Typical. You wait years to discover the winner of the great Murdoch succession race, and then you get a fudge.
Rupert Murdoch will be succeeded as chief executive of 21st Century Fox by James Murdoch, according to reports, but older brother Lachlan will get the title of executive co-chairman. It will be hard to tell who’s boss.
Chief executives run companies, so, on that score, James has won. On the other hand, chairmen usually have the power to fire the chief executive, so, viewed that way, Lachlan is supreme. But, just to complicate things, the 84-year-old Rupert is staying on as executive co-chairman, so perhaps nothing can be read into the job titles.
Through a British corporate governance lens, the abundance of Murdochs is about as convincing as putting a brace of Milibands in charge of the Labour party. The problem is that the Murdoch clan’s control of Fox relies on a dual-voting structure in which the family has nearly 40% of the voting power but an economic interest of only 12%.
Americans, traditionally, have tended to accept lopsided voting power. Belief in a visionary, all-powerful boss runs deep – apologists argue that it promotes stability. But there are limits even to Americans’ tolerance. There was a significant shareholder revolt last year against the dual-voting structure. The issue was also central in Fox’s abandoned attempt last year to buy Time Warner – the target argued fiercely that the non-voting stock on offer represented second-class paper.
Now, if chief operating officer Chase Carey is also to step down as part of the boardroom reshuffle, Fox will be left without a non-Murdoch in a senior role. We’ll see, but the bet here is that a James/Lachlan double act will hasten the day when 21st Century Fox is obliged to accept 21st-century voting arrangements.
Bailout bonus? A loss by another name
Very droll, Mr Tyrie. The claim by the clever chaps at Rothschild that the net gain to the taxpayer from the bank bailouts could be £14bn “would benefit from a great deal of qualification,” says the new chairman of the Treasury select committee.
You bet it would. The Rothschild calculation relies on two manoeuvres that go well beyond normal massaging. Metaphorical limbs were broken to produce that £14bn figure. First, the investment bank ignored the cost of funding the bailouts. As Tyrie says, the Office for Budget Responsibility estimated a net cost of £17bn in its report in March.
Second, as pointed out here on Wednesday, Rothschild counted the fees paid by Royal Bank of Scotland, Lloyds and the bundled-up Northern Rock and Bradford & Bingley as if they were recoveries. But the state was providing a service when it underwrote the asset protection scheme and similar insurance arrangements.
Cut the numbers a different way and one could easily produce a figure of minus £14bn, not plus £14bn. Big difference.
Ryanair boss lets fly at CMA
It doesn’t take much to enrage Ryanair’s Michael O’Leary, and the Competition and Markets Authority never fails to hit the spot. Sure enough, the competition watchdog’s latest ruling that Ryanair should reduce its stake in Aer Lingus from 29.8% to 5% brought forth the expected reaction. “Manifestly wrong” and a “ridiculous decision”, said Ryanair.
Sympathy for O’Leary’s crew extends this far: the CMA’s original thinking was that Ryanair’s presence as a large shareholder would deter bidders for Aer Lingus. Then Willie Walsh at IAG, parent of British Airways, turned up with a €1.35bn bid, putting a dent in the logic.
But it is merely a dent – nothing more. As the CMA pointed out, IAG made its offer only when Ryanair was under pressure to reduce its holding. What’s more, the bid is conditional on Ryanair’s acceptance. For O’Leary, that’s all irrelevant. IAG can get to 50.1% without Ryanair’s help, so what’s the problem? It’s obvious. Companies don’t like to have significant minority investors in the wings, especially if that investor is a competitor. It’s a lot easier to get things done when you own 100%. And, since the Irish government has agreed to sell its 25% stake in Aer Lingus to IAG, Ryanair is the only serious obstacle to the deal.
In theory, O’Leary can snub IAG’s offer and continue his verbal bombardment against the CMA all the way to the supreme court, provided his lawyers get permission to go that far. In practice, one suspects, he will come under pressure from Ryanair’s own shareholders to take IAG’s cash. They, surely, would prefer €400m to a legal campaign that, though highly entertaining, consistently runs up against a brick wall.
Coupe victory in Egypt
Hurrah! Mike Coupe, Sainsbury’s chief executive, is not going to prison in Egypt for two years. The case against him was always absurd, of course. Coupe had nothing to do with an ancient dispute with Sainsbury’s former business partner in Egypt. Now a court in Cairo has acquitted Coupe. But this belated display of sense will not, one suspects, improve foreign investment to Egypt one jot.
guardian.co.uk © Guardian News and Media Limited 2010