James boosting his reputation as visionary
Last week, News Corp. firmed its first deal in the Arab TV market, with plans to launch two free-to-air English-language satcasters in the Middle East this year.
Like many other News Corp. innovations, this one was engineered by James Murdoch. Just as Pier Silvio Berlusconi has emerged from his father’s considerable shadow to make his own mark on Mediaset, the 35-year-old Murdoch increasingly boosted his own reputation as a potential visionary.
In 2003, he was appointed CEO of his father’s U.K. satellite service BSkyB at age 30, making him the youngest chief exec in the history of the London stock exchange FTSE 100 index.
Detractors griped about his lack of experience, but were quickly silenced when he successfully increased revenues by one-third, to over $8 billion a year. He transformed BSkyB, in which News Corp. owns a 39% stake, by launching it into the broadband market, investing heavily in the Sky brand and innovations such as TiVo-style service Sky+ and high-def TV.
Since then, the married father of two — his wife, American Kathryn Hufschmid, works for the Clinton Climate Initiative — has added titles and duties, including being named head of News Corp.’s Europe and Asia operations.
While photographs of him, most often wearing a bespectacled look of deep seriousness, would suggest a tightly wound, buttoned-up suit, those who have worked with him say he can be an inspiring leader.
“He brings a lot of energy and is very good at vision and strategy,” says one BSkyB exec. “He passionately believes in the environment and is passionate about looking after the people working with him. That said, he’s a Murdoch and a tough businessman.”
Evidence of his willingness to play hardball could be seen after he engineered BSkyB’s flash acquisition of a 17.9% in terrestrial net ITV in November 2006 — for $1.9 billion — to stop rival Virgin Media’s plans to merge with Britain’s main commercial station.
The U.K. government subsequently ruled BSkyB would have to scale down its ITV stake to below 7.5% after Virgin Media execs screamed unfair competition. BSkyB is appealing the decision.
James, who is a smoker, is also known to be tenacious, headstrong and opinionated.
For example, in one incident related by former British communications chief Alistair Campbell in his published diaries “The Blair Years,” the Murdoch family members were having a private dinner with then-British Prime Minister Tony Blair at Downing Street, and James was reported to have interrupted his father’s ruminations on foreign policy by claiming Murdoch was “talking f—ing nonsense.”
Blair apparently consoled the elder Murdoch by stating, “I hear far worse all the time (from my own children).”
Analyst Rich Greenfield of Pali Research says, “James has earned people’s respect from an investor standpoint. He’s quieted his critics by showing he can act quickly and decisively over a short period of time.”
Murdoch inked the Mideast deal with Prince Waleed Bin Talal, a shareholder in News Corp. and long-time business associate of his father Rupert’s, after visiting the Saudi royal’s offices in Riyadh in January.
The first channel, likely to be dubbed Fox Movies, will bow in May and the second is targeted for November. Both will be totally owned by Fox, with Prince Waleed’s Rotana media handling regional sales. The two companies will split ad revenues.
This deal follows News Corp.’s $421 million purchase in January of a 14.6% stake in German satellite service Premiere, also masterminded by Murdoch.
He increased News Corp.’s stake in Premiere to nearly 20% in February, making it the single biggest shareholder in the Teuton paybox and confirming expectations that the group was serious about securing a new German foothold.
What made the power move all the more noteworthy, and drenched in Oedipal intrigue, was it marked News Corp.’s first foray into Germany since the 2002 demise of Teuton maven Leo Kirch’s Kirch Group, in which the elder Murdoch had acquired a minority stake and subsequently wrote off $1.4 billion in losses.
That hasn’t stopped James from acting decisively.
“We’re looking forward to working constructively with Premiere’s management on the growth and future direction of the business,” he coolly noted when News Corp. announced it was upping its Premiere stake in February.
He has also announced plans to launch a German-language paybox by applying for a license for Fox Intl. Channels Germany. The channel, which could bow as soon as May, will air films and skeins from the Fox library.
“Rupert has a very negative image in Germany,” says Dresdner Bank analyst Chris-Oliver Schickentanz. “He’s seen as a pure capitalist, a dominating political person only interested in his own business, merits and success. The perception of James here is driven more by the fact he did a very good, professional job at BSkyB. He has a much better image than his father in Germany.”
Nick Vivarelli in Rome contributed to this report.