Prompted by a discussion on the Labour Uncut version of my last post, and not really finding the information in the press, I thought I’d take a peek inside the NewsCorp annual report, to see exactly how much this “little local difficulty” bothers him financially.
2010 figures:
Annual gross revenues NewsCorp £ 20,592m*
Annual profits Times Newspapers £ -45m
*$32,776m and $2,539m, using a rate of $1=£0.628259
So, a couple of observations:
One. NewsCorp is the world’s 284th largest company. If NewsCorp were a country, it would be the world’s 85th largest in terms of GDP, between Kenya and Costa Rica. Or about half the size of that of Wales. Except that, unlike Wales, as leader he is not elected. He really is the feudal king of all he surveys, as long as the shareholders are kept happy. So think of it more as, if you like, King Rupert of half-of-Wales. A latter-day absolute Tudor monarch.
Even before we look at the disproportionate influence a media company has compared with ordinary companies, that’s quite a lot of medieval-style power. We’re quite lucky he’s not allowed to raise a private army.
Two. The combined profits of Times Newspapers and News Group are currently negative because of the former’s losses, so both could be closed without affecting earnings. But even in the happy event that Times Newspapers were back in profit and making one as large as News Group (i.e. 80m for the two groups combined), it would contribute only 5% of the profits of the whole group. So financially the whole NI issue is little more than an irritating mosquito to Murdoch, albeit politically important to the name of his group in the UK. BSkyB is more of an issue, as it is a highly profitable, international business – see this graphic from the NY Times. But it’s not like the NI issue is a big deal in itself.
Conclusion: as long as he can ring-fence the rest of his empire from the political fallout of the scandal – which seems quite likely, given that there is no evidence so far to link the vast majority of his empire to the same illegal practices, his company will not only survive but continue to be a huge global power. Miliband, being the Leader of the Opposition (and not, let’s not forget, the Prime Minister), has virtually no financial resources and little power, except that of harnessing the outrage of the British people and the embarrassment of the Tories. But this really is David and Goliath.
Ed, you need continue to keep Cameron close on this. You need him for cover. If this becomes merely Labour vs. Murdoch, there will only be one winner.
STOP PRESS: An interesting article in yesterday's Telegraph makes similar points to the last two about the risk that Ed is taking, albeit in a not-very-supportive way. Thanks to John Rentoul for the heads-up.
"as long as the shareholders are kept happy"
Which is the critical point. If he weren't doing as his voters (shareholders) wanted, he wouldn't be free to continue doing it.
The other "voters" in the News Corp realm are of course the customers – those people who choose to spend their money on Sky, The Sun, and so on. A politician only has to face the electorate once every four years. The Sun has to do it every day.
"If he weren't doing as his voters (shareholders) wanted, he wouldn't be free to continue doing it." Well, yes, but please don't try and suggest that makes it into some kind of big collegiate enterprise. Firstly, Murdoch has always called the shots, no-one would dispute that. Secondly, there is no kind of shareholder activism at play here, where shareholders put pressure on the board to do things (if there were, perhaps we wouldn't be in this corporate governance mess). Thirdly, neither do the buyers of the newspaper provide any kind of check or balance.
I am not sure why you are defending the Sun. NewsCorp may be shown to be clean: if it is, fine and good. But NI is not and you are on the wrong side of the argument (it is also likely, although not yet proven, that the Sun suffered from the same practices). What they have done is being roundly condemned by all parties and the public.
"We’re quite lucky he’s not allowed to raise a private army."
Good one!
Thanks – I try!