Bolloré Is No Mercier

Jean-Marie Messier took a stogy French utility and construction conglomerate and converted it into an unwieldy media monstrosity in numerous related and unrelated businesses including Universal Studios.  During the dot.com bubble, he drank the internet Cool Aid and paid fabulous prices for companies whose value evaporated like water spilt on summer asphalt.

As the value of his empire collapsed, he met his Götterdämmerung. 

Eventually French financier Vincent Bolloré took a dominant position in the company, became Vivendi's chairman, and divested many of its assets to concentrate on content. In the process, Vivendi has piled up €16bn of cash. Lex’s Oliver Ralph and Robert Armstrong discuss whether Vincent Bolloré should return this money to shareholders in this Mar 23, 2015 video:


However, there is nothing like idle cash to attract the wolves.  Bolloré now faces an activist challenge from Wall Street’s quiet professor Peter Schoenfel, the head of the hedge fund, P. Schoenfeld Asset Management.

A Media Mogul Invades Britania

  Liberty Global, John Malone's international media conglomerate, wants to buy Virgin Media.  This would be his biggest move into the UK. 

Will the deal work?   Liberty is loaded with debt.  Although Virgin Media is selling at a significant discount from comperable European media properties, Malone will have to pay a premium.  Will the price be a bridge too far?

In this February 4th video, Lex's Stuart Kirk and Nikki Tait discuss the financing of a potential buyout, and whether Virgin Media's shareholders see Liberty as a good enough suitor for the UK cable operator:

Can the Richest Aussie Sheila Make Even Fairfax Quake?

The WSJ's Deborah Kan talks to Andrew Critchlow, the Journal's Australian correspondent, about Australia's richest woman, Australian mining heiress Gina Rinehart.  This savvy investor is translating her natural resources wealth into the biggest shareholding in Fairfax Media. (2/1/2012.)  Will she who pays the piper call the tune?

Media Monguls and Respectability Do Not Go Together.

Media companies represent a large chunk of the global economy and a big piece of the world's stock market capitalization.  Unless you consider Apple a media company, the only one to make the list of the top 100 most respected companies by professional investors was Walt Disney, which went from #20 to #12.

Read the story in Barron's:


Most Respected Companies 2/12/2011 3:03:01 AM

Barron's presents its annual ranking of the most respected companies in the video below. Apple comes in first for the second year in a row. Johnson & Johnson fell from last year's ranking.





What explains this lack of respect in one of the business world's largest sectors?

The Curse of the Media Mogul

The media hold a peculiar place in the business world, for they are the natural habitat of that most peculiar species, the media mogul.  We do not speak of car moguls or utility moguls, yet the media sector is dominated by huge international companies run by over sized personalities.  A media mogul even provides a James Bond flick with its villain.  In "Tomorrow Never Dies," Elliot Carver is a caricature of News Corporation's Rupert Murdoch.

Three Columbia Business School professors, Jonathan Knee, Bruce Greenwald and Ava Seave, also see media moguls as villains but in their case they see the shareholders as the victims.  Jeremy Philips summarizes their argument in his Wall Street Journal review of The Curse of the Mogul (New York: Portfolio, 2009)  "that media conglomerates as a whole have underperformed since the advent of the Internet. The Web has eroded the barriers protecting traditional businesses without improving the competitive position of even one incumbent. For a new competitor, of course, lower barriers mean opportunity, but they will mean opportunity for still newer competitors, too, making it difficult to establish a sustainable advantage. Citing Warren Buffett, the authors say that companies should be 'continuously digging the moat around their business.' But media companies have often done just the opposite, 'inadvertently construct[ing] bridges for competitors when they think they are strengthening the moat.'"

Glitz, Ego, or Value?

Do you agree with the Columbia dons that media moguls are obsessed with growth and overlook true competitive advantage?

And Then There Is Italy

Italy is the only country to entrust its government to a media mogul (Silvio Belursconi) and now finds the office of the presidency embroiled in a sex scandal. For movie stars, scandal sells. That same principle may not hold for Italian politics.

The Financial Times reports: "On Tuesday a Milan examining judge accepted a request from prosecutors, who said they had sufficient evidence concerning a “significant” number of prostitutes, to proceed to an immediate trial of the 74-year-old prime minister without holding a preliminary hearing. The case will begin on April 6." 

“Ruby,” a Moroccan nightclub dancer named Karima El Mahroug is "alleged to have joined erotic 'bunga bunga' parties last year..." She, then "aged 17, denies having had sex with the prime minister. Mr Berlusconi says he has never paid for sex and also denies pressing a Milan police chief to free the teenager from detention last May." His excuse is diplomatic: he wished to avoid an incident. He thought her to be "the niece of Hosni Mubarak." The people went to the streets of Mubarak's Egypt to oust him. The Italians have mostly headed to the espresso bars. Then again, they have the ballot box to deal with their media mogul.

What a Difference a Year Makes: US TV networks

In this May 20 Video,Kenneth Li notes how TV networks are re-thinking business models. On and off screen, the media industry is returning to comfort zones disturbed in recent years by thousands of alternative sources of entertainment on the internet. Across the media sector, executives were eager to convince advertisers that television is as resilient as it was in the eras they are harking back to. (1m 54sec)

Good Bye Mr. Chernin

Andrew Edgecliffe-Johnson writes about Peter Chernin as the FT's man in the news.

Chernin recently announced he is leaving News Corp. Perhaps he is frustrated being the prime minister when only blood relatives can aspire to be king or queen. Mr. Murdock's generation of heirs through serial monogamy might have contributed.

Not everybody's golden parachute includes the start up of your own independent production company.

Succession Planing At News Corp?

Has Rupert Murdock decided it is time for James to be next?

John Rogers' Ariel Capital Management Increases its Stake in McClatchy, the Wichita Eagle's Owner

John Rodgers is an old and savvy investor. Media Daily News reports that his investment company has raised its ownership stake in the McClatchy Company to 15.5 percent. The Chicago Tribune reports, "'Our firm is based on contrarianism. We often find that's where opportunity is,' said Ariel founder John Rogers."

The McClatchy family owns about 30% of the outstanding shares and has super shares to allow it control. Hedge fund Citadel Investment Group also has accumulated 3.2 million McClatchy Class A shares.

Newspapers have always been great cash generators. John Rodgers, Citadel, Rupert Murdoch, and Sam Zell all seem to think they are worth investing in. Everyone else is avoiding them like the plague. At least in Murdoch’s case we know that his strategic insight is that he who controls the content commands the audiences.

Ft.com has an interview with Zell that provides a view of the business that he back up with a very large bet.

Murdoch Bids $5 Billion for Dow Jones

Want a Journal Mate?

The rule of media empires is he who owns the content rules. Whether content pays is another matter! Wall Street seems convinced that top shelf journalism and having a business model in the black are two diferent things after all. (And I do not mean Conrad Black!)

Rupert Murdoch's News Corp has bid $ 5 billion for Dow Jones, publisher of the Wall Street Journal, Barrons, and the Dow Jones Newwires among other media properties.

Is Murdoch paying too much? he does not think so: "[W]e feel it's worth this. This is the greatest newspaper in America, one of the greatest in the world. It has great journalists which deserve, I think, a much wider audience. We feel that with coming both online and offline, there's a great deal to be done here. It's got great journalists, it's got great management, but it's got a rather confined capital. It's got to be part of a bigger organization to be taken further."

The Bancrofts say "No."

Although the bid is a 67% premium over the stock price that does not mean it is a deal.

Like many traded newspaper companies, Dow Jones has more than one class of shares. In this instance, the Bancroft family, which has a minority of the shares has a voting majority. The Financial Times quotes Michael Elefante, a Dow Jones director and lawyer representing the Bancroft family, as saying “Members of the family and the trustees of trust for their benefit have advised him that they will vote shares constituting slightly more than 50 per cent of the outstanding voting power of Dow Jones against the proposal.”

Stay tuned, the fun has just begun.

2006 Newspapers' print advertising revenues down; internet jumps to $2.7 billion

The Newspaper Association of America, in data reported in the Wall Street Journal, reports that advertisers spent $46.6 billion (down 1.7 percent) on their print ads and $2.7 billion on their internet ads. The newspapers' internet advertising was up 31.5 percent. Although that was in line with the 34 percent increase in all internet advertising spending, it was not enough to offset their losses on the print side. The internet side of the business provides only 5.4 percent of the industry's advertising revenue.


The Journal got its overall internet ad spending data from the Interactive Advertising Bureau.

Mary Berner is Making Changes

Ad Age tells us that she has been dipping into Conte Nast for key executives to lead the changes at the Reader's Digest Association. Having people you know, have confidence in, and can trust can be crucial to an outsider's success in an organization in need of change.

Read more in Ad Age.

Readers' Digest Association Goes Private

The Readers' Digest Goes Private

March 2nd, 2007, Readers' Digest Association went private. Ripplwood Holdings, LLC led a group of private equity investors who acquied the Association.



Mary Berner takes over as CEO. She has a big job ahead of her. Since the Cold War ended, the flagship magazine, an American cultural icon, drifted away from its original editorial embodiment of solid American values in a desperate search for new demographics. Circulation fell. The magazine, which was the vine that gave substance to the direct marketing branches, withered.

Mary Berner is highly qualified for the job. She left Conte Nash in January, 2006. Apparently she lost out in the bureaucratic politics, and did not want to play second fiddle. She brought an appealing management style to Fairfax publications and achieved great success.




Stockholders, who had gotten little to cheer (see the stock price chart courtesey of Stocktrak.com) about during the long years of public ownership, gladly voted for the acquisition offer in February.

NBC is wroth about a breach of its rules: What about the shareholders' money?

Victor Jung used to be the treasurer at NBC Universal. According to this morning's Wall Street Journal. He has been charged with stealing some $800,000 over a six month period. Mr. Jung set up a corporation "NBCU Media Productions LLC and wired transferred funds from a GE account" to bank accounts in its name. These accounts financed some fancy flings and a place in the Hamptons.

He was arrested 6:00 A.M. yesterday.

I wonder what he was thinking? "They won't notice $800,000: it's rounding error."

Of course, maybe he is innocent. Perhaps in the wacky world of the media, he was simply facilitating the extravagence of his superiors.

The unsung hero of the piece is the internal auditor who caught him. Internal auditing has been booming after the wakiness of the internet boom went out of fashion. What was ordinary business practice was seen to be just plain silly when that bubble burst. Sarbanes Oxley has super charged the boom. The most recent figures I saw had internal auditors' salaries growing in double digits. The demand outstrips the applicants off into the future.

Most interesting in this news story is NBC Universal's reaction:

Consider its public statement: "NBC Universal is committed to and vigilant about the enforcement of its compliance policies. When we discovered the potential integrity breach, we promptly brought it to the appropriate authorities and are cooperating fully with the investigation. We will continue to monitor the situation to its resolution."

That is a far cry from "That blankety blank stole the shareholders' money and we want every red cent back!" Perhaps the flack under the NBC peacock is singing a song for his grey flannel superiors at GE where the corporate culture is probably a lot less flamboyant.

In general, the return to corporate sanity after the internet bubble burst is salutary. But I also wonder whether in the post Sarbanes-Oxley world, companies are worrying more about following the rules, than growing the value of their businesses?