Leonardo Del Vecchio: out with the new, in with the old? (Photo: Paolo Bona)
I’m annoyed with Leonardo Del Vecchio, founder of Luxottica, the sunglasses and spectacles-maker. By retaking the executive reins at 79, he has undermined a recent column in which I contrasted his enlightened approach with the benighted version of family ownership and management practised by Rupert Murdoch. Worse, his decision looks like a step back for the company itself.
Mr Del Vecchio apparently has no intention of installing any of his offspring as chief executive, now the well-respected Andrea Guerra has stepped down. That is good. But when you give yourself the title of executive chairman and you own two thirds of the company, it is hard to say that you have kept the operational and shareholder aspects of your business separate, which I still consider to be the best model. As I wrote in March, “maintaining both ownership and management of a large family business more often than not leads downhill into further confusion, uncertainty and internecine conflict”. Read more
Rupert Murdoch is not exactly putting his money where his mouth is with 21st Century Fox’s unsolicited $80bn offer for Time Warner. By offering non-voting Fox shares as part of the cash-and-stock bid he has made clear that he will not risk his voting grip on his family-controlled company. Read more
It was fitting that when Rebekah Brooks, the former editor of the News of the World, was overcome with emotion at the Old Bailey on Tuesday, having been acquitted of charges related to phone hacking, she was helped by the court matron. Only a tabloid case would feature a figure so reminiscent of old British institutions such as boarding schools and cottage hospitals.
Spanish Crown Prince Felipe Photo: Reuters
A couple of royal handovers and a papal resignation and suddenly abdication – which used to have a near uniformly negative connotation – is all the rage. Read more
Leonardo Del Vecchio and Rupert Murdoch have plenty in common. The chairman of Luxottica, the eyewear group, and the chairman of News Corp and 21st Century Fox were born in the 1930s. Both are billionaire patriarchs of family businesses they largely built themselves but now share with outside investors. Both have six children from different relationships, and both have wrestled with the question of succession.
My first reaction to the latest news of changes at the top of the Murdoch empire was: did the shrink get involved?
Succession planning at family businesses is often full of unlikely twists and shrieking. After the phone-hacking scandal broke over Rupert Murdoch’s UK newspapers in 2011, Vanity Fair claimed that the Murdoch siblings had discussed succession with a “family counsellor”, partly in an attempt to smooth the process. Read more
Stephen Elop, ex-Nokia, soon-to-be ex-husband
I firmly believe boards need to be less squeamish about prying into their senior executives’ private lives, particularly when divorce is looming, because the corporate consequences can be grave. Now researchers at Stanford’s Graduate School of Business have broadened the debate to suggest that shareholders should worry about chief executives’ marital disharmony, too.
Divorce, they write, could undermine CEOs’ control and influence, affect their “productivity, concentration and energy levels”, and have an impact on their attitude to risk. They cite Rupert Murdoch’s split from Wendi Deng and the divorce of Harold Hamm, CEO of Continental Resources, from his wife. News of the first, thanks to a pre-nuptial agreement, left News Corp shares unmoved; news of the second, with no pre-nup, knocked 2.9 per cent off Continental Resources’ stock price as investors worried about the fate of Mr Hamm’s 68 per cent stake in the group. Read more
So the revelation in FT Weekend’s interview with David Cornwell, better known as John Le Carré, that Mr Murdoch once lunched with the master espionage novelist is a delicious one. Mr Le Carré is no fan of the media mogul, telling one interviewer in 2010 (even before the phone hacking scandal engulfed News Corp) that his empire was guilty of “pretty horrendous manipulation of the media” and “enormous intrusions into our domestic affairs”.
But some years ago, he relates in the FT interview, he met the proprietor of The Times, after taking offence at one of the newspaper’s stories about him. Read more
I once rashly asked the chief executive of a large listed enterprise if he was overpaid. “I’ve taken no holiday and spent every weekend of the past 18 months trying to rescue this company, breaking up my marriage in the process,” he responded drily. “So, no, I don’t think I’m overpaid.”
With the Leveson report into the UK press published, the tectonic plates are shifting inside Rupert Murdoch’s empire, with a series of interlocking reshuffles underway. The outsider remains Elisabeth Murdoch.
The restructuring, in which Robert Thomson is to become chief executive of the new News Corp publishing company, with Gerard Baker succeeding him as editor-in-chief of the Wall Street Journal, is already causing ructions. Tom Mockridge has resigned as chief executive of News International, the UK publishing arm.
All this coincides with a lengthy profile in The New Yorker of Elisabeth Murdoch, Mr Murdoch’s daughter by his second marriage, who fell out with her brother James over the phone hacking affair. In Ken Auletta’s article, News Corp resembles Dombey and Son, the Charles Dickens novel. Read more
Mark Thompson – image by Getty
I don’t know Mark Thompson, outgoing director-general of the BBC, but I have my doubts about how well his long career at Britain’s public-service broadcaster – interrupted by just two years at commercial Channel 4 – will equip him to run the New York Times Co.
Critically, his new employer has to generate its own revenues, rather than simply pulling money in from a mandatory television licence fee and then spending it.
Management is management, whether in the public or private sector. Mr Thompson is obviously talented and will arrive in Manhattan battle-hardened, not only from his fights with the UK government, and the unions, but from regular set-tos with the New York Times’ biggest rival, Rupert Murdoch, and his clan. Co-blogger and former FT media correspondent John Gapper – currently on holiday – has tweeted that Mr Thompson is “a good choice for the NYT – former hack, strategic, tough, down-to-earth. Used to opinionated employees and controversy” and “also experienced in running a media icon that thinks a lot of itself – mostly justifiably, sometimes not”. Read more
It will be a shame if bitter and partisan debate over whether Rupert Murdoch is “a fit person to exercise the stewardship of a major international company” obscures the more important conclusion of the UK parliament’s culture, media and sport committee on phone-hacking: that he and his son James were wilfully blind to what was going on.
Whether BSkyB, controlled by the Murdoch-owned News Corp, is a “fit and proper” owner of a broadcasting licence is a question for Ofcom, the regulator, which has now entered an “evidence-gathering” phase of its probe.
But as even the dissenting members of the committee said on Tuesday, if the “fit person” line had been omitted from the report, they would have voted unanimously to back it, including the charge that the Murdochs oversaw a culture of wilful blindness. Read more
The Rupert Murdoch on the witness stand for day two of his evidence to the Leveson inquiry was less impressive than the Murdoch of day one.
After his halting testimony to a House of Commons last July, he was refreshingly on form on Wednesday – coming out punching with a display of crisp, sharp replies, even if quite a few were implausible (as I discussed in my column).
Matthew Engel summarised his performance nicely in the FT:
Ga-ga? Rupert? Eyes bright, sharp as a tack – and in control of the situation. “I hope I’m like that at 81,” said a young man in the public gallery. Normally a barrister on his feet cuts an intimidatory figure when cross-examining a seated witness. This time Mr Jay looked like a supplicant backing away from the boss’s desk.
But Mr Murdoch sounded slower and more tired on Thursday, hesitating longer over his replies and sometimes rambling. His reply to a question about his suggestions for media regulation went on a long time and had various digressions. Read more
Warren Buffett’s early stage prostate cancer is so commonplace and treatable that you might legitimately ask whether it was worth declaring. But there is no question that it was better for Berkshire Hathaway’s chairman to make his statement than to conceal the condition.
While there are good reasons to respect the privacy of patients, Apple’s failure to detail Steve Jobs’ condition during his leave of absence for health reasons in 2009 spread unnecessary uncertainty about the future of the company and its succession planning.
If Mr Buffett had any doubts about whether to make his statement, he could have asked a fellow senior citizen: Rupert Murdoch. Read more
By Ben Fenton
In an extended Vanity Fair piece that people who know the Murdoch family say is “horrifying in its level of detail” and “strikingly accurate in most respects”, Sarah Ellison has laid out how the phone hacking scandal at one of News Corp’s UK newspapers derailed dynastic plans for the media group.
One element of a long history – the claim that the four eldest Murdoch siblings had discussed the “succession” to their father as chairman and CEO with a “family counsellor” or psychologist – stood out, both for being hard to picture and for what it says about how little other shareholders views appear to enter into the Murdoch family considerations on succession planning. (Rupert Murdoch and the elder four of his six children control 38 per cent of voting shares, but own only 12 per cent of the total equity). Read more
At July’s parliamentary hearings into phone-hacking at the News of the World, Liberal Democrat MP Adrian Sanders wound up his line of questioning by asking James Murdoch if he was “familiar with the term ‘wilful blindness’”.
Mr Murdoch, now deputy chief operating officer at News Corp and head of its international business, asked Mr Sanders to elaborate, which he did:
It is a term that came up in the Enron scandal. Wilful blindness is a legal term. It states that if there is knowledge that you could have had and should have had, but chose not to have, you are still responsible.
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
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
“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 scandal. Read more
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