The End of the Reformation of Rupert Murdoch

Agenda-Setting Financial Insight.
Sept. 5 2012 4:31 PM

The End of the Reformation of Rupert Murdoch

143420649
The reformation of Rupert Murdoch looks to have reached its limit.

Photo by JUSTIN TALLIS/AFP/GettyImages

The reformation of Rupert Murdoch looks to have reached its limit. The 81-year-old media mogul has moved to sensibly deploy capital and break up News Corp as part of a big turnaround since a British phone-hacking scandal rocked his empire. But two new board nominees look like the old Murdoch at work. Investors shouldn’t be so quick to forget the havoc an unconstrained emperor can wreak. 

Poor corporate governance contributed to the misconduct at the now-shuttered News of the World tabloid newspaper. Systems and controls across News Corp were exposed to be lacking, ultimately costing the company its desired acquisition of the entirety of its BSkyB satellite business and upending top management around the world. The Murdoch discount deepened, as News Corp shares traded well below the sum of the group’s parts. 

The old fox grasped the nettle, though. Murdoch sidelined his son, James, and elevated right-hand man Chase Carey to a more prominent role. Billions of dollars originally earmarked to buy BSkyB were redirected to buy back shares and raise the dividend. Murdoch even opted to separate his beloved newspapers from the more profitable TV and film divisions. And just like that, investors forgave the sins of the past, giving nearly full value to News Corp’s assets. 

Murdoch still doesn’t want to be second-guessed, though. On Wednesday the group named as directors Alvaro Uribe, the former Colombian president, and Elaine Chao, who served for eight years under President George W. Bush as secretary of labor and is married to the top Republican in the U.S. Senate. Uribe is well suited to help Murdoch with his Latin TV ambitions. Chao can reinforce his ties in Washington. But neither looks up to the task of challenging the News Corp chairman and chief executive on how he runs his corporation. 

Despite some turnover over the past year, the board is still stacked with Murdoch’s children, lieutenants, cronies and other supine directors. Shareholders would do well to remember that as quickly as Murdoch changed his ways to enhance their investment, he is still essentially free to act on his whims. The Murdoch discount isn’t necessarily gone forever.

Read more at Reuters Breakingviews.       

Jeffrey Goldfarb is a New York-based assistant editor with a focus on Wall Street, private equity, M&A and the media industry. Before becoming a columnist, Jeffrey wrote about banking, deals, international trade, healthcare and the Internet.

TODAY IN SLATE

Foreigners

More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

What Charles Barkley Gets Wrong About Corporal Punishment and Black Culture

Why Greenland’s “Dark Snow” Should Worry You

Three Talented Actresses in Three Terrible New Shows

Why Do Some People See the Virgin Mary in Grilled Cheese?

The science that explains the human need to find meaning in coincidences.

Jurisprudence

Happy Constitution Day!

Too bad it’s almost certainly unconstitutional.

Is It Worth Paying Full Price for the iPhone 6 to Keep Your Unlimited Data Plan? We Crunch the Numbers.

What to Do if You Literally Get a Bug in Your Ear

  News & Politics
Weigel
Sept. 17 2014 10:25 AM An Alaskan Nationalist on the Scottish Independence Movement
  Business
Moneybox
Sept. 16 2014 4:16 PM The iPhone 6 Marks a Fresh Chance for Wireless Carriers to Kill Your Unlimited Data
  Life
The Eye
Sept. 16 2014 12:20 PM These Outdoor Cat Shelters Have More Style Than the Average Home
  Double X
The XX Factor
Sept. 15 2014 3:31 PM My Year As an Abortion Doula
  Slate Plus
Slate Fare
Sept. 17 2014 9:37 AM Is Slate Too Liberal?  A members-only open thread.
  Arts
Brow Beat
Sept. 17 2014 9:03 AM My Father Was James Brown. I Watched Him Beat My Mother. And Then I Found Myself With Someone Like Dad.
  Technology
Future Tense
Sept. 17 2014 8:27 AM Only Science Fiction Can Save Us! What sci-fi gets wrong about income inequality.
  Health & Science
Science
Sept. 17 2014 10:20 AM White People Are Fine With Laws That Harm Blacks The futility of fighting criminal justice racism with statistics.
  Sports
Sports Nut
Sept. 15 2014 9:05 PM Giving Up on Goodell How the NFL lost the trust of its most loyal reporters.