Apologies to everybody here who would normally warrant a whole blog post of their own, but I’m way behind when it comes to catching up on the Felix Salmon smackdowns and so I’m going to clear them all out in one fell swoop, starting with:
The biggest surprise for me, at the Murdoch hearings today, was the lack of political theater and crocodile tears of remorse. I was expecting a ceremonial piling-on — a group of politicians all jumping at a very rare opportunity to tell Rupert exactly what they thought of him, with the billionaire mogul just sitting there and taking the insults, reiterating over and over again just how very sorry he was about everything that has happened.
When it comes to the fiscal debate in Congress, the worst-case scenario is clear: no agreement at all, and a default. The best-case scenario is also clear: a bipartisan agreement on a credible long-term fiscal plan which allows a large measure of certainty and predictability going forwards. Something along those lines looks more likely today, and markets are rising as a result.
The increasingly-fragile nature of Rupert Murdoch’s hold on News Corp has refocused attention on its dual-class share structure. As John Gapper noted last week, such structures aren’t particularly good for minority shareholders like you or me. And if you plug today’s share price into the Breakingviews Murdoch discount calculator, you’ll see that the company is trading at roughly 30% below its fair value. Or, to put it another way, if Murdoch and his voting control were to disappear tomorrow, the shares could jump a good 45%.
Larry Summers reckons that “with last week’s tumult in Italian markets, the European financial crisis has entered a new and far more dangerous phase”; he’s right about that. But his prescriptions for what must be done, laid out in the second half of his column, are a mess. For one thing, they’re impossible to implement from a political perspective. For another, they contradict Summers’s own diagnosis of what the problem is, as laid out in the first half of his column. And in any case they’re a textbook case of too little, too late: even if implemented they wouldn’t actually fix the problem.
The abrupt departure from News Corp today of Rebekah Brooks (early) and Les Hinton (late) is yet more proof that News Corp is flailing around and incapable of getting out in front of the phone-hacking story. It’s a bit like the way in which the cost of bailing out Lehman Brothers would rise by a few billion dollars an hour at the height of the financial crisis in 2008: every day of bluster and delay just makes this crisis worse for News Corp and for Rupert Murdoch.