Legal eagles trash Sky bid
SITTING in London, it is hard to understand the public interest generated in the United States by sexual harassment allegations at 21st Century Fox.
There is fascination with the impact it might have on the ‘fit and proper’ test by Britain’s regulator Ofcom on the Murdoch empire’s £11.7bn bid for the 61pc of Sky it doesn’t already own.
Britain caught a glimpse of the battle this week when lawyer Lisa Bloom, accompanied by harassment claimant Dr Wendy Walsh, brought concerns about the Murdoch empire directly to Ofcom. They argue that ongoing disclosures and claims of sexual harassment at 21st Century Fox, where James Murdoch is chief executive, mean the company is an unfit owner of Sky. Bloom has told Ofcom that the company’s ‘approach to business and management includes a lack of oversight, intervention and decency’.
Fresh representations from sharp-elbowed American lawyers are due tomorrow.
The tone of the intervention is a sharp reminder of how News Corporation was dragooned into pulling out of its previous attempt to take full control of Sky because of phone hacking.
What I found amazing recently was that in the era of Donald Trump, when so much is going on in American politics, events at Fox News dominated headlines in the New York Times occupying forests of newsprint.
Partly, it would seem, this was media outrage at the role that Fox News, one of America’s most popular 24-hour news channels, played in shifting public opinion in a direction that offends liberal sensibilities.
The New York Times also reported on considerable efforts made by James and Lachlan Murdoch to clean the stables and normalise governance at Fox. They persuaded their father Rupert to abandon loyalties to market-leading anchor Bill O’Reilly, who was expensively dismissed from his post.
The questions for Ofcom are: What kind of corporate culture fostered an atmosphere of misogyny? Was there a cover-up of compensation to disgruntled staff and guests? And did senior executives know what was going on and were complicit?
In most cases of corporate misbehaviour, it is the attempt to plough over the wrongdoing that is as damaging as the actual act.
The concern will be that Sky, which has an exemplary reputation for great production values and brilliant news coverage, could be tainted by the ongoing controversy swirling around Fox. It is a hard judgment to make, in that James Murdoch has been a competent chairman of Sky and responsible for investment in technologies which made the group such a formidable presence in UK and European media.
It is something of a fiction to pretend that the Murdoch family, with 39pc of the stock, does not have effective control anyway. Proving that the merger will have a detrimental effect on media plurality may be hard, as long as there is protection of the news operation from integration with Fox News.
What is as significant and ought to be of most concern to minority investors is the way that the Murdoch family tends to put its interests above those of broader stakeholders. The buyout price looks to be at a handsome premium but is partly being met by cash that 21st Century Fox received for selling its stakes in Sky Deutschland and Sky Italia to the UK company. Inter- company transactions often leave outside investors in Murdoch enterprises horribly out of pocket.
Judgment day
THIS paper has long been an advocate of seeing the senior bankers at the heart of the banking crisis in court.
We likely will get one of those opportunities in October when the some of the bankers involved in the arranged marriage between Lloyds and HBOS in 2008, including former Lloyds chairman Sir Victor Blank and former chief executive Eric Daniels, will be defendants in a case brought by Lloyds investors. The court will explore the alleged failure to disclose covert assistance provided by Lloyds, the Bank of England and the Federal Reserve to keep HBOS afloat.
Fittingly the case, if not settled, comes exactly a decade after this travesty for Lloyds shareholders.
Singer’s bite
SHAKING off Elliott Advisors is harder than separating a rottweiler from a bone.
Its latest manoeuvre – to try to rid Akzo Nobel of chairman Antony Burgmans in the Dutch courts – might look like a lost cause.
But that’s what Argentina thought when Elliott boss Paul Singer demanded full repayment on bonds that were bought for pennies – and won!