Monthly Archives: July 2011

John Gapper

The success of the New York Times metered paywall – it has gathered 224,000 digital-only web subscribers in its first four months (as well as 57,000 Nook and Kindle subscribers) – raises one obvious question: who will be next?

I was sure enough that the NYT’s experiment, in which readers who access more than 20 articles a month have to pay a subscription although articles accessed through social media links remain free, would work that I made a bet on it with Felix Salmon, a vociferous sceptic.

Felix backed down gracefully this week, acknowledging that I am extremely likely to win. My bet was that the NYT would have at least 300,000 digital subscribers after two years, so my bet should go into the money fairly soon (and Felix will owe me $100 for every 100,000 NYT digital subscribers above that figure). Read more

John Gapper

The 46 per cent first-day pop in Dunkin’ Donuts shares in its initial public offering in New York made the company look like an internet wonder. It has also brought back memories of the disastrous Krispy Kreme IPO in 2000.

Krispy Kreme, for those who do not recall, was a high-flying stock in the early 2000s before accounting difficulties and mismanagement brought the shares crashing down again. At the time, it was hailed as a solid alternative to internet stocks.

This, for example, was Andy Serwer’s conclusion in Fortune in 2003:

Unless the fat police run riot across this land, Krispy Kreme is here to stay. It isn’t some fly-by-night dot-com. There’s 66 years of history here. It’s a product that people not only love but understand. (Quick, what does InfoSpace do?) The world is always filled with unknowns, never more so than right now. With all that’s wrong out there, sometimes it’s easy to lose focus on the big picture. So take a second and ask yourself: Is the American dream still alive? Is Krispy Kreme for real? Don’t bet against it.

 Read more

The ill-tempered struggle in Washington over raising the federal debt limit is enough to make anyone gloomy about the future of the US. Clive Crook, my FT colleague, rightly contrasts the stasis among politicians with the “unrivalled energy and ambition” of US workers.

Re-reading the first joyful tidings of business partnerships that have since gone bad is a little like looking at the wedding photographs of a couple on the verge of divorce.

John Gapper

The collision of two Chinese bullet trains in Zhejiang this weekend ought to prompt the country’s leadership to think carefully about how one of the world’s biggest engineering projects has been handled.

The government’s first reaction was to to dismiss three senior officials in the Shanghai railways bureau for allowing the fatal crash to occur, as well as ordering emergency checks on the entire national high-speed rail network. Read more

John Gapper

The US publishing business is in turmoil, driven by the rise of e-books and the decline of print. It has now reached a turning point with e-book revenues overtaking those of adult hardbacks.

The hardback is under severe pressure globally – UK publishers  increasingly publish “trade paperbacks” initially rather than hardbacks. The hardback survives in the US but its future as a mass product looks dim.

In some ways, that is a shame. I am reading The Last Werewolf by Glen Duncan in the US hardback, which is an object of beauty. The Knopf hardcover is finely bound, has an embossed cover of golden suns and moons, and is edged in blood-red.

That said, the hardback list price is $25.95, compared with $12.99 for the more prosaic black and white Kindle version. The margins for Knopf’s parent Random House* on the Kindle edition are higher, while the reader pays half-price. Read more

There is no doubt which Murdoch family member emerged best from the phone-hacking hearing before a UK House of Commons select committee this week. Leaping across the room to land a loud slap on the idiotic foam-pie protester who had assailed her 80-year-old husband, Wendi Murdoch was fearsome.

Thousands of business school academics are eagerly cutting and pasting News Corp examples into next term’s teaching materials. But the lessons are so numerous and far-reaching they could fuel an entire programme. And so, I give you: the MMBA – the Murdoch masters in business administration.

John Gapper

The Murdoch phone hacking affair has made me reflect further on how powerful people who may have broken the law get treated in various jurisdictions – and revisit the case of Dominique Strauss-Kahn.

I wrote a column in the FT earlier this month defending the treatment of Mr Strauss-Kahn (or DSK, as he is known) at the hands of the New York judicial system. I argued that the police and prosecutors had acted correctly in arresting him promptly on charges of sexual assault, and later disclosing weakness in the evidence.

That did not go down very well with a lot of readers – here is a letter criticising my piece that was printed in the FT. However, I think that the Murdoch affair, and the collusion it has revealed among British politicians, media figures and the police make the New York authorities look even better by comparison. Read more

Andrew Hill

Plenty of critics will say that Rupert Murdoch’s full-page apology for the “serious wrongdoing” caused by the News of the World in the British phone-hacking scandal comes too late. Likewise, the resignation on Friday of former editor Rebekah Brooks as chief executive of News International, News Corp’s UK subsidiary, looks tardy.

But News Corp should be more concerned about whether the 6m readers of the UK papers where Mr Murdoch’s letter will appear can trust the sender, given the winding route he took before delivering it. Read more

John Gapper

The move by ConocoPhillips of the US to split its upstream and downstream operations and become a “super-independent” oil company focussed on exploration feels like one of those turning points beloved by investment bankers.

Industry mergers and demergers tend to progress on a supercycle, in which investment bankers first persuade companies to merge in order to achieve scale and then later tell them they need to demerge to gain focus. Read more

Rupert Murdoch is not strictly the founder of News Corp – it started life as News Limited, the owner of an Adelaide newspaper, under his father – but he has embodied it for the past 59 years. The media empire is built around his gambles and opinions, with little regard to what others think.

Andrew Hill

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat” (Sun Tzu)

News Corporation’s withdrawal of its bid for British Sky Broadcasting is the latest in a series of increasingly desperate tactical moves by Rupert Murdoch and his chieftains to limit the consequences of the UK phone-hacking scandalRead more

Andrew Hill

Deutsche Bank’s procrastination over who should take over from Josef Ackermann as chief executive – and its readiness to consider co-chiefs to replace him – smacks of indecision, poor succession planning and compromise at the top. But could it work? Read more

Recent progress in shareholder democracy is bound to come up, when the US Senate banking committee meets on Tuesday to assess how investor protection has improved since the financial crisis.

John Gapper

The News International scandal, which today led Jeremy Hunt, the culture secretary, to refer Rupert Murdoch’s bid to acquire complete control of British Sky Broadcasting, throws the entire shape of his UK operations into doubt.

Might the ultimate effect be that News Corporation disposes of its troublesome UK print operations to focus on its far bigger and more profitable entertainment assets in the US and elsewhere in the world?

That possibility, raised by Andrew Hill last week, would have seemed implausible even a week ago. Rupert Murdoch is an inky-fingered newspaperman who loves papers of every stripe and infuriated investors by paying $5bn for Dow Jones four years ago. Events are, however, moving very fast. Read more

Having been jailed in 2007 for hacking phones on behalf of the News of the World, Glenn Mulcaire this week pleaded for understanding. “I knew what we did pushed the limits ethically,” the private investigator told The Guardian. “But, at the time, I didn’t understand that I had broken the law at all.”

Andrew Hill

When advertisers put pressure on news organisations, it’s often a sign press freedom is threatened. From South Africa to Hong Kong, public opinion puts companies or governments that use their commercial clout to protest against editorial policy on the side of the bad guys.

It’s symptomatic of the sorry state of UK news media that in the widening scandal over phone-hacking, the reverse is true. Read more

John Gapper

The problem of Chinese companies that have run into trouble after gaining listings on US and Canadian exchanges through reverse mergers reminds me of the controversy about emerging market investment companies being listed in London.

I noted last week Richard Lambert’s FT article on Vallares, the investment company run by Nat Rothschild and Tony Hayward, which has promised London investors transparency along with chance to buy undervalued commodity assets.

Meanwhile, the FT has covered the short-selling attacks on Chinese companies listed on the Toronto Stock Exchange and US bourses, including Nasdaq. Twelve of these have been suspended from trading on Nasdaq over accounting flaws. Read more

In June 2004, Mark Zuckerberg turned down an offer of $10m for his four-month-old social network. Four years later, Twitter’s founders – Biz Stone, Ev Williams and Jack Dorsey – declined an all-stock offer worth $500m from Mr Zuckerberg.