The Murdochs ride out

August 2, 2007

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The Murdochs are on rampage. One force led by father Rupert overpowers the Dow Jones ranch. Meanwhile another raiding party headed by son James makes a lightening raid, and claims ownership of the Amstrad territories. Can anyone stop the Murdoch gang?

Got a bit carried away there. First the surprise news that BSkyB, led by James Murdoch, has acquired Amstrad. Then a less surprising report. The long-running News Corps seige of the Dow Jones organization conducted by Rupert Murdoch has come to an end. The prized asset, The Wall Street Journal, has fallen to the mighty News Corp.

Both are relatively small deals, but each is of a high profile nature.

Before we get too tricksy in linking the two stories, let’s recap on recent events. The Wall Street journal tells it as it sees it, as a delicate dance between suitor and target. Suiter and Target? That’s not very romantic, but the story is well worth a read.

Behind the scenes, however, the media mogul had orchestrated a deal over two years. He quietly gathered intelligence on Dow Jones’s operations and consulted Wall Street figures to plot his moves. An emissary for him talked with family members who had been Dow Jones dissidents a decade ago

The story then rotated around the reluctance of the powerful Bancroft family to sell its shares. The sticking point was not so much a fair price, as the loss of what was reported as the values of independent news reporting esposed by family members.

Meanwhile, at BSkyB

Meanwhile, News Corporations’ subsidiary, BSkyB, announces that it has reached a deal to buy Amstrad. Coincidence, but another victory for the Murdoch family and News Corp. Like father, like son, The offer is a no-nonsense one, valuing Amstrad high enough above the traded value of its shares to deter other would-be bids. This is salient, as prospects for the Amstrad have not been rated highly by analysts.

The agreed figure is some £150 million. But the deal comes with a lot of trappings. Amstrad is the company that Sir Alan Sugar created and led to its current position. That alone would have secured him a niche as one of the UK’s most successful entrepreneurs, but then he starred in his own TV series, The Apprentice.

BSkyB is high-profile in the UK, through the impressive success of its satellite broadcasting, and particularly through its impact on Premier League football. Its deal is generally regarded as a major factor in the rocketing finances, and players mega-contracts. Add to that is a whiff of (Mills & Boon) drama starring a less-favoured offspring of James Murdoch striving to prove himself to patriarchal father Rupert and to the world.

Students of takeover battles can find details further details in earlier posts.

Financial analysts concede that the bid is advantageous for Sir Alan. In strictly financial terms the value to News Corp is less clear.

Some blue sky thinking

Those of us at a distance from the key players have to reply on efforts of imagination, trying to make sense of the available information. This is a nice training exercise for would-be strategic leaders. Can you push yourself beyond first impressions? Can you make sense of otherwise curious aspects of the story as it is presented to you?

Here are two puzzling aspects. Why did Rupert Murdoch make an offer for Dow Jones that is widely beyond what anyone else would have been prepared to pay? Why did James Murdoch likewise make an offer which again is one that is high enough to baffle commentators?

It is likely that there is an explanation that lies beyond the basic short-term numbers involved. The targets possess some value to News Corp that go beyond financial valuation of assets. For Dow Jones and its Wall Street Journal we could investigate whether the figure could be taken as reflecting that mysterious intangible ‘potential value of the brand’. I can’t see that work so well in the case of Amstrad (Sorry, Sir Alan).

In the first case, the intangible may be seen as the WIT price meaning ‘whatever it takes’. Rupert Murdoch wants the Wall Street Journal. A majority of its shares are held by individuals for whom the company is not valued in terms of a stock-market figure. Some ‘offer they can’t refuse’ has to be made. And eventually pragmatism wins over deeply held emotions. The WIT pricing simplifies the deal-making, by removing the possibility of some third party white knight appearing on the battle field.

In the second case, the seller, Sir Alan Sugar is founder of Amstrad. He has never presented himself as bound to it through a deep emotional commitment. Sugar the entrepreneur and market trader has the pragmatism of the entrepreneur. Faced with a deal in a company whose best days seem to be behind it, he acts decisively.

So what was James Murdoch up to? The ‘killer fact’ for me is the reliance that BSkyB has for Amstrad to supply its satellite boxes. With Amstrad stock otherwise rather unattractive, might it be attractive as a nice little move for, say, Richard Branson to make a bid of Amstrad. At very least that would send the price of Amstrad up. Until recently, that would also have been a real concern also because of BSbyB’s dispute with Virgin Mobile.

Is that what happened?

No more than speculation on my part. But it does show some of the considerations those strategic chess players have to be aware of in these corporate battles. And at least it does not reply on disentangling the spin put on the story given to ‘in the know’ financial journalists.


Prime Minister Brown – At last, at long last

June 28, 2007

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Tony Blair exits after a last Prime Minister’s question time. The house settled for a dignified and good-humored farewell. Rumors leak out of names in Gordon Brown’s cabinet, and of a new job for Tony Blair.

Today’s political comings and goings are recorded for posterity in infinite detail. The leadership transition is now beyond the control of any one person. The ritual kicks in. It is worth noting, as it is a relatively rare event. The essential features for a century or so is that the incoming Prime Minister is received by the Monarch, is invited to serve, and accepts, almost always without hesitation. Sometimes it is possible for this to be preceded by a visit from the outgoing PM to hand in the bunch of keys and Rent Book for No 10 Downing Street.

Goings on at The Palace

In today’s ritual, the ceremony unfolds with TB being driven to Buckingham Palace in the Prime Ministerial vehicle, spending an hour with the Queen, and leaving as ex- Prime Minister Blair, in a more modest car. Conversely, Gordon arrives in a humble People Carrier, meets the Queen, does the business, and returns in the swanky Prime Ministerial car and with the keys and rent book for No 10.

The traditional speech on the steps of No 10. Slightly creepy because the area is mostly clear of people for security reasons. Prime Minister Brown predictably speaks of ‘doing his utmost’ (a translation of a school motto?).

The last and first leaks?

Possibly the last leak of the Blair administration. The rumor was right. Before the day is out, Tony Blair is to resign his Parliamentary seat and take up a job as special envoy to The Middle East. His mandate is particularly to assist in a resolution to the Palestinian issue, on behalf of the UN, EU, America and Russia.

Seems Tony mentioned it in a telephone conversation to his old friend Bertie Ahern. Bertie blabs to the press. These are two men who kept schtum with many a secret during years of delicate negotiations over the future of Northern Ireland. But this is what happens when demob-happiness kicks in.

The new manager draws up his team sheet

Meanwhile, in the quiet of his new manager’s office, Gordon completes the names on his team sheet. Even without Bertie’s help, more rumors trickle out. The late-night editions of tomorrow’s papers speak confidently of some names and appointments.

There have been more rumors of surprises on the team-sheet. We will have to wait just a little longer for the names, and the positions in which they have been selected to play.

A new job for Alan?

An obvious rumor. Alan Johnson will have a nice consolation prize, after losing out to Harriet Harman in the deputy leadership battle. a more surprising rumor is of a new job for Sir Alan Sugar in revitalizing British Business Leadership. Possibly in Business Education. Now that will offer some scope in future posts on leaders we deserve.


The Apprentice

June 27, 2007

350px-tovenaarsleerling_s_barth.pngMy curmudgeonly view of The Apprentice is largely focused on the view that it presents a distorted and undesirable role model for would-be business leaders. However, it can be argued that the series exposes dubious business practices, and that subsequent debate can be healthy.

Why should the owner of a large corporation risk public ridicule while seeking high-profile visibility for himself? In the news at the moment has been Sir Alan Sugar, and his BBC TV show The Apprentice. That other knight, Sir Richard Branson, has an even longer tradition of self-publicity, and would probably also be tempted into TV stardom given the opportunity.

One difference may be that Sir Richard’s publicity stunts have, mostly, been associated with his beloved Virgin Brand. By and large, the restlessly innovative brand and the image of RB seem pretty compatible.

So what about Sir Alan and his business interests? He has stated that he is doing the show because he enjoys it, and because he thinks it worthwhile to communicate the excitement of the world of business.

I note this without recalling the original source, but I can’t recall that he says he is taking part because it’s good for his business interests. On the other hand, it’s a pretty safe bet he doesn’t consider it to be harming his commerical net value.

What’s happened to Amstrad?

AS a matter of record, as Sir Alan’s public visibility has grown, so has the share value of Amstrad. Significantly. Over six times their quoted value in early 2002.

So Sir Alan’s show has helped Amstrad?

Well … it’s not as clear-cut as all that. A few years ago in 2002, the shares had plummeted to a price of 20p, suggesting that the company was a near basket-case.

At present, financial analysts see Amstrad’s main business is in the highly competitive one of selling set-top TV boxes. There is no evidence of great growth there. The vitality and entrepreneurial flair brought to the company in its early days by Alan Sugar seems have disappeared. My scanning of the financial press suggests that the company’s future prospects are not rated highly. [This is a personal view, and not, repeat not advice from a successful share-tipster.]

As part of a strategic response to corporate difficulties, the TV exposure hasn’t worked.

Is The Apprentice a good showcase for business?

Sir Alan says so. The BBC have commissioned another two series, and have increasingly talked-up the status even of those would-be apprentices ejected from the house (I meant, those fired from the programme). As each is evicted (sorry, ‘fired’) he or she has another brief period of celebrity.

By and large a consensus seems to be emerging beyond the vested interests of the BBC that The Apprentice throws as much light on Business as earlier and better-scripted series such as Steptoe and Son, Are You being Served, and Only Fools and Horses.

One article highlighted some undesirable elements if the show was intended to mirror business life.

“I think I would be very uncomfortable being Sir Alan Sugar’s solicitor now,” says Nicholas Lakeland at London law firm Silverman Sherliker. “I wouldn’t say his approach is consistent with what employment lawyers would advise.”

Although at interview you are only protected against discrimination after a year at an office, you can claim constructive dismissal, and where bullying is really bad, protection from harassment. If Sir Alan behaves in his company like he does on TV, warns Lakeland, he could find himself in hot water.

Bullying can prove very expensive for businesses. Last year Deutsche Bank had to shell out £800,000 to workplace bullying victim Helen Green. In 2003 Steven Horkulak was awarded nearly £1m in damages by the courts after months of abuse by his boss, president of brokerage firm Cantor Fitzgerald International. Employers be warned.

My case is, that the omnipotent boss as acted out by Sir Alan Sugar in The Apprentice, is a poor role model for much of today’s business. He illustrates many of the characteristics that have helped him achieve success for a self-made multi-millionaire. The vital ingredients of determination, resourcefulness, energy, single-mindedness are not so obvious as a kind of unthinking and gratuitous bullying. The style is by no means universal among successful business leaders. I have suggested elsewhere that such tyrannical behaviors are most often found concentrated certain industries including the media.

These objections have been raised elsewhere.

Steve Carter, head of recruitment firm Nigel Lynn, condemns the unrealistic “brutality” of the show’s recruitment process. “The idea that people should set about stabbing each other in the back to succeed is not good business,” he says.

To that I would add another misgiving. The episodes are followed by tired radio productions which remind me particularly forceably of the culture of Celebrity Big Brother.

The Case for the Defence

I have been inclined to rant a bit about a programme which I have trouble watching for more than a few minutes. So let me have a go at defending The Apprentice. It has revealed one example of muscular leadership. Wannabe leaders can discuss what they have seen. In pubs and workplaces this is already producing discussion. Maybe this in turn will allow people to figure out ways of coping when they come under fire from a bullying boss. Even better, some bosses may perhaps review their own leadership behaviors towards employees, and consider alternative patterns.


Ask the Admiral

June 15, 2007

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This week, Admiral Lord Boyce takes part in a discussion on aspects of leadership with an audience from military, commercial, and sporting fields. The former chief of defense staff examines strategic leadership, differences in public and non-public sectors, and transition from military to civilian employment. The event permits an opportunity for on-line participation.

The event is scheduled for Tuesday 19th June at Manchester Business School. Lord Boyce is a returning alumnus of the Advanced Management Achievement Course (AMAC). For the event, current members of AMAC will be joined by an invited audience for a question and answer session.

Advanced warning systems

Here are some of the messages picked up by our advanced warning system. The Admiral will face a barrage of questions including the following:

How does leadership manifest itself through your role in the House of Lords?

One of the most popular current television programmes is “The Apprentice”. From watching this programme there may be a perception that successful leadership is developed through bullying. Do you believe that you have to be aggressive to be a good leader?

What characteristics do you look for when you are part of an interview panel to select a person for a leadership position? Do these characteristics differ across the military, non-military public and commercial sectors?

What keeps you awake at night in relation to the toughest challenges of leadership, from a military perspective and from a non-military perspective?

Why not join in?

You can use the message reply at the end of this post to submit a question. We will try to get the questions on the agenda, Thanks to a sympathetic participant infiltrated into the event, we have every hope of adding to the list of questions discussed.

The event will also be reported in a subsquent post.


It’s a fire. No it’s not, it’s you who are fired!

May 5, 2007

20075315910089.jpgsurvivors.jpgNearly two hundred years of tradition ended as receivers found an efficient way to tell staff that their company was folding. The receivers at Robbs department store, of Hexham, Northumbria, rang the fire alarm. As employees gathered in the car park they were told the news. Creative leadership? Or what?

The story got under my skin. I imagined how the idea might have come out of a brainstorming session. How the preferred solution had been found to meet the criteria of clever, unexpected, appropriate, cost-effective…

On second thoughts, the freedom to freewheel for creative and ingenious ideas has to be coupled with the discipline of principled evaluation of consequences.

The BBC reported the story as follows

Bosses at the almost 189-year-old Robbs store deliberately set off the fire bell to clear the building of customers and get staff together in one place. At the designated fire point, the 140 members of staff were told the landmark store would be shutting in two weeks.

The store’s administrators [Kroll] called the decision “efficient and practical …the closure of Robbs department store was due to become public knowledge before the end of the trading day and [management wanted] to notify their colleagues of the situation before they found out through other means”.

As a result, they determined that “the most efficient and practical method of informing their colleagues of this business development was by using the fire alarm”.

What do you think?

Was this an example of the creative dynamism needed to sweep away the obsolete and force in the new? Or was it something else.

Next week…

Dynamic young executive from Kroll auditions for a place on The Apprentice. Says his work experience makes him an ideal candidate to work for Sir Alan Sugar.

As the company website puts it

Kroll’s Corporate Advisory & Restructuring group is the world’s leading specialist in corporate turnaround, restructuring and recovery. Our focus is providing clients with objective, independent advice and delivering creative solutions to complex problems.


The Apprentice: Is Sir Alan Sugar acting out the Frankenstein myth?

March 29, 2007

_42740811_gorilla.jpgIn the third series of The Apprentice, Sir Alan Sugar further develops his iconic status as business leader and TV celebrity. But is he acting out the Frankenstein myth, and will he be remembered only for the monster he created?

Update (April 24th 2007)

Dan, and others suggested (in the comments) the possibility of a ‘turned table’ game in which Alan Sugar and others are successively fired. The application of avatars also cropped up in a blog by Paul Carruthers.

4 pm Wednesday March 28th. Message from the pink one. Would I be willing to give a telephone interview about The Apprentice? Do Bears trade in the markets? Yes, I would be willing to give an interview.

This is how it works. The Business Journalist has a list of contacts, and calls around for a few comments that can be knitted together for an article. Mostly the journalist wants to embellish a story-line. Is Alan Sugar a good role model? Is the series just another version of reality TV? Is reality TV unreality TV? The bulk of the final article may well have been assembled – perhaps in an earlier face-to-face interview, or developed from a pre-view of a TV show. The conversation between journo and quote-provider is usually quite pleasant. The discussion may even respect the convention that you are been offered a chance to express your views to a mass audience. Later you will find whether you supplied the sort of quote that the interviewer was looking for.

In pre-blog days, the rest of the discussion would never have been reported. But that was then. Here’s what I would have liked to seen published in a fully reported interview. My reasonably crafted replies here are of course far more coherent than the spluttering efforts I might have made at the time.

Journalist: The Apprentice is starting another series tonight. I’m writing a piece for the Financial Tube and wondered if you had any comment about the programme

Self: Yes. I’m with Digby Jones on this one. He thinks Alan Sugar is a bad role model for a business leader. So do I.

Journalist: Why do you think that?

Self: Alan Sugar is a successful businessman. But the structure of the programme gives a false one-dimensional picture of him acting as an old-fashioned alpha-male ..

[Journalist asks another question but I go on with the earlier answer]

.. He has to act as he does. There are the scenes where people are sycophantic about him, then they get the victim part in the scene where he has do his catch phrase ‘you’re fired’.

Journalist: [possibly asking the question again. The one I hadn’t answered]: What do you mean by an old-fashioned alpha male? Isn’t he typical of successful business leaders:

Self: There are still successful alpha-male leaders. They are increasingly being compared unfavourably for similarities with violent animal group behaviors such as the so-called Mandrill Management. You find them particularly in certain jungle industries. Media – film tycoons, barrow-boys. [And newspaper magnates, but I might not have mentioned that. I have in the past, a few times. If the journalists get it, they don’t publish it. Can’t think why.] But we need to show other models of business leaders. People who can help in tricky negotiations – get our people out of Iran at present, get politicians around a table in Northern Ireland.

Journalist: Have you ever seen the programme?

Self: A few times. But I’ve stopped now. I can watch kids behaving badly in my day job. I don’t want to switch on and watch a phonier version of business dynamics at night.

I respect Sir Alan’s business success. But that’s something else. He’s been sucked into a different game here. There is every chance that he will eventually be remembered by a catch-phrase ‘you’re fired’. I’m not bothered about that.

We ban violence from our screens on the assumption it leads to copycat behaviour. I’m not for taking our TV without Sugar, but I don’t like the way it reinforces the idea that a successful boss has to be a bully. Is this the image of the charismatic leader we aspire to? The leaders we help create and deserve?


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