|China Myths Debunked|
|WE all know the facts: In
1949 when the Communist
Party took over, China had
been mired in civil wars
and dismembered by foreign
aggressions; its people had suffered
widespread famine; average lifeexpectancy
was a mere 41 years.
Today, it is the second largest economy
in the world, a great power with global
influence, and its people live in
increasing prosperity; average life
expectancy has reached 74 years.
But the assessment has to go deeper
than that, for reasons none other than
the apparent discomfort, if not outright
disapproval, Western political
and intellectual elites feel toward the
Communist Party´s leadership. Five
|PETER Oborne, writing in
the conservative Daily
Telegraph, recently suggested
Conservative British Prime
Minister, David Cameron, was not
merely in a mess, he "is in a sewer."
That seems about right. Cameron
lost it over Rupert Murdoch. He
showed staggering lack of judgment
in hiring Andy Coulson, the former
News of the World editor, as his first
director of communications at
Downing Street, a hubristic decision
made against the best advice and
apparently with a dual aim: to show
he was not an old Etonian "toff" and
to get favourable treatment from the
37 percent of the British print media
owned by Murdoch.
He then spent a fair chunk of time
during his first year in office in 26
meetings with various News Corp
honchos, including Rebekah
Brooks, who was...
News Corp Is A Family Business
TERRY SMITH | GUARDIAN NEWS SERVICE LAST week while I was in New York, I had the unusual experience of being interviewed about the implications of the phone-hacking scandal in the newsroom of Fox News for Sky TV.
So I was being interviewed in the centre of Rupert Murdoch’s news empire in America for the satellite TV channel where his son James is chairman and in which, at least until last week, his News Corp master vehicle was trying to buy out the outside shareholders.
What happened in the interview was revealing about some aspects of this scandal which have yet to come into full focus.
In my view, the Sky News interviewer, Anna Jones, demonstrated a pro- Murdoch bias.
I suggested to her that, as the CEO of a public company, I think the shareholders would have had me fired if I had indulged in the following: 1 Paid $580m (£360m) for MySpace and then sold it for $35m (£22m); 2 Paid $5.7bn (£3.5bn) for Dow Jones and written off $2.8bn (£1.7bn); 3 Paid $615m (£382m) for my daughter’s business in an example of what has been described as “blatant nepotism”; 4 Seen my company’s shares underperform the S&P 500 Index for 15 years; and 5 Been in charge when several of my staff had engaged in criminal phone hacking and bribing police officers, activities which had been covered up by my management.
So, I asked, why hasn’t Murdoch been fired? The answer, of course, is that nobody can fire Rupert Murdoch because the Murdochs control News Corp through differential voting rights.
News Corp has two classes of share capital: A shares which carry no votes, and B shares which have all the votes.
The Murdochs own 40% of the B voting shares.
The much more numerous A shares have no votes, so the Murdochs are able to control a company in which they own only 13% of the total issued share capital being the total of the A and B shares.
So when News Corp paid $615m for Elisabeth Murdoch’s business, Shine, her father was literally buying it mainly with other people’s money - which as we all know is much easier to spend than your own.
Similarly, the impact in terms of lost value of the other disasters which I mentioned has mainly fallen on those long-suffering but nonvoting A shareholders in News Corp because they are putting up most of the money.
My responses about the Murdoch situation were clearly not what the Sky interviewer was expecting, or wanted to hear.
She mounted a defence of Rupert Murdoch’s achievements in building a “big empire”.
I reminded her that to qualify as a business empire News Corp would need to generate, for example, a decent return on capital - something which it has failed to do.
Return on capital employed is one of the most important measures of corporate performance - it is the profit return which the management earns on the capital shareholders provide.
News Corp has managed a decidedly poor return on capital employed of just 10% a year in the past five years.
Comparable companies have done much better: the US media company Viacom managed a return of 20% a year and Daily Mail & General Trust 30% a year.
The interviewer ended by cutting me off after she said she would like to take me through the achievements of James Murdoch and Elisabeth Murdoch.
I would welcome that debate on live TV.
Of course the clip of the interview on the Sky website omits the interviewer’s questions and comments.
If this is the standard of editorial independence and integrity at Sky before the Murdochs owned the company outright, one can only cringe at the thought of what would have followed if they gained outright ownership.
The whole litany of phone hacking, police bribery, and cosiness with politicians of both major parties who competed to see who could engage in the greatest pandering to the Murdoch acolytes is, in general terms, an example of an abuse of power.
So is the shareholder voting structure at News Corp.
News International published an apology in UK newspapers for the phone-hacking scandal.
Rupert Murdoch should apologise in person to his shareholders for the damage he has wrought and, since actions speak louder than words, he should enfranchise the class A non-voting shares which the Murdoch family does not own.
Then the owners of News Corp can pass judgment upon his actions.
(Terry Smith is chief executive of Tullett Prebon and Fundsmith)