Too many requests 2009 September 26 | Undercover Columnist

Archive for September 26th, 2009

ITV has dropped the Ball

ITV's Boardroom blunder

ITV's Boardroom blunder

ITV has dropped a huge clanger by not appointing former Sky boss Tony Ball as its new chief exec. Yes, his reported £30 million pay and incentives package does seem at odds with the current belt-tightened business environment, and yes, his ‘Millwall school of management’ was always controversial and cost him friends in high places. Ball’s apparent demands to hand pick the next non-executive chairman of ITV – to replace outgoing exec chairman Sir Michael Grade – may have put a little too muc power in his back pocket.

Yet Ball’s days at Sky are fondly remembered in the City. Under his four-year leadership Sky, 39.1% owned by Rupert Murdoch’s News Corporation, doubled its subscriber numbers to seven million and became the leading player in commercial television, largely thanks to his policy of exclusive rights to increasingly popular Premier League. And crucially, Ball remains among the few calibre candidates capable of addressing ITV’s biggest problem – reducing the broadcaster’s reliance on advertising revenue. That challenge still remains but whoever the eventual appointment is, they’ll need to rely on more than X-factor to turn ITV’s fortunes around.

contact me

Tags: , , , , ,

1 Comment

Eastern promise lures HSBC boss abroad

HSBC boss Hong Kong bound

HSBC boss Hong Kong bound

Shunting the operating base of HSBC chief executive Michael Geoghegan from London to Hong Kong tells us two things. Firstly, it represents another signal of the increasing shift in economic power from the west to the east. Where a traditional G7 power base of US and European interests once held sway, now it is rapidly being overtaken by a wider group of nations in the G20, reflecting the expansion in emerging markets such as China and India. Banking markets are less mature in Asia than they are here and thus the opportunities to grow and increase profits are greatest.

But there is a second and more reassuring point. It demonstrates that western banks are returning to their stuffy savings and loans knitting, a pattern that once produced solid streams of profits that allowed large chunks of cash to be handed back to shareholders on a bi-annual basis through dividends.

In their desperate dash for growth far too many banks have developed a devil may care attitude in regards to growth, expanding into all sorts of highly leveraged, high risk products and markets. That shift has led us to the events of the past few years and the near collapse of the western banking system, so a return of grey suits and reassuringly dullness is a welcome breakthrough.

contact me

Tags: , , , , , , ,

No Comments

Cadbury’s independence crunch time

Cadbury's Crunchie time

Cadbury's Crunchie time

The independence and identity of yet another British firm is being threatened by an overseas predator as Cadbury fights off the advances of US giant Kraft. On the one hand it is reassuring to celebrate the best of British, be it in sport, food or industry. Yet the economics behind insisting that British factories remain British-owned are not overwhelming.

This sort of nationalistic flag waving might deliver a bit extra tax revenue for the treasury, it might produce a handful of trade spin-offs on the assumption that British businesses may favour working with other British businesses. Yet there are also strong counter-arguments, such as securing vital access to overseas markets through a well-placed overseas parent.

National boundaries have been blurred by free market enterprise with investors able to mop-up profits earned on the other side of the world, yet when push comes to shove, if someone offers to buy a company for significantly more than that company is likely to be priced on the market in any foreseeable future, investors would be mad to turn that down.

Yet it remains unclear that this is what Kraft has done. It’s £10 billion package does offer a cash element, but much of the deal would be financed by its own paper. This makes the deal on the table more difficult to value than a pure cash offer, and requires investors to swap a set of fundamentals with which they are familiar for another with which they are not. Turning that down would not be mad at all.

contact me

Tags: , , , , , , , , ,

No Comments
Too many requests