Back in my days at News Ltd, section editors and above would often put
in a big effort to produce something special when they knew that Rupert
Murdoch was in town and would probably actually look at their work.
I can remember former HWT editor in chief Steve Harris telling current
Herald Sun chief of staff Damon Johnston that Rupert would read every
word of a page three story he did attacking gambling. Rupert hated the
growth of gambling in Australia because it meant less spare change to
pick up a newspaper or take out a Foxtel subscription.
With Rupert Murdoch about half way through a 10-day visit to
Australia, it is worth reading his newspapers with this in mind, especially tracking where he will wake up each day. He
spent yesterday in Melbourne catching up with his mother and awarding a
sculpture prize which was written up in most papers this morning. Tomorrow he will head to Adelaide for the first ever
News Ltd awards for editorial excellence before Wednesday’s
“shareholder information meeting” at The Advertiser which Crikey will be attending.
Terry McCrann’s column in The Weekend Australian was a
classic in the “what would Rupert like to read” category. The headline
was “Playing by the rules is for fiscal losers: the figures don’t lie”
and the sub-head “Good corporate governance is harming many companies”
The column opens as follows:
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Investors can take their pick. They can have “good
corporate governance.” Or they can have good performance – faster
rising share prices and higher dividends. Indeed, not just good, but
dramatically better performance.”
That’s the persuasive conclusion of a comprehensive research exercise
into investor returns and financial performance of Australian stocks by
Martin Gold of the Sydney Business School.
The Weekend Australian reported on this research two weeks
ago. Tellingly, it has been met with deafening silence, as it
fundamentally challenges the absolutely core tenets of corporate
governance in Australia.
McCrann and Gold claim that because a group of stocks with nominal bad
corporate governance have out-performed the broader index over the past five years, it pays to
have bad corporate governance overall.
This is a complete joke because it is so easy to pick your stocks over
a certain period. The last five years have seen an extraordinary boom, so
what about going back a little bit further and looking at the corporate
governance practices over the years?
Alan Bond, Christopher Skase, John Elliott, One.Tel, Adsteam, HIH and many other
fallen or challenged companies had appalling corporate governance that
magnified the eventual pain for investors and creditors.
Good corporate governance is essentially about protecting investors
when things get hairy. Remember Conrad Black, who got away with thieving
for years due to the sycophants on his board? It is designed to stop
things like what Rupert
Murdoch did when he and News Corp almost went broke in the late 1980s.
Three days after the 1987 stockmarket crash, the Murdoch family company
sold 42 million News Corp shares to Queensland Press, which was 56% owned by News Corp and 44%
owned by the Murdoch family. Queensland Press shelled out a
whopping $671.5 million paying $16 a share when the stock had plunged
to as low as $8.50. Others have gone to jail for similar uncommercial
related party transactions which would never happen at a company with
good corporate governance.
McCrann’s Saturday column is not online but his Sunday effort
was better than usual and Rupert would have been impressed before what is probably a meeting at the Herald Sun offices today. No one else in Australia produces a column six
days a week so McCrann should be allowed one slapped together effort
and that’s usually for the Sundays.