Must do better’ is Janet Dignan’s verdict on governance standards at two of the world’s highest-profile media companies.
Two old men (74 and 80), both media moguls, neither renowned for ethical standards. Both accused of criminality. Both busy men. Indeed, one has a country to run, the other a world to influence, mostly via newspapers and television channels.  

So we’re talking about Rupert Murdoch and Silvio Berlusconi.
Much has been made of Murdoch’s papers’ trivialization of news, with help from semi-naked ladies and celebrity gossip. But serious financial comment focuses on his companies’ failures in corporate governance. And there’s been much hand-wringing about their senior managements’ close ties with members of government. 

Berlusconi, on the other hand, doesn’t just have ties with the Italian government, he is the government. Well, the prime minister, anyway, so he has unbreakable ties with at least one senior member of the Italian government. And his peccadillos – naked women on the TV and in his bed – are an easy match for anything that appears in the Murdoch press. 

Of course, there are numerous differences between the two men.
But let’s look at how they run their businesses, the strengths and weaknesses of corporate governance at Mediaset and News Corp, just to get things in perspective. One difference between the two is that Berlusconi lives and runs his businesses in Italy, a truly wonderful country in so many ways (food, wine, landscape, art, architecture, history) but not one renowned for its adherence to high standards of incorruptibility in government or media. Further, although many would argue that Berlusconi has broken the law, he’s in the happy position of being above it – or at least having immunity from it – by virtue of the fact that he runs the country.

Murdoch, on the other hand, runs News Corporation, a family-dominated multinational media empire whose board is described by Paul Hodgson, senior research associate at GMI Ratings, as ‘almost the epitome of dysfunctional’.
Many dislike Murdoch’s level of influence over public opinion and politicians but that very level of influence has given him the protection he’s needed.

IR magazine has now analyzed corporate governance at the two companies to see how they compare, by reference to our own de minimis standards (see below). Neither fares well, yet both have been free of shareholder action for change. The reason for that is simple: given the nature of control by the owners, resistance would be futile. The only unanswerable question is why anyone would want to own their stock.
IR magazine’s de minimis corporate governance standards
- Corporate objective (CO): to optimize returns to shareowners
- Corporate disclosure (CD): accurate, adequate and timely, with an accessible IRO or equivalent, able to speak for senior management
- Voting rights (VR): one share, one vote for each ordinary share, with provision for in absentia voting. No dual classes of shareholders
- Corporate boards (CB): accountable to shareholders; at least 50 percent independent directors who should dominate audit, remuneration and audit committees; up for reelection on a regular basis
- CEO/chairman (CC): two different people
- Governance codes (GC): followed
