Sleight Of Hand Reporting On Murdoch

The Guardian is running a big story today on how U.S. shareholders are “deeply troubled” by the testimonies provided by Rupert and James Murdoch before the Leveson Inquiry.

“U.S. shareholders are said to be worried that the Murdochs’ testimony this week has raised new questions about the management of the company and posed potential threats to other areas of its media empire,” the report claims.

And then it goes on to quote from a “senior policy analyst with Change To Win (CtW), a U.S. advisory group that works with pension funds with over $200bn in assets.”

According to the analyst, Michael Pryce-Jones, the Murdochs’ testimony raised two immediate concerns for shareholders: the future of the firm’s control of broadcaster BSkyB and the ethics of top management.

I am sure some shareholders are nervous about what is unfolding in the UK vis-à-vis phone hacking, public inquiries and the on-going investigation by broadcast watchdog Ofcom. But are they the immediately relevant shareholders?

The Guardian should have explained who Change To Win is? It isn’t just some kind of neutral advisory group. It was founded in 2006 as the CtW Investment Group and, as the organization explains, it “works with pension funds sponsored by unions affiliated with Change to Win, a federation of unions representing nearly 5.5 million members, to enhance long-term shareholder returns through active ownership.”

The leadership council of the Change To Win federation consists of Joseph Hansen of the United Food and Commercial Workers; James P. Hoffa of the Teamsters; Geralyn Lutty of the United Food and Commercial Workers; Mary Kay Henry of the Service Employees International Union; Arturo Rodriguez of the United Farm Workers of America; Eliseo Medina of the Service Employees Union; and Tom Woodruff of the Service Employees International Union.

So, I think, we can take it that there is no love lost for Rupert M. from such an organization. Does that mean their views should be discounted? Of course not. If the union pension funds have investments in the Murdoch media empire, they have every right to voice their opinion and concerns. But it would have been more honest journalism for The Guardian to explain exactly who Change To Win is and where they might be coming from.

Of course, if the paper had done so, then the story would have been weakened. Maybe that explains the omission. And also why the report glides over as quickly as it can this bit of contradiction: “Nonetheless News Corp shares rose during the three days of testimony, rising 0.7% to $19.76 on Thursday.”

Hmm. In the end, the only important News Corp. shareholders are the top five in voting terms: the Murdoch family and Rupert Murdoch, who control 39.74 percent of the votes in News Corp.; Alwaleed bin Talal Alsaud (7.04 percent); Invesco (1.8 percent); Bank of New York Mellon (1.19 percent); and Taube Hodson Stonex (1.07percent).

 

Changing Nature Of Drug Cartels

Last night, I had a conversation with academic Edgardo Buscaglia, a lawyer and economist at ITAM, a Mexico City university. Buscaglia is a knowledgeable man about Mexico’s drug trade and cartel wars, and provides, unlike many others, details to support his thinking.

Back in 2010, for example, he estimated that the Sinaloa Federation was responsible for almost half the drug trade in Mexico, about 45 percent, of the drug trade in Mexico, and using statistics from the country’s security forces calculated that only 941 of the 53,174 people arrested for organized crime in the previous six years were associated with Sinaloa.

That, of course, gave fuel to those who argue that the Mexican authorities in the war on drugs favors Joaquín El Chapo Guzmán  and is seeking to diminish or terminate the other cartels. As the theories go, the authorities are either in cahoots with the Sinaloa Federation or plan to allow the cartel to expand and at a later date negotiate a deal with El Chapo for a decrease in violence.

Buscaglia himself isn’t so sure. And I don’t subscribe myself to either the cahoots theory or the more Machiavellian theory that the Calderon administration is keen to protect the Sinaloa Federation so that things can be returned to the old ways of a dominant cartel keeping everything stable.

I see no hard evidence that the Calderon administration is going easy on the Sinaloa Federation or that it wants to boost the power of El Chapo, although it wouldn’t surprise me if the next administration, especially if it is formed by Enrique Peña Nieto of the Institutional Revolutionary Party, or PRI, may try to pull off a deal with the Sinaloans.

It seems to me that the Calderon administration really is trying to capture El Chapo, even though their best chance to date was bungled in February (see post below).

So why the discrepancy? Why does the Sinaloa Federation suffer fewer arrests than the other cartels?

There are several answers.

First, the Sinaloa Federation is a much harder cartel to penetrate compared to, say, Los Zetas. It is built around families while Los Zetas isn’t. Second, it is less exposed and forced to compete in hostile environments because it is less concerned about expanding its geographical territory. It already controls considerable territory and as a producer of drugs much of what it has to do is transactional and deal-making.

Third, it has been at the game longer and is more efficient. And fourth, and this is where there is an element of truth to the cahoots theory, it is has more local and state politicians and law-enforcement officials in its pocket and so is the beneficiary of tip-offs.

But to return to Buscaglia. Since 2003 he and his team have been analyzing case files and indictments at the federal level and from 17 of Mexico’s states. And what they have found in their sampling is how the nature of the cartels and their criminal activities have been changing in the past seven years as the war on drugs has intensified. Only about half of the cartels’ manpower, resources and time is spent on drug trafficking.

The picture he sees is one of smart and determined diversification, prompting him to argue that calling these crime syndicates drug cartels is missing the point. They are now broad, diversified transnational crime organizations and are as much involved in other crimes as narcotics trafficking.

What other crimes? High on the list is trading in counterfeit and pirated goods. Human trafficking, extortion and kidnapping also figure prominently. And until the state takes on the economic underpinning of the cartels, then it will lose in its confrontation with the crime organizations,  Buscaglia argues.

“The state will have to start dismantling in a methodical way the economic infrastructure of the cartels, to seize their assets in terms of property, businesses, storage facilities, transportation, etc,” he says.

The Digger And Leveson

Day 2 of media mogul Rupert Murdoch’s testimony before the Leveson Inquiry. What a difference in appearance and manner from last summer when he testified before a House of Commons committee. The Guardian described his Commons testimony in July as a “complex performance of shame, wryness and amnesia.”

I saw something else – a man in shock, and an old man at that who just didn’t look like he was altogther there. Was that an act to garner sympathy and wrong-foot his pursuers? Murdoch-haters would say it was, but I am not so sure.

This time round the wryness is still there and so is the shame but the amnesia seems on the whole to have gone. He looks fitter and much more together. And his frankness is appealing, especially when it comes to his relationships with prime ministers.

And he is utterly right about government regulation of the press when he says the laws as they stand now are “perfectly adequate” but “lack of enforcement” is the problem. Do we really want the political elite to have control of what papers say or more importantly don’t say?

But was he convincing on whether there was or was not a cover-up at senior levels at News International of the phone-hacking scandal? He places all the blame with management at the News of the World. But having worked at News International, I find it hard to believe that James Murdoch and other corporate executives were so in the dark. And if they were, then there was monumental incompetence.

Government Subsidies For Local Newspapers?

Government subsidies for the local press? Government encouraged or supported community media trusts? Of course, my American libertarian friends would throw their hands up in horror at such ideas. But UK Conservative MP Louise Mensch is pushing the government to do such things.

Mensch is worried rightly about the consequences of the decline in the UK of the local press and what it means for local government accountability and democracy. She wants a serious review and is calling on the government to introduce subsidies and tax advantages for local newspapers.

And she has a point about trying to create a level playing field for local newspapers. The country is awash with local Pravda-type propaganda newsheets put out by local authorities and financed by council taxpayers. Local newspapers have to compete also with regional BBC television, again funded by the public.

Britain’s local press is dominated by a handful of newspapers groups — Johnston Press, Newsquest and Northcliffe. And they have been slashing away at their properties. Newsquest’s ownership of the Herald Group in Glasgow has been nothing short of a disaster and both the Glasgow Herald and the Sunday Herald are pain shadows of what they once were. Johnstone has failed to revive the Scotsman and Scotland on Sunday. Down south there have staff cuts, papers getting thinner or being shifted from daily publication to weekly.

Of course, in these straitened times the big newspaper groups have suffered dramatic falls in advertising revenue and huge drops in profits. But there has been a marked lack of thought and creativity by managements as well.

Citizen journalism isn’t filling the gap.

So would government subsides bring government control? That doesn’t have to be the case. And there are examples of where it has worked — in Italy for instance.