By Ric Marshall, Chief Analyst and Co-Founder, GMI
Founded in 1979, News Corp is today one of the largest and most powerful and influential media organizations in the world. The company is a truly a study in contrasts, on the one hand an enormous, public corporation with over 50,000 employees worldwide, while on the other the intensely personal sandbox and fiefdom of Chairman, CEO, founder and dominant shareholder, Keith Rupert Murdoch, who turned 80 this past March 11.
The News Corp board is, plainly speaking, entirely Mr. Murdoch’s board, whose purpose for existing is in keeping with the two-fold nature of the company itself, on the one hand providing a modicum of respectability and formal compliance to this enormously powerful public corporation, while at the same time insuring absolute and consummate allegiance to Mr. Murdoch and his personal and familial interests. Executive pay practices at the company have consistently ignored the need to link pay to performance, transferring millions of dollars in company profits to Mr. Murdoch and his cronies, and even going so far as to award Mr. Murdoch additional equity in the company he already all but controls.
While his standing as one of the most successful entrepreneurs and business leaders in our time may well be unimpeachable, Murdoch is equally reviled for his alleged ruthlessness and calculated efficiency, and the negative social impact of his involvement in modern media may have only just begun to be examined and weighed against the company’s – and its founder’s – fortunes. For the past three decades Mr. Murdoch has pushed back against existing standards regarding media market concentration and conflicted ownership, while at the same time organizing both his own and his company’s holdings – some would say even his own citizenship – so as to maximize the reach and scope of his personal power. Many observers feel that he has also redefined the very concept of “news”, emphasizing notoriety and scandal over factual reporting, and evaluating “newsworthiness” on the basis of revenues over integrity. Still others lament the resulting impact on the balance of political power in the US, the UK, and other countries, a concern that has remains mostly ignored and unexamined. This is the "S" in News Corp, the sheer societal enormity of what Murdoch and company have wrought, hidden from view and protected by the limited financial risk and legal liability constructs of the modern public corporation.
How will the company’s shareholders respond? This week's annual meeting should be revealing, but the choices available are limited, on the one hand a bet on the Murdochs’ ability to ride out the latest storm, while on the other a patently futile expression of concern and displeasure that could in fact help pull down the company even further.
What will it be, Mr. Murdoch? Empire, or imminent train wreck?