't make enough from display ads to pass up Microsoft's deal. News Corp. could strike an arrangement that lets it lock in a disproportionate share of search ad revenue from Bing-driven hits on News Corp. sites. That kind of deal would work to Microsoft's advantage, too.
Microsoft could sweeten the deal for News Corp. by sharing a cut of broader Bing search ad revenue. Microsoft could in effect say, "Rupert, old pal, we really like you. Here's a big chunk of our search revenues, as long as you're willing to work with only us."
Other publishers have reasons to follow News Corp.'s lead. If payments from Microsoft exceed the value of ads generated by Google-related traffic, it would make sense for other publications to delist from Google, too.
As more content becomes available exclusively on Bing, users could switch away from Google search. That in turn will move market share. Google may even begin to pay incentives, putting pressure on its margins. Microsoft could be willing to race all the way to the bottom.
13 November 2009
How NOT To Show Up In Google SERPs
Rupert Murdoch is determined to change the way print content is treated on the web. In addition to being one of the first and largest media companies to plan a full-scale switch from free to paid content models for its newspapers, Murdoch is saying he will block News Corp content from being indexed by Google.
The issue involves the debate surrounding free versus paid content. Murdoch has made it clear for months that he believes free content online devalues the worth of the content. With that in mind, News Corp plans to stop offering its news sites for free, though Murdoch has said the company might not meet its own deadline of charging for content across all sites by the middle of next year. Murdoch’s company has clearly been at the forefront of the debate, and Murdoch expects a paid model to begin to be played out more and more often over the next two years.
News Corp, if it does indeed block Google’s access to its content, will be the first major media company to do so. “The traffic which comes in from Google SEO brings a consumer who more often than not reads one article and then leaves the site,” Miller says. “That is the least valuable traffic to us… the economic impact [of not having content indexed by Google] is not as great as you might think. You can survive without it.”Google, for its part, claims to send news organizations about 100,000 clicks every minute. “Publishers put their content on the web because they want it to be found,” said a spokesperson (via the Telegraph). “But if they tell us not to include it, we don’t.”
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