Archive for November, 2009

At 78, Is Murdoch Continuing To Outwit Us All?

Posted in Uncategorized on November 27, 2009 by Tom Leatherbarrow

After reading an article posted on the Guardian this week – I was left wondering how, at 78, Rupert Murdoch continues to keep all media moguls at bay with his controversial decisions gaining the kind of coverage that consumer brands would dream of.
Australian-born Murdoch began with one paper within his native country quickly rising through the ranks he began to dominate both the print media and television market (creating Sky in 1989) and this year Forbes were forced to continue recognising his importance – as the 132nd richest person in the world, it cannot be disputed that Mr Murdoch knows a thing or two about his media.
However, the recent criticism has addressed Murdoch’s supposed ‘venture’ to remove stories from Google and encourage the public to pay for content online. Arguably, certain case studies prove paid-for content does not work online – for the consumer or the entrepreneur looking to make a fast buck. A good example can be found back in September 2005, when the New York Times (with an all encompassing daily circulation of around 1.5million) announced a subscription-based service that would now be in place for daily columns known as TimesSelect. Costs were relatively low, but the service was hardly a success with bloggers working around the rule and re-posting the content online.
TimesSelect was discontinued in 2007 reflecting a growing view (that still very much exists and garners much support today) that subscription fees cannot outweigh the potential ad revenue from increased traffic to a free site – a view that Murdoch appears to be ignoring in favour of pioneering new techniques. According to a report in yesterday’s FT, Murdoch’s choices go beyond spitting his dummy out at common web beliefs and towards cosying up to Bill Gates and Microsoft’s newest search engine venture Bing (which, since its launch in June, has quickly been established as Google’s biggest competitor). According to the Guardian, it would seem that ‘Microsoft may be willing to do what Google, so far, has resisted: pay news organisations for the privilege of featuring their content on its site’.Perhaps we shouldn’t be so quick to write off Murdoch and his old age; after all he is sitting on a 4 billion fortune – a testament to his success. And just as Murdoch’s alliance with Thatcher saw The Sun credit itself with helping John Major to win an unexpected election victory in the 1992 general election – the News Corporation could be first to succeed with paid-for online content, leaving Murdoch laughing all the way to the bank.

Crude politicking will hurt Cameron

Posted in Politics on November 26, 2009 by Tom Leatherbarrow

Just got back from a visit to a client during which the conversation turned briefly towards David Cameron’s fact checking issue. As my client eloquently put it. “What a c#ck up. I bet he got back to his office and tore a strip off somebody.”

The facts of the case are almost immaterial but, for those not in the know, Dave accused the Prime Minister at PMQs of state funding two schools with links to Islamic extremism. The BBC this morning ran with the fact that the Conservatives had been forced to concede they had got some facts wrong.

Couple of points. Firstly, what beggars belief is why the Tory party chose this line of questioning yesterday. There are plenty of vulnerable areas to attack this Government on, domestic terrorism is not one of them.

Secondly, Cameron has now given a Brown a wonderful put down for PMQs. Expect Gordon to be asking “has the Leader of the Opposition got his facts right this time?” every time he gets to his feet.

These are dangerous times for the Conservatives. As many commentators have rightly pointed out there is no groundswell of popular support for them. In many ways they are the least worst option. And, as the Prime Minister himself has found out over the last two years, seemingly small issues can grow disproportionately in the public’s mind to become issues of leadership and credibility.

Cameron has benefited in the last year from the fact that the media spotlight has not been trained upon him. Any more c#ck ups like this and that spotlight may begin to turn.

Hung Out to Dry

Posted in Uncategorized on November 25, 2009 by Tom Leatherbarrow

Interesting and increasingly topical article in today’s Independent by Steve Richards, who is hoping for all the drama and back door deals that a hung parliament would bring. It can be found HERE.

I like Steve Richards’ stuff but I can’t help feeling that he is viewing this through the prism of the Westminster bubble (can you view a bubble through a prism?). Anyway, I’ve no doubt a hung Parliament would be hugely exciting (particularly for the political commentators), but I worry about its effect on the economy and wider business confidence as a whole. From where I am standing, business badly needs the certainty of a Government with at least a workable parliamentary majority (circa 40-50 seats). What it certainly does not need is for the current ‘limping along’ to carry on past a General Election. If it was anything like 1974 that would mean circa 5-6 months of limping before a second election in the late Autumn.

In recent days I’ve had two conversations, one with a client and one with a former colleague, both of whom have echoed this same point. My client, acutely aware that the Conservative Party has vastly different views on the climate change debate in comparison to the current Government, wants clarity on key proposals, particularly in relation to renewable technologies and their finance. My former colleague, (I’d call him a City Grandee but he’s only 46, sorry John!) rightly pointed out that relations between the main parties are so fractious that a governing coalition is all but impossible. He’d like a public information campaign to warn the public of the dangers of having Brown, Cameron and Clegg squabbling for six months (God forbid!).

As ever, the financial markets will be first to deliver their verdict and I would be more than willing to bet that the FTSE will take a serious hit the day after an election if we have no outright winner.

A Damascene Conversion

Posted in Banking on November 20, 2009 by Tom Leatherbarrow

Interesting article in today’s FT by Martin Wolf which can be found HERE. Martin, arch-proponent of capitalism, is proposing a windfall tax on bank bonuses. This is the economic equivalent of Sir Alex Ferguson announcing at a pre-match press conference: “Premiership referees are the best in the world. I will never question them again.”

Much of what Martin says has been heard before, but it is worth revisiting, if for no other reason than to marvel at the sheer audacity of the global investment banking institutions. The banker argument, most recently espoused by Lloyd Blankfein, CEO of Goldman Sachs (who memorably told the Sunday Times a few weeks ago “I’m doing God’s work”) is as follows: “Yes, we took the money, but now we’ve paid it back so we can do what we want”. Blankfein is of course referring to the $10 billion of Federal Government money which kept the firm from going bankrupt in October 2008.

Of course, as Martin points out, this is a gross over-simplification. The institutions now making these enormous profits are effectively being underwritten by Governments around the world (the “too big to fail” argument). Secondly, the enormous profits are in large part due to the unprecedented amount of public money that has been pumped into the financial system, which investment banks are now happily, trading and hedging and collateralising. Thirdly, those making the enormous bonuses are exactly those who almost destroyed the financial system in the first place. Four, ordinary chaps (you and me) are hurting most and will be paying the bill for the bail-out for the next 20 years.

As Martin says “windfall support should be matched by windfall taxes.” However, he does miss out one other key factor in the investment bank re-birth, namely lack of competition. The banking crisis effectively narrowed the field considerably as Bear Stearns, Lehman Brothers, Citigroup and others, for different reasons, are no longer playing. So, in short, the likes of Goldman’s has a bigger, better playing field to play on and fewer opposing teams. Not bad is it?

In the past, the banks have been able to defend themselves against this sort of attack by shooting the messenger, but Wolf is highly respected. They might struggle with that strategy this time.

Ladies and gentlemen, the President of Europe

Posted in EU on November 19, 2009 by Tom Leatherbarrow

Tonight Europe’s great and the good meet in a smoke filled room to select our new President (how democratic!). I confidently predict that there will be no street parties, bunting or celebration of any kind, not least because you probably won’t ever have heard of him or her.

For Tony Blair supporters this is bad news, but in all honesty I don’t believe he ever stood a chance for two reasons. Firstly, he’s damaged goods. Although he may not realise it himself, Iraq and his slavish following of the Bush Administration severely damaged his reputation in Europe and positioned him for all time as an ‘Atlantic Man’ rather than a European.

Secondly, and this is key to understanding who we are likely to get, Blair, though damaged, remains a big beast, capable of generating international headlines. Sarkozy, Merkel and Berlusconi won’t want that. If anyone is going to be photographed having tea with the Obama it is them, not some new President.

So what can we expect? My guess is that we will get a faceless bureaucrat who will be greeted in this country with a chorus of “who’s that?”

It’s the Sun wot spun it

Posted in Media on November 17, 2009 by Tom Leatherbarrow

Apologies to my fan (sorry Mum) for not blogging over the last few days. I’ve been out of the office with no access to a computer which meant that I was unable to do a quick update on The Sun’s treatment of Gordon Brown (see Real Callousness – Wednesday 11th November). Anyway, towards the end of the blog I mentioned that we could expect the Sun to try and make amends for its mauling of Gordon with a gushing piece on Sarah over the next few weeks.

And lo and behold Friday’s paper had this news story (I use the term news in its loosest sense) complete with a review of Sarah’s wardrobe by the editor of Cosmopolitan magazine. Members of the public relations profession will recognise the happy confluence of the Sun’s need for a positive Brown story (“look we’re not that bad, we’ve been terribly nice to his wife”) and some excellent work on the part of Sarah Brown’s PR people.

However, I suspect this story was not a difficult sell. Sarah Brown, formerly of Brunswick, is very well connected in the London media world. For the Sun this will have been like giving an old friend a pat on the back.

Real Callousness

Posted in Media on November 11, 2009 by Tom Leatherbarrow

The newspapers have been full of the Prime Ministers alleged callousness and indifference in recent days as a result of ‘Spelling-gate’. My initial instinct, that this was a politically motivated attempt to humiliate the Prime Minister, is proving well founded.

On this Armistice Day allow me to tell you a story of real callousness from another age, to put all of this in perspective.

My Great Uncle, Robert Ballard, was a member of the Royal Field Artillery, a regiment equipped with smaller field artillery guns that were generally situated closer to the front lines. As a family we know little about him, other than that he was a beloved older brother of my own grandfather, who eventually called his own longed-for son after him. His role in the Great War was, according to my own mother, “something to do with horses”, presumably tending to the poor animals which pulled the guns into position.

As you have probably guessed by now, he was killed the outskirts of Arras on the Western Front on July 17th 1917. In an act of real callousness, the War Office informed his mother, my own Great Grandmother, of his death via telegram. Nothing unusual in that, except that it was accompanied by an invoice for the blanket in which he was buried. In those days, you not only had to be prepared to sacrifice your own children for the nation, you also had to pay for the privilege of having them buried. To my Great Grandmother’s eternal credit, to the day she died she refused to pay.

Robert Ballard currently lies in Point Du Jour Military Cemetery near Arras. It is a small cemetery named after a particularly strong German redoubt in the near vicinity. The cemetery became internationally famous about 10 years ago when the ‘Grimsby Chums”, members of a Pals Regiment (anybody interested in the sheer idiocy and pointless waste of the Great War should read up on Pals Regiments), were discovered nearby linked arm-in-arm. They were subsequently re-buried in Point Du Jour.

Times have fortunately changed but individuals and organisations are still capable of extraordinary callous behaviour and thoughtlessness. I supect the Sun’s behavior in recent days has offended the British public in such a way. The Sun’s website story is now the recipient of nearly 200 comments from its readers, 90% of which are supportive of the Prime Minister. This will not have gone unnoticed in Wapping.

The talk on the Sun’s website is of a callousness perpetrated by a national newspaper which chose to publicly try and humiliate a man on the basis of his disability. The Prime Minister is, if you didn’t know, practically blind.

Apparently, the political editor of the Sun, well aware of the Prime Minister’s failing eyesight, tried to dissuade senior staff on the paper on Sunday night from treating the story as they did. He was ignored.

I suspect we will now see the Sun quietly pull away from this one and try to make amends as it did with its other great cock-ups – remember “Bonkers Bruno” and “Hillsborough – The Truth?” Get ready for a gushing ‘Sarah and the boys” story coming your way in the next few weeks.