A high-profile Australian media stockbroking analyst has broken the
industry’s “code of silence” to reveal how he was bullied by News
Corporation when he downgraded the stock, then his employer was bullied
when he downgraded it again – and finally he was retrenched from the
bank when he put a “sell” recommendation on the company.

As News
Corp braces for what could be an explosive annual meeting next week,
Mike Mangan, the former Australian media analyst for Deutsche Bank, has
written a revealing and disturbing piece on News Corporation for
today’s edition of Eureka Report.

In the story, Mangan makes the
connection between broker recommendations and fees paid to the
investment banking arms of the same brokers – and estimates that the
fees paid by News Corp to investment banks over the past 10 years has
averaged US$250 million a year, which is more than the company has paid
in dividends to its shareholders.

“One of the intriguing
aspects of the dreadful performance of this stock over the last 7 years
is that almost all the brokers missed it,” he writes. “At a time when
News gave virtually no return to its shareholders almost every broker
had a ‘buy’ recommendation on the stock. The vast majority of brokers
still recommended News to their clients.

“Brokers getting
stock recommendations wrong is not new. But I would argue it is unique
for almost every broker who covered the stock across two continents to
continually recommend a stock that delivered nothing to shareholders –
over 7 years.”

What’s going on? Well, says Mangan, “whilst
most companies talk about competitors, Rupert talks about his enemies.
It is an interesting insight to his philosophy. In the military there
are no competitors either. Enemies must be destroyed. I suspect in
Rupert’s world, you are either loyal (and amply rewarded mind you), or
you are an enemy. And enemies must be destroyed, often with no quarter
given and no prisoners taken … in Rupert’s world there appears to be
no room for UN observers – ie independent analysts.”

To read Mangan’s story in full click here and register
for a 14-day free trial to Eureka Report, and then go to the home page.