Sky's the Limit
The travails of the Murdoch clan have sent BSkyB (BSY) shares higher. This seems a perverse reaction to what is really bad news for the broadcaster.
No doubt Sky shareholders are hoping that the Murdochs will be forced to sell their controlling stake and that Sky will be a better place without their supposedly malign influence. I think this is putting antipathy towards the Murdochs before investment reality.
I am no apologist for Rupert Murdoch, for whom I worked for four years on The Times in the 1980s, then as a freelancer for 10 years. However, he was the driving force behind Sky, outwitting, outspending and quickly acquiring vanquished rival BSB.
Son James, when first appointed to the board of BSkyB, was greeted with some scepticism but he did, on the whole, made a decent fist of it, driving subscriber numbers substantially higher in his early days there.
Admittedly everything connected to the Murdochs looks tainted by the phone hacking scandal but how is driving them out going to help BSkyB? A new board would be sitting very uncomfortably if the Murdochs retained their 39% stake and waited patiently for the furore to die down, interfering surreptitiously in the meantime.
The more likely alternative would be for Ofcom to try to force the Murdochs to sell on the grounds that they are unfit to hold a broadcasting licence. That would lead to a prolonged court battle, with BSkyB in limbo, or a dumping of the shares, which would depress the share price considerably.
The best hope for shareholders would be if another media giant bought out the Murdochs and made a full offer for BSkyB at a price above the current stock market price. This is wishful thinking. The newcomer would hold all the aces and would be under no obligation to bid the price up.
Any rise in the BSkyB share price is a reason to consider getting out. I cannot see the attraction of the shares at more than 700p, and probably not above 650p.
Don't Pay the Piper
Shareholders are at last revolting and that is great news for corporate Britain. Let us remember that it is the shareholders who own the company and the board of directors are the servants, with the non-executives there specifically to represent the shareholders.
There was a time when shareholders felt intimidated at annual general meetings and many a threatened uprising petered out before it got going. So it is wonderful to see shareholders standing up for their rights and highly encouraging that institutional shareholders are at last doing their duty in opposing excessive pay, especially rewards for failure.
Forget all the nonsense that is spouted about executives moving abroad if they are not paid ever inflated salaries here. It doesn't often happen and people who are overpaid become less, not more, incentivised.
I suggest that shareholders make a note of the people who have inspired revolts at companies such as Aviva (AV.) and Trinity Mirror (TNI) and watch out for them pitching up at other companies.
As a former journalist I am particularly interested in events at Trinity Mirror, where the unfortunately named Sly Bailey has pocketed £14 million over nine years, during which time the share price has fallen by 90%.
Had she taken a mere £1 million a year, quite enough to live on, and spent £5 million on hiring staff to make the newspapers more appealing, she might not be facing such extreme humiliation right now.
Don't Bank On It Yet
There is mildly encouraging news from the UK's two state-controlled banks. Royal Bank of Scotland (RBS) will next week repay the last of the £163 billion it took in emergency government loans at the height of the crisis while Lloyds Banking Group (LLOY) is expected to finish clearing its own £157 billion bailout by the end of the year.
While there is still a long way to go before their shares are worth holding, this is an important step on the way. Until those debts were settled, there was little prospect of the government getting shut of its shareholdings.
We still have the shadow of those holdings overhanging the market and depressing the share price, so I continue to feel it is better to be invested in HSBC (HSBA), Barclays (BARC) or Standard Chartered (STAN) where there is a dividend.
RBS and Lloyds remain very much a long term punt at this stage. However, shareholders who have clung on can start to see a very tiny chink of daylight.
That's the Spirit
It is always worth looking at companies that are growing sales in emerging markets. For example, tobacco companies have done well for those shareholders who put ethical issues to one side.
Boozing is another deadly sin that we are merrily exporting to countries that could likely do better by spending their newly found wealth on something healthier. Diageo (DGE) demonstrated this week it’s been profiting from this boozy trend.
While Diageo’s European sales have slipped by 1% over the past nine months, sales in Africa, Asia, Latin America and the Caribbean have shown double digit growth. The foolishness of our decision 40 years ago to abandon the world and embrace Europe is now becoming all too apparent.
Diageo shares are at a 12-month high and are not cheap. The yield is 2.6%, not bad but not great, and the rating is demanding but the company is worth considering on a long-term view.
Scam Alert
This is not a stock market matter, but I want to alert readers to a credit card scam that has been tried on me. The call at first appeared to be genuine, alerting me to a possible misuse of my debit card. As I have been the victim of a card cloning in the past, I was naturally concerned, but I took the caller’s number and rang back. It was 0843 289 4634.
I was finally convinced that this was a scam when the caller wanted to send a courier to my house immediately so that my card could be taken away and analysed because, he said, it had been used with the chip and pin.
A call to my bank’s security department confirmed that the telephone call was a hoax and I have reported the matter to the Credit Fraud Action hotline.
Callers are always moving onto new scams as old tricks are publicised. For example, he never asked for my card number, security number or pin number – it has already been widely reported that if your bank phones you they never ask for these. I have signed up for email alerts of new scams and will pass these on in this column in future.
In the meantime, here are some reasons to be suspicious:
* The caller does not say which bank he is ringing from. Do not mention the name of your bank first.
* He asks how much money should be in your account. This is not to check if anything has been taken out illegally but so that he knows how far to push his luck once he has his hands on your card.
* He asks about cards with other banks or building societies and wants to take them away for analysis as well.
* He claims to have contacted the other card issuers and these cards have also allegedly been misused.
A word to the wise: watch out!
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