Sent: 22-03-2011 11:59:03
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The Pilgrimage to News Corporation
At the next election, I want to vote for a party leader who has not gone to New York and dutifully paid homage to News Corporation chairman and chief executive Rupert Murdoch.
The White House, Capitol Hill, the United Nations headquarters and 1211 Avenue of the Americas: these are the standard stopping off points for Australian leaders visiting the USA.
Australian political leaders are in continual discussion with business executives. This is generally healthy insofar as politicians need a clearer understanding of the impact of their decisions on business outcomes.
Business leaders need to represent their interests effectively to the political decision makers for the sake of their shareholders and the ongoing success of their commercial activities.
The relationship with Rupert Murdoch is different. He has a political magnetism that will never be wielded by the widget maker from Wagga.
The visit to Murdoch is unadulterated politics. Prime ministers and their minders are fearful of Murdoch using his media ownership to damage their election prospects. Of course, everyone in News Corporation asserts publicly that journalists and editors are free to opine unfiltered views but the politicians have heard too many stories of executive intervention to take any chances.
Despite the unedifying spectacle of political leaders feeling compelled to make this pilgrimage, there is a bigger reason to be worried. The visitations confer a status on Murdoch which is largely undeserved.
Murdoch runs a public company like a family enterprise. Probably anyone buying News Corporation shares would recognize that the company is Rupert's plaything and that one of his children will be duly anointed in the style of Hosni Mubarak or Muammar Gaddafi to take his place.
That does not, however, excuse a News Corporation share price below its March 1998 closing level nor a paltry dividend equivalent to a current yield of less than 1%. Neither does a meagre return of 7% on the capital employed make the business any more attractive.
The politicians seem to emerge from the Murdoch visits in the mistaken belief that he is a successful businessman who should be an Australian role model.
This is worrying. Australia's political leaders are continually involved in making judgments about business behaviour. These judgments define what is good and what is inappropriate and lead to policy decisions determining the parameters within which business must operate. They should have a clear understanding of what is a good business outcome.
In visiting the USA, Australian politicians should consider visiting the Australians that are leading other companies. In diversifying their visits, they could help draw attention to those business people from Australia who have shown skill at business building.
In this way, politicians might help to cultivate in the broader community some sense of what makes a successful business. They might gain some insights themselves about the pressures on businesses striving for the returns expected of them by the investing public.
Unfortunately, the Murdoch visits help perpetuate the mistaken view that big and flashy is better than a committed effort to delivering strong returns on the capital employed in a public company business.
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