Rupert Murdoch’s News Corp will start its new life as a mainly-publishing company with no debt and $2.6bn (£1.7bn) in cash when it is spun off.
Read more here: News Corp gets $2.6bn from spin off
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Rupert Murdoch’s News Corp will start its new life as a mainly-publishing company with no debt and $2.6bn (£1.7bn) in cash when it is spun off.
Read more here: News Corp gets $2.6bn from spin off
• Virgin Media boss will walk away with shares worth $78m
• Sector braced for battle as Liberty Global takes on BSkyB
John Malone’s takeover of Virgin Media will create a $28bn (£18bn) company headquartered in Britain, but the world’s largest cable group by customers will pay no UK tax for the foreseeable future.
Malone’s Liberty Global, which owns 11 cable companies in Europe, has confirmed an agreed cash and shares bid that allows Virgin chief executive Neil Berkett to walk away with shares worth $78m and gives 2,500 fellow staff nearly £16,000 each from an employee share scheme.
The combined company, which will retain the Virgin brand in Britain but not its boss, would have more customers than America’s largest group, Comcast, and the muscle to challenge Rupert Murdoch’s UK dominance of pay TV.
But the losses accumulated by Virgin Media after two decades of investment in the country’s cable network mean the new company would be exempt from tax for at least 15 years, according to analysts at Espirito Santo bank. Bernstein bank said Liberty would pay no UK taxes for “the foreseeable future”.
Virgin was formed in 2006 from the alliance of Virgin Mobile, NTL and Telewest, which were assembled by merging regional cable networks. After investing £13bn in laying fibre optic cables to half of UK homes, the industry was loss-making until Virgin began to turn a profit in 2010.
Because it has been profitable for three years, it can declare how much of its historic losses it will offset against profits. On Wednesday, Virgin put that number at £2.6bn – allowing significant leeway on its balance sheet before it needs to pay corporation tax in Britain. In effect, Virgin needs to accumulate profits far in excess of £2.6bn before it starts paying corporation tax. The company made £261m in pre-tax profit in 2012, which is forecast to rise to £500m after 2014. On that basis, Virgin would have been paying £100m a year into the public purse if it was a regular payer of corporation tax at a rate of 21% of profits.
“You’re looking at probably 15 years for them to work their way through, but this is a company that over the last 20 years has invested billions in network infrastructure,” said Espirito analyst Andrew Hogley. “This is a very different situation to a Starbucks or an Amazon, that is offshoring profits to avoid paying UK taxes.”
Malone’s entry into the UK cable market marks the culmination of a decade long ambition. In 2002, the man known in the US as the “King of Cable” after his creation of the company that became Comcast, attempted to use his 24% holding in Telewest to force its merger with NTL.
The bond holders of the heavily indebted companies resisted then, but are unlikely to do so this time around. Virgin still has £5.7bn of debt, and a majority of its lenders must agree to the takeover by a deadline currently set for 14 February.
The transaction is partly debt fuelled – Liberty plans to fund its cash offer by adding nearly £2bn to Virgin borrowings. The combined Virgin and Liberty Global will owe a total of $39bn, more than twice its annual revenues of $17bn, and more than its stock market value of $28bn. Speaking on Wednesday
Malone, who is now 71, said he had no intention to topple his 81-year-old sometime adversary Rupert Murdoch’s UK pay TV business BSkyB, which has nearly 11 million customers compared with Virgin’s 5 million. “Our relations with Sky are going to be very important for us,” he said. “We’ve had a long history of cooperation with News Corporation in its various configurations and we are looking forward to this.”
Liberty said it would continue to invest in Virgin’s network, improving its speed and capacity to carry data – the top speed offered to retail customers is currently 120 megabits a second. But Liberty also hopes to use its expertise to improve take-up of television and mobile phone subscriptions at its businesses on the continent.
Malone’s European broadband and cable companies have 18 million pay-TV subscribers, almost on a par with Murdoch’s 19 million in Britain and Europe. “Liberty is an 800-pound gorilla and Murdoch is another 800-pound gorilla,” said Ovum analyst Adrian Drury. “The reality is this will be a straight bloodbath because the UK is an incredibly competitive market.”Fries stressed he had no plans to compete with Sky for sports rights, where BT is already presenting the best funded challenge yet to the satellite broadcaster’s dominance.
The deal is expected to be finalised in June, at which point Berkett intends to step down. “I’m not a very good number two,” he said. The deal is worth an estimated $78m to Berkett, who took the reins as acting chief executive in 2007 and overseen a dramatic recovery in its fortunes. He has accumulated $56m in stock options which have not yet been exercised. He fully owns $8m in shares and the value of shares yet to be granted under his incentive plan stands at $13 under the terms of the offer.
Increase related to acquisition of Fox Sports Australia and Fox Star Sports Asia and ‘improvements’ in publishing operations
Rupert Murdoch’s News Corporation has reported a doubling of quarterly profits but paid out a further $56m (£35.8m) in costs related to the News of the World phone-hacking scandal.
News Corp reported net profits of $2.4bn in the three months to the end of December, compared to $1.1bn in the same period a year earlier, on sales up 5% to $9.4bn. Most of the increased profits were related to the acquisition of the 50% stakes in Fox Sports Australia and Fox Star Sports Asia that News Corp didn’t already own.
Murdoch said the increase in profits was due to “double-digit gains” in News Corp’s cable TV businesses and “improvements” in its publishing operations, which includes the Sun, the Times, the Sunday Times and the Wall Street Journal.
The company said its publishing division, which reported a $16m increase in profits to $234m, benefited from the launch of the Sun on Sunday in February 2012.
The $56m in compensation payments and costs related to the News of the World take the total payout related to the phone-hacking scandal to more than $340m. News International, the division which controls the UK newspapers, is making a concerted effort to close down the hacking saga, agreeing out-of-court settlements on 143 of 165 outstanding civil damages cases it is facing in the high court before a key hearing before a judge on Friday.
Murdoch said News Corp was making progress in its plan to split the $54bn global empire into two separate publicly listed companies – a newspaper, book publishing and education division and a media and entertainment company. Work on splitting up the company cost the company $23m in the latest quarter.
Last week, News Corp said Will Lewis, one of the executives running News Corporation’s controversial management and standards committee dealing with the phone–hacking scandal, is moving to a new senior role with in the newspaper division’s headquarters in New York.
James Murdoch, Rupert Murdoch’s son and News Corp’s deputy chief operating officer, said he did not expect Liberty Global’s $23.3bn takeover of Virgin Media to effect the competitiveness of the cable TV market.
Rupert Murdoch stands waiting in the ring should the Liberty Global boss be successful in his Virgin Media bid
If John Malone is successful in his $20bn-plus pursuit of Virgin Media, it will renew a fierce rivalry, and occasional friendship, he has had with Rupert Murdoch over the decades in the battle for global dominance of the pay-TV market.
Malone, known as the King of Cable, rattled Murdoch in the middle of last decade, building up a stake of nearly 20% in News Corporation, which made him its second largest shareholder.
The 71-year-old forced Murdoch – a decade his senior – to buy him out in a 2007 deal which saw Malone acquire News Corp’s stake in DirecTV, the largest satellite broadcaster in the US. Malone was also considered a prime candidate to swoop for full control of BSkyB in 2011 after Murdoch was forced to pull his $8bn (£5bn) offer as the phonehacking scandal engulfed News Corp, the UK satellite broadcaster’s largest shareholder with a 39.1% stake. However, Malone demurred, saying Murdoch, below, had shown the “greatest integrity” in previous deals and he didn’t want to give him a “hard time”, although he admitted he desperately wanted to return to the UK pay-TV market.
Malone, who has been building Liberty Global’s cable TV presence across Europe, has a reputation as a private individual who shuns the glamorous billionaire lifestyle. He gives generously to charity and holidays in a camper van.
He first looked at snapping up Virgin Media more than five years ago. Before the 2006 merger of NTL and Telewest, which created the UK’s largest cable TV company, Malone made two unsuccessful attempts to control NTL and held a significant stake in Telewest. He has been a senior player in the US cable TV industry since the early 1970s and has owned interests in the UK cable sector for much of a career characterised by complex dealmaking and asset swaps.
Dame Elisabeth Murdoch, the mother of the media magnate Rupert, has died at her home in Melbourne, Australia, aged 103.
Read the rest here: Elisabeth Murdoch dies at 103
Leveson report suggests only minor changes for future mergers such as Murdoch empire’s BSkyB takeover bid
Lord Justice Leveson is highly cautious, even timorous, on what will be the key question for many of his readers, of how overweening power exercised by some media proprietors might be curbed.
He says politicians should be the ones to carry on deciding whether to intervene when they consider media plurality is threatened, rather than autonomous regulators: “It is in the nature of large media organisations that every one of us is exposed to their output on a regular basis and we all have views (and, in some cases, perhaps prejudices) that might affect such a decision if allowed to do so …
“It seems to me that those who argue that a public interest decision is rightly for a democratically-elected decision-maker are right. It is that person who is accountable to parliament and the electorate: that is the nature of our constitutional arrangements.”
All he recommends, for future media mergers, such as the Murdoch empire’s attempt to take total control of BSKyB, is a set of relatively minor improvements to transparency during the process: “The secretary of state should consult relevant parties as to the arguments for and against a referral, and should be required to make public his reasons for reaching a decision one way or the other.”
Leveson concedes that this might not appear to make much change, but he says this would make it easier to challenge poor decisions in court by judicial review: “It will ensure both the highest standards of probity and that a very rigorous test is applied to the reasoning behind the eventual position.”
He says it is “unarguable” that there needs to be more scope for the media regulator Ofcom to look regularly at plurality problems, and not merely when a merger or a takeover is occurring, but adds ” the precise mechanism for doing so is essentially a technical issue on which the inquiry is not best placed to reach a definitive conclusion”.
Anyone who thought Leveson would take a hatchet to the former culture secretary Jeremy Hunt for his behaviour over the Sky bid has had their hopes dashed.
Although he describes the Sky bid events as “an illuminating case study” that would cause a perception of bias, Leveson analyses the manoeuvrings over the ultimately withdrawn bid to take over 100% control of BSKyB in a way that broadly supports the already-presented government version of events.
He does not back the claim that there was a secret deal in which Murdoch’s papers would support the Conservatives in return for explicit commercial concession.
He largely exonerates Hunt from actually biased behaviour, and merely accuses him of a lack of supervision of his special adviser, and an “unwise” failure to spell out how closely he had been communicating with James Murdoch before being given the job of deciding on the Sky bid.
Leveson accepts the official line that Hunt’s junior special adviser, Adam Smith, who subsequently resigned, merely went too far out of inexperience and allowed himself to be ensnared into “inappropriate” email and text correspondence with the lobbyist, Frederic Michel, who was carrying out a “charm offensive” on behalf of News Corp.
This left Smith exchanging messages that appeared to accept “Mr Michel’s use of the language of common cause and conspiracy”.
“When faced with the intimacy, charm, volume and persistence of Mr Michel’s approaches, Mr Smith was put in an extremely difficult position.”
He got “way to close” to the lobbyist, “ultimately, as I have concluded, probably passing on confidential information about Government thinking which should never have been imparted to News Corp.”
But Leveson accepted: “There is much to say by way of mitigation for Mr Smith. He was inexperienced, had been involved in government for a matter of months and had never before been involved in (even if he had ever heard about) a quasi-judicial process. He did not receive what was to be, for him, sufficiently clear or detailed guidance”.
Leveson contents himself with a dry hint that the official version of events may not, in all eyes, be wholly credible: “I must admit to finding it surprising that Mr Smith, who had worked for Mr Hunt so closely and for so long should have kept him unsighted on the way in which he was performing what he saw to be his duty; that, as I understood it, was the role of a special adviser – to be the ‘eyes and ears’ of his principal. Both men, however, make it clear that Mr Hunt was unaware of the nature, and extent of his contact with Mr Michel.”
Rupert Murdoch’s News Corp reports a sharp rise in profits thanks to a one-off asset sale and strong revenue growth at its cable networks division.
See more here: News Corp profits up threefold
The Times and Sunday Times’s online audience is not only smaller than their free-access rivals’ – it’s worse than the Financial Times manages with its porous paywall system
Once upon an early paywall time, Rupert Murdoch built castle walls around the Times and Sunday Times – and pulled up the drawbridge. But now, via Google and sundry searches, that wall is developing cracks.
And you can see why from the latest NRS Padd survey findings, which put print and digital newspaper readership in the UK together. The Telegraphs, daily and Sunday, with no paywall in Britain as yet (though a £1.99 version is coming in overseas) have 7,934,000 individual print readers a month and 5,977,000 online readers. The Guardian and Observer have 4,923,000 in print and 6,713,000 online. But though the Times and Sunday Times have 7,934,000 followers in print, only 675,000 online readers make it over the wall, and that drags down News International titles’ ratings hugely.
Now, it’s absolutely fair enough to point out that Mr Murdoch’s contenders get money from their wall, while competitors have to rely (not always fruitfully) on ads alone. But the killer figure here is the one for the FT, whose long-established but slightly porous paywall (plus big subscription numbers) sees 895,000 readers come calling each month. Drawbridge Wapping wins neither as revenue raiser nor digital apostle: which is why, one guesses, the policy is changing.
Former Barclays boss finds new heights of unpopularity Stateside
They say that what begins in America eventually arrives in the UK. But, very occasionally, us Brits can send something back too.
The baiting of Bob Diamond – the former Barclays boss who’s made such a heroic stab at becoming the world’s most hated banker – is one cutting-edge innovation of which Albion can be proud. And now our simple invention seems to be catching on in the US.
Protests aimed at ousting Diamond as chairman of the board of trustees at Colby College in Maine – where he’s donated millions – have been expanding, the local Portland Phoenix reports, as the students get more and more irate about Barclays’ role in the Libor-rigging scandal.
Simultaneously, there are those in the UK unable to forget other slight blots on Diamond’s time at the bank too, not least former customer Guardian Care Homes, which will kick off the first claim for damages over alleged mis-selling of interest rate swaps in the high court tomorrow.
Barclays rejects the claim, but the legal battle is being billed as a “landmark case”, likely to have major implications for all UK banks and how they settle future claims, which must be of tremendous solace to Bob. Even if Colby removes the tasteful golden letters adorning the Diamond Building, his place in history looks assured.
Bob Dudley has been the boss of BP for two years – but this week might just be the first time he’s actually looked forward to facing the City.
The oil group is only reporting third-quarter numbers on Tuesday, but after spending the past few years significantly underperforming the market and rival Royal Dutch Shell, the company has finally found something that can be spun as a coup.
Last week, BP extracted itself from its TNK-BP joint venture with a group of Russian oligarchs – a relationship notable for large profits and even bigger spats. So comfortable was Dudley with his TNK-BP pals that he even felt compelled to flee Russia four years ago when running the show.
His new deal will see the British oil group exchange its 50% stake in the business for £7.5bn in cash and an 18.5% stake in the Kremlin-controlled oil giant Rosneft – causing much muttering about frying pans and fires.
Sceptics also mention Dudley’s tendency to announce moves that don’t happen, but with shareholders clinging to hopes of higher dividends and share buybacks, it’s doubtful they’ll be churlish enough to raise these concerns and ruin the American’s day.
Before we knew him as the man who (metaphorically) slept as News International’s phone-hacking crisis escalated, James Murdoch already had a reputation for succumbing to weariness.
As a 15-year-old intern at the Sydney Daily Mirror – the paper where father Rupert learnt the trade – he kindly provided amusing headlines for the rival Sydney Morning Herald by dropping off on a sofa at a press conference.
The task of remaining conscious has occasionally returned to challenge Murdoch fils since, and this week will present another one of those little tests. James will once again be asked to wrestle the narcolepsy and endure one of those tedious shareholder assaults: campaign group FairPensions is urging BSkyB’s shareholders to vote against his re-election at the satellite broadcaster’s annual meeting, where he now sits as a mere non-exec after resigning from the chairmanship. Shareholder group Pirc reckons he should leave his new lesser role too.
All of which must seem particularly tiresome to young James, who has been forced to weather a few of these incursions of late. The result may also appear that way to the scorers. News Corporation, which the Murdoch family controls, owns 39% of BSkyB.
In these harsh times, it’s not surprising that there is so much outrage at the behaviour of the ruling elite
The British are engaged in a strange rebellion. They are turning on their failed elite and scourging their institutions. No one knows what they want. But their targets are plain. To see them gathered in one place, look at this gruesome scene from July 2004 recorded in Piers Morgan’s diaries.
Morgan’s managers had just fired him from the editorship of the Mirror for running pictures of British soldiers pissing on Iraqi detainees, which a fool could have told him were crude fakes. Morgan does not care. He toddles off to the 40th birthday party of Ross Kemp. Brown is there. Blunkett is there. Tony and Cherie Blair are there, along with Greg Dyke, the former director general of the BBC, and Sir John Stevens, commissioner of the Met. It seems that everyone who is anyone in Britain is there, but no one is there to see Kemp. They are paying court to the then wife of the EastEnders star, Rebekah Wade (now Brooks). Rupert Murdoch made her editor of the Sun and she is thus a mighty figure in the land.
The guests scratch, slap and stab each other’s backs (particularly over the second Iraq war). But they agree that there is only one way to rule Britain. Whoever is in power must strike a deal with the media, most notably with the Murdoch papers, and feed them crowd-pleasing stories.
Politicians must let the City do as it pleases because what tax revenues its bankers provide allow ministers to pay for public services. As for all those millions who are never invited to celebrities’ parties, they can still “live the dream”, to use the most unintentionally revealing phrase of the last decade. Even though the incomes of working people were stagnating by 2004, the banks allowed them to pile up debt so they could consume on the never-never in a land of make-believe.
Reading Morgan made my stomach turn. But most believed he was part of an elite that might be tawdry and compromised, but at least knew how to run a country.
Look at them now. Brooks is awaiting trial on charges of conspiring to hack into the voicemail of a murdered teenager. Embarrassed Met officers arrested her and virtually every other journalist they could find evidence against, because they had been as ensnared in Murdoch’s net as the politicians and knew they needed to get out fast. The wider police “service” has been disgraced by the revelation that it was serving the people of Liverpool by systematically lying about the dead of Hillsborough. The cover-up, the worst in living memory, has forced senior officers to resign and will doubtless lead to criminal charges.
Meanwhile, the Leveson inquiry has made Morgan’s tabloid press a free-fire zone for serious and silly critics alike. The expenses scandal has led the public to regard all politicians as frauds. Blair and Brown, who seemed such mighty figures in 2004, now look like nincompoops who could not see the crisis coming in a financial system whose plutocrats they flattered. The banks are bust. The debts they approved so carelessly now cripple households and the wider economy. Even Greg Dyke’s BBC is being torn apart by accusations that its self-serving managers suppressed the evidence that one of its stars raped and abused children for decades.
Historians will try to find common themes in Britain’s great reckoning. Justice is one. Justice for the cheated taxpayers, the dead of Hillsborough, the celebrities who had their lives invaded by peeping Toms and for the children Savile stalked. I am sure they will also say that the crash fuelled the rage. Successful elites are formidable. Failed elites are vulnerable. The fastest fall in living standards since the 1920s makes the urge to take on anyone from the Murdochs to the prime minister all the keener.
If historians go beyond these generalities, though, they will find only confusion. The Occupy campaign is a true representative of our directionless times when reformers have no coherent ideology. Unlike previous leftwing protests, Occupy had no leaders and no manifesto. More to the point, it was proud to have no manifesto beyond a well-merited rage at what the bankers had done.
The confusion of the protesters is shared everywhere. People who want Leveson to attack the tabloids are inclined to defend the BBC and vice versa. Right-wingers are more anxious to denounce MPs for stealing public money than private sector bankers for wrecking the economy. On the left, it is the other way round. Meanwhile, double standards abound. The sadists and masturbators who gawped at the News of the World now condemn it. The borrowers, who piled up debts, now damn the banks for their own imprudence The destructive nature of modern outrage is as striking as its incoherence. The voters want blood. If the Savile affair ends with the BBC’s director general resigning, they will be satisfied. Hardly anyone, however, talks about the need to reform to counter the next generation of Peter Rippons and Fred Goodwins.
It seems self-evident to me that we must have German-style worker directors on the boards of public and private sector hierarchies, so that whistleblowers in the mould of the magnificent Liz MacKean have someone in authority to talk to about incompetent or dangerous managers. I am also astonished that we have still not smashed the banking conglomerates and divided their retail from their casino arms. But I should be realistic. There is little prospect of crowds filling the streets to demand free speech in the workplace or of demonstrators chanting: “What do we want? A British Glass-Steagall. When do we want it? Now.”
The old is dead but the new cannot be born. And because the coalition will not act as its midwife, I find it a hard government to hate. Its inability to map a new course for Britain makes it seem an irrelevance as much as a menace; a footnote in history that will be forgotten as soon as it is gone.
Paradoxically, given Labour’s responsibility for the crisis, the only senior politician who understands the need for reform is the shy and stuttering Ed Miliband. He at least grasps that the world of Piers Morgan and Tony Blair, Rebekah Brooks and David Blunkett was not worth having. For all our current sufferings, we should be glad that we can never go back.