Текст 2. James Murdoch resigns from BSkyB

Текст 2.

James Murdoch resigns from BSkyB

The would-be emperor's slow striptease

James Murdoch's resignation as chairman of BSkyB, announced today, looks like an exercise in damage limitation. The question is, damage to whom: BSkyB, or Mr Murdoch himself.

In the statement from BSkyB—his stewardship of which, as its chief executive and later chairman, has been one of the highlights of Mr Murdoch's career—he says: 

"I am aware that my role as Chairman could become a lightning rod for BSkyB and I believe that my resignation will help to ensure that there is no false conflation with events at a separate organisation."

That "separate organisation" being, of course, News International, the chairmanship of which Mr Murdoch quit in February over the phone-hacking scandal. His father Rupert Murdoch's News Corporation owns both News International and the largest single stake (39%) in BSkyB. Ofcom, Britain's broadcast media and telecoms regulator, has been investigating whether, in the light of the phone-hacking affair, BSkyB is "fit and proper" to hold a broadcasting licence. Removing the man who supervised both companies from the chairmanship of BSkyB should give Ofcom one less reason to revoke the licence, and satisfy some shareholders who have been calling for him to go.

But the purpose could be just as much to insulate Mr Murdoch. BSkyB's board, which up to now has supported Mr Murdoch unanimously, is due to replace some retiring directors soon, and having more hostile members on it while he remains chairman would be bad for his already tarnished image. Resigning now also means he will be slightly less in the line of fire when Ofcom and the Leveson inquiry, which is investigating the phone-hacking, report on their findings.

Finally, it might protect him in case any further muck arises following last week's fresh allegations about smart-card piracy at NDS, the pay-TV software company that News Corp also owns. Such piracy, which NDS denies encouraging (and has fought off several lawsuits alleging so), was one of the reasons behind the collapse of ITV Digital (previously ONdigital), BSkyB's chief rival, in 2002. Mr Murdoch became chief executive of BSkyB only in 2003, and before that he was never more than a non-executive director of NDS, so his name has never been linked to the piracy claims; but it certainly makes sense now to distance him from them.

All this would be in line with the idea that Mr Murdoch is still being groomed to take over the leadership of News Corp when his father retires or dies. But Murdochologists are divided on this. A not uncommon view is that his recent move from London, where he had his power base, to New York, the fief of Chase Carey, the chief operating officer and his direct boss, was more of an emasculation than a promotion. Moreover, the company's international pay-TV businesses are part of his new remit, and with the removal of BSkyB, that remit just got a good bit smaller. It is unclear, then, whether the progressive stripping of the emperor-to-be's old clothes is meant to prepare him for new ones, or to leave him naked.

Текст 2.

An old new scandal

Fresh claims of shady practices at a News Corp pay-TV company

Mar 31st 2012 | NEW YORK | from the print edition

TWO things remain unclear about this week’s allegations about a News Corporation subsidiary: how much is new, and what, if anything, was illegal. NDS, the company in question, makes software for pay-TV systems—including for the “smart cards” that act as keys to the set-top boxes that decode TV signals. The BBC’s “Panorama” programme and the Australian Financial Review published separate reports alleging that NDS paid hackers to decrypt the cards of competing firms, and then had the codes distributed on the internet. They were widely exploited, thus weakening NDS’s competitors.

Such claims first surfaced over a decade ago in a series of court cases, all of which NDS has won or had dropped (one case still being tried in Sicily involves a consultant paid by NDS, but the company itself is not charged). The firm has always said that, yes, it did pay hackers to break into rivals’ systems, but purely for research in its fight against piracy of its own cards. It denies doing anything improper with the results.

That is what the reports claim to establish. “Panorama” interviewed Lee Gibling, the operator of a hacker site, The House of Ill Compute, that was in NDS’s pay. He alleged that NDS had sent him the codes and software for hacking the cards of a British firm, ONdigital, with instructions to distribute them as widely as possible. The programme also had e-mails appearing to implicate Ray Adams, a former police officer who ran security for NDS’s British unit, in obtaining and passing on the codes, something he has consistently denied.

Meanwhile, the Review has published a trove of e-mails purporting to show plots by NDS employees to undermine not only competing smart-card firms, but also its own clients, TV companies that used NDS’s technology. For example, they show employees deciding not to implement a new method one of their hired hackers had discovered for “killing” pirated cards that had been plaguing DirecTV—an NDS client in which News Corp later bought a stake—and agreeing to cover up that decision, cryptically citing “the politics of the DirecTV situation”. (NDS did deploy the kill, 15 months later.)

The e-mails, the newspaper says, come from a laptop that belonged to Mr Adams. Some have surfaced in previous court cases. The trove is said to be the same as one that EchoStar, an American broadcaster, tried to use in a lawsuit against NDS, but it could not establish that they had been obtained legally.

NDS, in which News Corp recently agreed to sell its remaining 49% stake to Cisco, maintains its innocence. Whether new investigations will result remains to be seen: there are, so far, no smoking guns.

But there is plenty of smoke, to add to that already swirling around News Corp. As well as the ongoing inquiry into phone-hacking and police bribery by its British newspaper arm, News International, the FBI is reportedly investigating phone-hacking of 9/11 victims by its journalists and bribery of officials in Russia by a former News Corp billboard company there.

Last September a group of shareholders in America launched a lawsuit against News Corp’s board for dragging down the company’s share price through its “rubber stamp-like acquiescence to all of [Rupert] Murdoch’s desires”. It cites the phone-hacking and NDS affairs as well as cases brought against an American advertising subsidiary, which were settled out of court, and various other deals that it says lost the company money.

“Murdoch’s Scandal”, a documentary by PBS’s “Frontline”, which aired this week, made no fresh claims but unpicked Mr Murdoch’s cosy relationship with power. And the news that his son, James, has quit his remaining posts at News International, having resigned as chairman, fuels speculation that it may be sold off. Who would buy it now is another question.
Текст 3.

Uncuffing capitalism

A welcome attempt to restore the appeal of initial public offerings in America

Mar 31st 2012 | from the print edition

HAVING spent years heaping new rules onto its financial markets, America is about to take a modest step in the opposite direction. On March 27th Congress passed the JOBS (or, rather ludicrously, “Jumpstart Our Business Start-ups”) Act, which aims to revive growth by easing the regulatory burden on companies seeking to raise capital (see article).

The act is designed to address the decline in initial public offerings (IPOs). From 2001 to 2011 the annual tally of small companies going public in America was 80% lower than in the previous two decades.

The IPO drought does not mean firms cannot raise capital. There are plenty of other ways for them to do so, from private equity and private placements to bank loans. But the public markets serve a unique purpose: they provide capital directly to young, growing firms, give early investors a means to cash out and enable ordinary investors to stake a claim in the fortunes of those firms.

There are many reasons for the drought. Rich-world economies are not exactly fizzing, and firms from emerging markets that once sought respectability by listing in the West now have options at home. But onerous regulations are also to blame.

America has more than its fair share of those. From Sarbanes-Oxley to Dodd-Frank, policymakers have responded to crisis and scandal with ever more strictures on accounting, auditing, pay, governance and Wall Street research. Some of this was needed to make markets work better. By bolstering investors’ confidence in the marketplace, regulation can help companies raise capital. But too many new rules impose costs that exceed their benefits: the intensive review of internal controls required by Sarbanes-Oxley is one example among many.

Bosses of listed firms gripe that they spend more time complying with rules than cooking up new products. More worryingly, firms that in previous decades might have gone public look at the red tape and decide not do so. Start-ups used to dream of toppling incumbents; now they aim to sell themselves to Google or Apple. Creative destruction is muffled.

The JOBS Act would make it easier for young, growing companies to go public by releasing them from some of the auditing oversight requirements of the 2002 Sarbanes-Oxley Act. It would loosen the restrictions on communication between companies about to go public and investors, on underwriters’ research, and on the advertising of new share offerings.

Such steps would reduce compliance costs while providing investors with more information. Alas, other parts of the law deprive investors of helpful disclosures. A young firm could release just two years of audited statements instead of three, and a private firm could avoid registering its shares with the Securities and Exchange Commission (which triggers broad disclosure requirements) until it has 2,000 shareholders, up from the current 500. This would allow far too many companies that are, de facto, publicly held to evade disclosure and, perversely, reduce the incentive to go public.

The law also goes too far in waiving most registration requirements for firms that “crowdfund” (ie, raise small amounts of money from lots of investors over the internet). Crowdfunding is an efficient way for entrepreneurs to raise seed capital. But it is also a good way for hucksters to fleece suckers. The Senate wisely inserted modest disclosure requirements. More safeguards are needed, especially in the case of the brokers who sell the shares.

The JOBS Act is not perfect. But it starts to cut the rules that cuff American capitalism and should thus be applauded.

Текст 4.

The rewards of virtue

Does good corporate governance pay? Studies give contradictory answers

Apr 26th 2010

ONCE again, corporate-governance reform is back on the legislative agenda, not least in the United States. In 2002, after the scandalous collapses of Enron and WorldCom, Congress voted in the Sarbanes-Oxley act, which was intended among other things to beef up corporate risk-management. Now, the financial reforms being considered in Washington include several proposals intended to correct flaws in the oversight of firms that were revealed in the aftermath of the financial crisis. The reforms likeliest to become law include an advisory “say on pay” vote for shareholders on the remuneration of top executives, and measures to make it easier for shareholders to nominate candidates for election to company boards.

As always, these efforts to improve corporate governance have plenty of opponents. They argue that, contrary to the claims of the reformers, the changes would harm corporate performance by wrapping managers up in red tape. In the case of Sarbanes-Oxley, which was rushed into law with too little discussion of the details, the critics of reform had a point. The case for the latest proposals seems more straightforward, however, and has been debated for many years.

A lack of conclusive evidence has fuelled the controversy over corporate governance

The controversy over corporate governance has been fuelled by a surprising lack of conclusive evidence that improving it actually pays, in the form of higher returns to shareholders. The study most cited by the reformers is “Corporate Governance and Equity Prices”, published in 2003 by three economists, Paul Gompers, Joy Ishii and Andrew Metrick. This found that in 1991-99, investors going long on well-governed firms, as defined by an index combining 24 different aspects of corporate governance, while shorting poorly-governed ones, would have enjoyed an unusually high annual return of 8.5%.

Similarly strong returns were found for a trading strategy based on a narrower list of what reformers consider the six core elements of good corporate governance, such as making the company’s whole board face re-election each year, and not having any “poison pill” defences against takeovers.

Critics of reform were never convinced. A new study co-written by Lucian Bebchuk, a Harvard professor who is also an activist for corporate-governance reform, gives rise to further doubts—at least at first glance. “Learning and the Disappearing Association Between Governance and Returns,” by Mr Bebchuk, Alma Cohen and Charles Wang, repeats the study by Mr Gompers and his colleagues for 2000-08. It finds that, in contrast with the 1990s, neither the 24-factor index nor the six-factor one would have helped investors beat the market.

The disappearance of the good-governance premium may actually be a good sign

Mr Bebchuk and his colleagues argue that the disappearance of the good-governance premium during the past decade is actually a sign that investors have woken up to the importance of governance. This, they think, was due to a huge increase in discussion of the issue in the media in 2001-02, following the Enron and WorldCom scandals and the publication of the Gompers study. As a result, they argue, early in the decade differences in the quality of governance between different firms were fully incorporated in their share prices. Since this adjustment was a one-off, well-governed firms’ shares have not subsequently outperformed the market.

Not all reformers are convinced that the market has wised up, however. On April 22nd the Corporate Library, a governance-research organisation, published a study that found significantly higher returns in 2003-10 when it excluded from its portfolio firms that according to its governance ratings system were of “high” or “very high” risk. The crucial difference between this ratings system and the 24- and six-factor indices used by the other studies is that the Corporate Library says it researches firms for specific evidence of governance problems, whereas the indices rely on a box-ticking exercise.

Reformers hope that the latest study will put an end to the debate over whether good corporate governance is a virtue that pays. Doubters will surely try to dig up something in Corporate Library’s methodology to undermine its conclusions. It is a debate that will run and run—which is, at least, better than brushing the issue under the carpet.

Apr 4th 2012, 18:40 by J.H. | ROME

THE Northern League, Luca Zaia remarked this week, should be “as transparent as a crystal”. Indeed. The party of which Mr Zaia, governor of the Veneto region, is a leading member has for years been loudly decrying the waste and corruption of southern Italy and the capital, Rome.

But this week accusations were made that, at the highest level, the accounts of the League itself were far from limpid. Police raided the party’s headquarters in Milan brandishing a warrant that accused its treasurer, Francesco Belsito, of running party finances in the “murkiest fashion” for the past eight years.

Milan’s chief prosecutor subsequently disclosed that Mr Belsito, who resigned his post, was formally under investigation on suspicion of fraud, embezzlement and money-laundering. He also said that Umberto Bossi, the League’s founder and chief, was not a suspect. Nor were any members of his family.

But the warrant also contained damaging allegations that taxpayers' money paid to the League had been used to refurbish Mr Bossi’s house and pay for travel, meals and hotel accommodation for his children. Mr Belsito has denied wrongdoing. Mr Bossi and his son Renzo both denied all knowledge of the allegedly improper spending.

The claims are nevertheless potential political poison for the League’s charismatic, if at times eccentric, leader. As Roberto Maroni, the former interior minister and a senior member of the League, was quick to point out, this was not the first indication that something might be wrong with the way in which the party’s finances were being handled.

It was known that investigators were looking into why Mr Belsito had invested €7m of the League’s cash in funds based in Cyprus, Norway and Tanzania. Calls had been made within the party for his removal, and Mr Bossi had ignored them.

His position now looks precarious. Until last year, his autocratic management of his party was seldom contested. But then it had proved highly effective. Mr Bossi had coaxed the League’s share of the national vote up to more than 10% and given it a share in power as a coalition partner in all three of Silvio Berlusconi’s governments since 2001.

But Mr Bossi’s refusal to pull out of the last of those governments, despite claims of sexual indiscretion made against Mr Berlusconi and of financial impropriety made against some of his ministers, dismayed many of his followers. Last year, Mr Bossi faced unprecedentedly open criticism of his autocratic style of leadership from members of his party, many of whom felt the time had come for him to stand aside in favour of Mr Maroni.

The scandal also has implications for political stability in Italy, because since leaving government Mr Bossi has steered his party into opposition. The League has been far and away the most acerbic critic of the non-party, "technocratic" government of Mario Monti, who took Mr Berlusconi’s place as prime minister last November. Not only Mr Monti's government, but the three big parties that back it, stand to benefit from the League’s discomfort.

With a general election due in spring 2013, that could make a difference. And Mr Bossi at least clearly feels that the scandal and the forthcoming vote are linked. "It seems to me that the next election campaign has begun," he said today.

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Текст 6.

The pursuit of money

Apr 2nd 2012, 13:24 by The Economist online

WHILE Thatcherism made the overt pursuit of wealth more acceptable in Britain, it is still generally regarded as a bit vulgar. This view is reflected in the latest European Social Survey, in which just 13.5% of Britons said that someone who thought it important to be rich, have money and expensive things was "like me". This places them somewhere in the middle of the 26 countries polled. Scandinavian countries identify least with such a person, followed mainly by rich countries in western Europe. Attitudes change going eastwards. Those most keen on being rich are in poorer former Communist countries such as Russia and Ukraine, and in Israel. The Greeks and Irish place great emphasis on being wealthy, though it is not clear whether this is a factor in their current financial predicament, or a consequence of recent severe austerity measures. The French are cultural hold-outs, identifying the least with such an avaricious, déclassé person. Almost three-quarters said that such a person was "not like me".

Apr 2nd 2012, 17:29 by R.A. | WASHINGTON

AS I mentioned this morning, Americans owe European Central Bank head Mario Draghi a thank you for his efforts to prevent a euro-zone recession from translating into global economic trouble. America can survive a trade slowdown with Europe without too much trouble; financial contagion would be a different story. And evidence continues to indicate that America's economy isn't merely surviving; it's very nearly thriving.

The latest data flurry continues a string of good American economic news. Last week, the Bureau of Economic Analysis released its third estimate of growth in the fourth quarter of 2011. The overall GDP figure was unchanged, but the report also gave us our first look at the performance of Gross Domestic Income, an alternative measure of output theoretically identical to GDP, but which often differs in practice and which has been found to be a good predictor of future GDP revisions. While GDP grew at a 3.0% annual pace in the fourth quarter, GDI rose by 4.4%. The finding suggests that GDP growth may eventually be revised upward, and that recent, faster job growth isn't necessarily out of line with underlying economic performance. Indeed, GDI has consistently pointed toward a healthier recovery than GDP indicated (while during recession GDI sketched out a more severe downturn than GDP):

We also learned last week that consumer spending was strong in February while consumer confidence rose in March. And according to new figures released this morning, American manufacturing activity grew at a faster pace in March than in February. First-quarter growth is not expected to be as rapid as that in the last quarter of 2011, but it should at least come close to trend growth. Americans will be watching Friday's March jobs report closely. Markets expect payroll growth of around 200,000 jobs—perhaps a bit less than in February.

The news is generally good, but not good enough. Growth is a bit above trend but still slower than one would expect to see after so deep a recession. So far, growth seems to be tracking at or above the Fed's projections for the year while unemployment is tracking to the low end of its outlook—and inflation is below the Fed's target and falling. That suggests that the economy may be farther from potential output and employment than expected, and that the Fed can, and should, push harder to facilitate a rapid recovery.

That would be true even if the rest of the world were in great shape. Given potential threats abroad—especially in Europe—downside risks to growth and inflation are clear and present. This is no time for the Fed to take its foot off the accelerator.
Текст 8.

The euro crisis

Europe's half-depression

Apr 2nd 2012, 16:11 by R.A. | WASHINGTON

ONE has to hand it to the European Central Bank; it is impressive how effectively the ECB has managed to decouple outcomes in the euro-zone economy from financial-market panic. Just looking at movements in the S&P 500 or the yield on American Treasuries over the past month, one would be hard pressed to say anything about the state of things in Europe. For that, Americans clearly owe Mario Draghi thanks; his programme of cheap, long-term bank lending pushed the possibility of a Lehman-like event in the euro zone back out on the statistical tails where it belongs. Europeans are surely happy to have avoided a panic collapse (for now). I suspect they're finding it hard to cheer for the ECB all the same. New unemployment data provide one look at just why:

The unemployment rate in the euro zone rose to 10.8% in February. It was 10.0% a year ago and has inched upward every month since August, each recent uptick representing a new record high for the euro area. The pain is unevenly distributed. Germany's unemployment rate has held steady at 5.7% since October. Greek unemployment touched 21.0% in December (the latest month for which data are available); the rate was 14.9% in February of 2011. Spanish unemployment has risen a full three percentage points over the past year and stood at 23.6% in February. Italian unemployment moved up to 9.3%, from 8.1% a year ago. Portugal's unemployment rate rose from 12.3% in February of 2011 to 15.0% in February of this year. Youth unemployment rates are dramatically worse. A third of Italian and Portuguese under 25s are jobless and over half of youths in Greece and Spain are without work.

Conditions do not appear to be improving. Purchasing Managers' Index figures from March show manufacturing activity in the euro zone touching a three-month low. Spanish and French activity seems to be slowing at an ever faster pace. Worse still, contraction has now moved to core economies; both Germany and the Netherlands registered declining manufacturing activity for the month. Data on new orders suggest that April could be as bad or worse.

While peripheral euro-zone economies are contracting, it will be very difficult to hit deficit targets. If the result of disappointing fiscal performance is pressure for greater austerity, the squeeze on growth around the euro zone will intensify. Strikingly, the ECB continues to sit on its hands despite the seeming surety that the euro zone was in recession in the first quarter and will start the second in the same place. While both the Federal Reserve and the Bank of England have moved toward greater monetary accommodation against a more benign economic backdrop, the ECB contented itself with merely reversing last year's ill-considered 50 basis-points' worth of rate increases. Inflation continues to edge downward in the euro zone; the flash estimate for inflation in the year to March was 2.6%, down from 2.7% the prior month. Given the ECB's laser-like focus on headline inflation and its demonstrated willingness to respond to rising energy costs, it's difficult to see a big chance in stance despite the desperate economic conditions around the periphery.

A blow-up looks unlikely (absent unexpected political developments) thanks to ECB bank lending. Maybe euro-zone politicians will use the time they've been given to move toward real mutualisation of financial risks, which could reduce market pressure on peripheral sovereigns and allow for at least a mild slowdown in the pace of austerity. Unless, of course, the price of a eurobond is aggressive austerity for the forseeable future. Maybe two more years of soaring unemployment will bring unit labour costs around the periphery down to competitive levels. Internal devaluation on that scale would be an unprecedented accomplishment in the age of low inflation. If things hold together, the euro zone may well be all right by the beginning of 2014. Can things hold together while continuing on this course?