The Leveson enquiry: a storm in a media teacup?

May 15, 2012

In the UK, there could be a gigantic political scandal unfolding involving the Prime Minister, the Chancellor of the Exchequer, Rupert Murdoch, and a considerable number of their colleagues and close personal friends

On the other hand…

On the other hand, much of what is being reported may amount to a gigantic storm in a media teacup, amounting to little more than evidence of powerful people behaving with illusions of omniscience.

The tantalising question is whether we are witnessing an important series of events in political history in the UK in the early decades of the 21st century. Or not.

Timeline

Leaders we deserve reported on the breaking news stories emerging from the Leveson enquiry [in an earlier post April 23rd – May 10th, 2012].

May 28th Tony Blair’s testimony

Tony Blair’s involvement with the media was explored chronologically. He gave his expected well-prepared presentation. The self- image which ran through his book [reviewed among other places in Leaders we deserve] hardly appeaared to have changed.

His emphasis on power and power-relationships came through as he portrayed his own belefs that as prime Minister he sought to “manage not take on” the media. He drew parallels with [Labour] Union power. Of interest, he considered the owener of media to be less important than their appropriate managemment.

A brief moment of dramaas a protester burst into the room (ca 11.30 am) hurling “War criminal” accusation at T.B., before being hustled away

May 24th

Another week of compelling winesses. Yesterday Jeremy Paxman whose evidence suggested malpractice from the Mirror group. Today, Adam Smith whose evidence adds to the pressure on Culture and Media Secretary Jeremy Hunt as his special advisor in the ‘quasi-judicial role played by Hunt in the BSkyB case.

May 18th

Six children killed in a house fire. Is the case one for the Leveson enquiry? The deaths of six children in Derbyshire may be as relevant to the Leveson enquiry as that of the hacking of the voice mail of murdered teenager Millie Dowler.

The father of the children, Mick Philpott, acquired notoriety in a media campaign five years ago as “a benefits scrounger” who was reported as asking for a larger house to accommodate his extended family and more of his seventeen children.

May 15th 2012

Breaking news: Rebekah Brooks is charged for offenses relating to phone-hacking. The issue is said to be one ‘hanging over the government’ until the next election.

Lord Levinson announces intention to ‘say something significant on recent events’ at 2pm local time.

Levinson statement [2pm May 15th 2012]

Lord L had prepared an extended statement. He indicated yesterday [and earlier] that his remit was to explore evidence of Government/Press relations. In his statement, he reviewed various events which indicated the focus of his concern. These reprised his need to operate in a strictly neutral fashion, when there were political issues being considered by Parliament.

In this respect, he quoted extensively from Hansard [the official political record] on questions relating to the enquiry, and specifically the issue of making information requested from it available to Parliament, including a ruling from speaker John Berkow.

His statement also focused on the ‘leaking’ of information to News International. The statement implied that he would have to consider excluding from the enquiry any areas which he considered risked its independence and fairness.

It appears that there are ‘hard to resolve’ issues [dilemmas] here. The politicians are using the information leaked as part of a campaign attacking Jeremy Hunt through his disgraced special advisor Adam Smith. Lord Leveson is concerned about the fairness of the enquiry being placed at risk by politicised debate in Parliament.

May 15th 2012

Levison’s statement of May 15th in seen by The Telegraph as ‘defending the enquiry’

New York Times outlines prosecution of Rebekah Brooks as the most recent and easiest of charges of concealing evidence. More charges may follow which will embroil prominent politicians.

May 14th 2012

The Guardian newspaper was described last week by former Sun editor Rebekah Brooks, as a leading member of the ‘anti-Sky coalition’. The newspaper continues its reporting with an article drawing attention to the Chancellor’s involvement with Sky International executives at the time of the Government’s investigations of the proposed takeover of BSkyB by News International.

To be continued

This post will be updated regularly until further notice.


News International Update

April 25, 2012

The fate of Rupert Murdoch’s business empire continues to attract attention globally. Leaders we deserve is providing regular updates, as the Leveson Enquiry in the UK into Government and news media relations continues

Updates

This post will be updated regularly. Earlier LWD posts include:

The Murdoch meltdown
The closure of The News of the World
The business model of Rupert Murdoch

May 12th

Leveson enquiry continues to attract media attention with Rebekah Brooks, the former Sun editor, taking the stand at the Leveson enquiry. The BBC asks whether she have been treated differently if she had she been a “grumpy old man of Fleet Street”

Her testimony suggests that the Government will face more political problems from the stories produced through the enquiry which was set up by Prime Minister David Cameron. These appear to leave the spotlight on culture secretary Jeremy Hunt, as well as Mr Cameron’s own relationship with the former Sun editor.

May 10th

Selective amnesia and his status as someone on bail in connection with phone hacking hinder evidence to Leveson from Andy Coulson

Independent newspaper suggests Coulson’s evidence ‘leaves toughest questions at Prime Minister’s door’.

Personal view [TR notes for LWD]:

Coulson at times showed a grasp of the unspoken implications of questioning as well as more generally as someone thoroughly cautious and well-prepared with a few key points to make (no conspiracy; was not hired to influence Robert Murdoch’s political decisions.

May 9th

Story picks up as Leveson enquiry resumes. David Cameron’s closeness to Rebekah Brooks is not particularly new.

May 3rd 2012

BskyB distances itself from its major shareholder News Corporation in a statement from its chief executive Jeremy Darroch.

May 2nd 2012

Select committee finds Rupert Murdoch unfit to run News International. James Murdoch is also severely criticised.

Committee appears to have exceeded its brief, particularly with the most damning criticism, where voting occurred along partisan lines.

The Washington Post notes:

The parliamentary report issued Tuesday [Ist May 2012] was far harsher than most British observers had expected. It was approved by a 6 to 4 vote, with the four members from Prime Minister David Cameron’s Conservative Party staunchly objecting to the description of Murdoch as an unfit proprietor.

April 30th

The former First Minister of Scotland Jack McConnell reported as political target of phone hacking by Rupert Murdoch’s News International.

Jeremy Hunt ‘On probation’ by Prime Minister’s statement.

April 29th

Telegraph reports Cameron could fire Hunt if new evidence emerges.

April 28th

Leveson rejects Government plans to review Jeremy Hunt’s conduct over BSkyB bid saying “It’s not my problem”

April 27th

The Guardian: Rupert Murdoch’s evidence to the Leveson inquiry was like one of his tabloids: a lively mixture of accurate and inaccurate reporting, one-eyed comment and total fantasy.

Sky News, itself part of the story reports on Simon Hughes’ call for an investigation into Jeremy Hunt’s conduct during BskyB takeover bid.

The Belfast Telegraph reports that George Osborne is facing questions over whether he was lobbied by Rupert Murdoch and played a role in supporting News Corp’s attempted £8bn takeover of BSkyB.

April 26th Murdoch

Two inter-related stories today. In Parliament, Jeremy Hunt defended his ‘quasi-judicial’ role in the BskyB bid by Rupert Murdoch’s News Corporation. Mr Murdoch appears before the Leveson enquiry into Media ethics.

The BBC reports Rupert Murdoch’s witness statement

The Independent sees the Jeremy Hunt story as “a toxic trail” leading from Jeremy Hunt to the Prime Minister’s involvement in the Murdoch bid for B Sky B.

The Scotsman: Cameron admits “we all did too much cosying up” to The Murdochs.

April 25th 2012

The BBC continues its reporting of the Leveson enquiry with a ‘What the papers say’ review.

The Daily Telegraph examines the testimony of James Murdoch [24th April 2012] to the enquiry concluding that the Government’s relations with the Murdochs are coming under close scrutiny and ‘revealing a lack of candour’

The Guardian focuses on another close political relationship: between Rupert Murdoch and Alex Salmond

April 23rd 2012

Lord Patten tells Leveson enquiry:

Plainly, Mr Murdoch took the view that publishing a book which was critical of the Chinese leadership would not improve his chances [of expanding his business interests in China] , so he instructed HarperCollins to drop the book on the grounds that [the book] was no good”.

Image

Image of Rupert Murdoch is from livetradingnews.com


BBC as ‘Orwellian Threat’ – James Murdoch

August 30, 2009

_39371152_j_murdoch_203

James Murdoch concluded his presentation at the Edinburgh TV festival with the words: ‘The only reliable, durable, and perpetual guarantee of independence is profit.’ He presents BBC as an Orwellian threat to independent journalism

This weekend [Aug 28th 2009], hearing of the speech I did the decent journalistic thing and looked it up in the News Corp press release. All my attempts to cut and paste elements from the text were defeated. It may be as a result of my technological incompetence. Or it may be part of News Corps enthusiasm for pay to view, even for the content of press releases.
Whatever.

So I keyed-in the punch-line all by myself, and turned to the BBC, one of the prime targets in the speech for more information.

What follows has been cut and pasted from the report by the BBC

News Corporation’s James Murdoch has said that a “dominant” BBC threatens independent journalism in the UK.
The chairman of the media giant in Europe, which owns the Times and Sun, also blamed the UK government for regulating the media “with relish”

Organisations like the BBC, funded by the licence fee, as well as Channel 4 and Ofcom, made it harder for other broadcasters to survive, he argued.

“The BBC is dominant … “Other organisations might rise and fall but the BBC’s income is guaranteed and growing.”

Sir Michael Lyons, chairman of the BBC Trust, told the BBC’s World Tonight that Mr Murdoch had underplayed the importance of Sky as a competitor.
“Sky continues to grow and get stronger and stronger all the time so this is not quite a set of minnows and a great big BBC ..[noting that declining advertising revenues in the recession, rather than the corporation, were to blame for the problems facing the commercial media] That is nothing to do with the BBC, that is just to with what’s happening”

News Corporation owns the Times, the Sunday Times and Sun newspapers and pay TV provider BSkyB in the UK and the New York Post and Wall Street Journal in the US. Rupert Murdoch addressed the same festival 20 years ago, and was also critical of the UK’s media policy.

A bit more history

This week, with the death of Teddy Kennedy, I was reminded of the dynastic ambitions of Joe Kennedy for his sons .

There are some parallels between Joe and Rupert in that respect. Both were self-made tycoons. Both were considered single-minded and determined to overcome all obstacles between them and their goals, whatever it took.

LWD has been following the developing story of News Corp and the Murdoch dynasty for leadership lessons which they might offer.

Earlier this month [August 8th 2009] we reported the news that News Corp is intent on creating a new business model which will attempt to charge for on-line content. This is not a new idea, but will require the mix of entrepreneurialism and risk required for radical change.

Earlier posts suggested that son James shared the highly competitive characteristics of his father, although he was not necessarily the first choice as dynastic heir.

He has shown his combativeness in dealings with Richard Branson, another highly successful entrepreneur, but one who tends to blend his own competitiveness with a more cuddly public image than do the Murdoch clan.

However independent, James was sticking pretty close to the corporate line in Endinburgh.

The BBC is like the NHS

Taking on Richard Branson might be called a touch challenge. Taking on the BBC might be considered even tougher. It’s rather like taking on the NHS. A point not lost on Will Hutton who argued in the Guardian

Perhaps one of the most self-serving parts of his speech was when he accused the BBC of being Orwellian. But the BBC is not an arm of the Orwellian state; it is a public corporation committed to fairness and objectivity which is understood worldwide. It would never, like Fox News, a part of the Murdoch empire, broadcast rank half-truths about the NHS under the guise of being balanced and objective – and if challenged argue that it is part of a diverse, plural conversation.


Setanta struggles for survival: the dangers of a growth strategy

June 20, 2009

Setanta logo

Setanta was a successful entrepreneurial start-up which took on the market leader BSkyB in the UK’s pay-to-view satellite sports broadcasting business. Its demise makes for a gruesome but instructive case study

Twenty years ago, two Irish entrepreneurs Leonard Ryan and Michael O’Rourke spotted a gap in the emerging satellite broadcasting market and attacked it energetically and with great success. But eventually its strategy unraveled with disastrous results.

In June 2009 Setanta defaulted on its creditors as the company heads for extinction. Recently [June 9th, 2009] the on-line recruitment for Setanta’s services were blocked with the message “Oops! Something has gone wrong”.

What did go wrong?

As the Telegraph wrote at the time:

The company’s collapse has potential knock-on effects for funding of football in the UK, but also for Rugby and Horse racing.

The company went too far too fast

Maybe it was a classic marketing mistake allowing customers to join for only one month at a time.

Easy come, but easy go. And customers have not been coming. [This analysis of its marketing strategy is much easier to see in hindsight: Ed. Leaders we deserve]
The recession has certainly made matters worse. A second pay TV contract is an easy cut for families trying to scrimp a little. Setanta may simply have overestimated the appetite for sports programming. But the quirky design of the regulator’s auction BSkyB’s competitive advantage by encouraging [Setanta] be too optimistic in its bid.
There just might be a way out. Setanta could give up on direct selling – letting Sky or others to broadcast its games .. But much of the £450m put into the company by investors including Doughty Hanson and Goldman Sachs is likely to be lost.
Setanta managed to get into serious trouble without much borrowing. But – with the UK regulator’s enthusiastic backing – it collected roughly £500m of liabilities to content providers. There are next to no fixed assets, so the company finds itself at the mercy of its creditors.
That loss will only amplify a classic marketing mistake: allowing customers to join for only one month at a time. Easy come, but easy go. And customers have not been coming. Setanta 1.2m customer base is well bellow the estimated 1.9m required to break even. An operating loss of £95m is expected this year.
The recession has certainly made matters worse. A second pay TV contract is an easy cut for families trying to scrimp a little. Setanta may simply have overestimated the appetite for sports programming. But the quirky design of the regulator’s auction amplified BSkyB’s competitive advantage by encouraging the company to be too optimistic in its bid.
There just might be a way out. Setanta could give up on direct selling – letting Sky or others to broadcast its games. The EPL, which has the most to lose if Sky ends up with a pay-TV monopoly, might help by agreeing to reduce the £130m of fees it’s due this year. But much of the £450m put into the company by investors including Doughty Hanson and Goldman Sachs is likely to be lost.
Setanta managed to get into serious trouble without much borrowing. But – with the UK regulator’s enthusiastic backing – it collected roughly £500m of liabilities to content providers. There are next to no fixed assets, so the company finds itself at the mercy of its creditors.

Lessons?

What lessons are emerging from all this? I welcome views of strategically gifted colleagues for comment. Here are a few personal observations

The regulatory move which split football francises between competing organizations was designed to drive down costs through competition. It failed to solve the problem that the bidding arrangements left viewers little additional choice of service.

Are there similarities to the equally unpopular move which was inflicted on the country’s rail transport system? A lumbering monopoly had been restructured into several somewhat smaller monopolies.


Match of the day: Branson-Murdoch Round three

October 3, 2007

dog-in-a-manager.jpg
The battles between BSkyB and Virgin Media continue. This round goes to Richard Branson, as the competition commission rules that the Murdoch move which acquired a stake in ITV was anti-competitive.

According to The Guardian

Sky could be forced to sell its 17.9% stake in ITV at a substantial loss after the Competition Commission said this morning that the holding restricts competition and is against the public interest … It is likely to please Sir Richard Branson, who last year attacked Sky’s “reckless and cynical attempts to stifle competition, and secure creeping control of the British media”.

In a provisional ruling, the commission said that the shareholding, which has been fiercely criticised by rivals, would allow the satellite broadcaster to weaken ITV or prevent it competing fully with BSkyB.

In an earlier post I noted that

Both companies have a capacity to damage the other’s competitive position. As a complete victory for one side seems unlikely, the organizations will have to find ways of co-existing and collaborating, as well of competing

That has not stopped a bitter feud deepening between both organizations.

Earlier in the year Virgin’s TV subscribers were caught in the crossfire. Virgin lost an estimated 40,000 of its 3 million-plus subscribers when BSkyB pulled the plug (or at least, the dispute resulted in loss of BSkyB content to Virgin subscribers.

Both parties have continued to react energetically in the fast-changing media market-place.

This week Richard Branson launched the new TV channel Virgin 1, which even if planned otherwise will now fill the gap left by the loss of the Sky channels.

A day before the competition ruling, BSkyB yesterday unveiled Picnic, a new subscription service for Freeview digital TV, which initially will offer three channels (Sky One, Sky Sports 1 and Sky Movies).

Setanta Sports, originally positioned as viewing for Irish ex-pats, has muscled itself into a more visible position in its advertising campaign for cheap monthly subsriptions. In the UK, the most recent sale of transmission rights of Football matches has illustrated how what’s right for the Competition Commission may not be right for viewers wanting to follow their favorite team, and who now have mind-boggling calculations to make in view of the multiple bundling possibilities on offer.

What’s going on?

Here we have a developing story of some appeal to wannabe leaders. Is it a war-game? Are there rival teams of grand-masters planning move and counter-move?

While my favorite notion of Chess as a source of strategy insights offers a starting insight to the complexities, maybe a deeper study is required. One colleague suggested the various theories of Industrial Organization economics. These are even more complicated than the Branson Murdoch battle. A nice introduction can be found in the review by Kathleen Conner. Although not covering more recent work, it explores various theories, with particular attention to the Resource Based View of the firm. This remains a way of understanding how a firm’s competitive position may defined by a “bundling” of unique resources.