Murdock's Chimp Cartoon
An editorial cartoon in the print and online editions of The New York Post was criticized for linking a chimpanzee with the economic stimulus package signed by President Obama.
http://cityroom.blogs.nytimes.com/2009/02/18/chimp-stimulus-cartoon-raises-racism-concerns/
Murdock's Phone Hacking
UK — The People vs Murdoch’s Media Monopoly - Global media kingpin Rupert Murdoch’s bid to tighten his stranglehold over the UK press faces a relentless challenge from Avaaz members, who’ve run adverts, staged public stunts, delivered massive petitions, and organised phone-ins week upon week in an effort to safeguard public debate. An Avaaz-commissioned independent poll found that only 5% of Brits take Murdoch’s side — and new criminal charges for hacking politicians’ phones are further eroding the momentum of the Murdoch media machine. The government has been forced to extract concessions from Murdoch, and has now delayed a decision on the deal — costing Murdoch billions and giving us more time to stop him for good.
Charlotte Harris, a partner at the London law firm, has for the past three years been representing clients who believe their privacy was systematically invaded by Mr Murdoch's News of the World. She says the phone-hacking scandal raises profound questions about who is in charge of the country: newspapers, and in particular those owned by the world's most powerful media baron.
Rupert Murdoch News from BuzzTrackerhttp://www.buzztracker.com/category/rupert_murdoch
News Corp faces tax sting in $21 billion 'flip and spin'
Although the group’s profits over the past 11 years add up to $2.1 billion, it has paid no net British corporation tax.
RUPERT MURDOCH is an exceptional businessman in many ways—in the risks he has taken to build News Corporation, in the global reach of his empire, in the way he has changed the rules of the game for other media companies. But one of his most remarkable achievements is his tax bill. In keeping with his anti-statist philosophy, Mr Murdoch hands very little of his profits to governments.
In the four years to June 30th last year, News Corporation and its subsidiaries paid only A$325m ($238m) in corporate taxes worldwide. In the same period, its consolidated pre-tax profits were A$5.4 billion. So News Corporation has paid an effective tax rate of only around 6%. By comparison, Disney, one of the world’s other media empires, paid 31%. Basic corporate-tax rates in Australia, America and Britain, the three main countries in which News Corporation operates, are 36%, 35% and 30% respectively.
Finding out the specifics of News Corporation’s tax affairs is difficult because of the company’s complex structure. In its latest accounts, the group lists roughly 800 subsidiaries, including some 60 incorporated in such tax havens as the Cayman Islands, Bermuda, the Netherlands Antilles and the British Virgin Islands, where the secrecy laws are as attractive as the climate.
This structure, dictated by Mr Murdoch’s elaborate tax planning, has some bizarre consequences. The most profitable of News Corporation’s British operations in the 1990s was not the Sunday Times, or its successful satellite television business, BSkyB. It was News Publishers, a company incorporated in Bermuda. News Publishers has, in the seven years to June 30th 1996, made around £1.6 billion in net profits. This is a remarkable feat for a company that seems not to have any employees, nor any obvious source of income from outside Mr Murdoch’s companies.
News Corporation does not help outsiders to understand its affairs. Its financial reporting is minimalist. Its full response to our questions about its tax affairs was, “News Corporation and its subsidiaries, including News International, prepares and files tax returns in every jurisdiction in which they do business. The company’s tax returns, and payments, are reviewed on a regular basis by relevant tax authorities.”
Investigating News Corporation’s tax affairs is made especially hard by accounting standards in Australia, where the company is incorporated. They are among the most lax of the developed economies. In America, too, many of the unlisted subsidiaries of Mr Murdoch’s listed companies are incorporated in Delaware, where there is no obligation on them to file publicly available accounts.
In Britain, however, the laws require Mr Murdoch to publish at least a few facts. That has enabled The Economist to go through 11 years’-worth of financial results of the 101 British companies listed in the latest set of News Corporation accounts as subsidiaries of Mr Murdoch’s main British holding company, Newscorp Investments, to find out how much tax they paid.
The answer is that since June 1987, although the group has made £1.4 billion in profits, it has paid no net British corporation tax at all. In some years the companies paid some tax but in other years they claimed rebates.
How have they managed this? Part of the answer lies with BSkyB, which is 40%-owned by News Corporation. The figure of £1.4 billion includes a net £317m from News Corporation’s share of BSkyB’s pre-tax profits. Tax is payable on those profits. But BSkyB has been able to set against them the substantial losses made during its expensive start-up of satellite broadcasting in the late 1980s and early 1990s.
Yet BSkyB accounts for only that £317m, leaving around £1.1 billion in other profits. Mr Murdoch might normally have been expected to pay around £350m in tax on this. To put that in perspective, such a sum could build seven new hospitals, 50 secondary schools or 300 primary schools.
There are few clues in the British accounts as to how Mr Murdoch has avoided writing the British government a large cheque. They disclose only that there are no tax bills because of the availability of tax losses. Yet the group has been profitable since its early losses from satellite television and the British recession in the early 1990s. Where do the tax losses come from?
In the short term, there is always a disparity between profits that appear in a company’s audited accounts, and profits that the Inland Revenue uses to calculate tax. Lots of adjustments are made to accounting profits to arrive at taxable profits. For instance, in Britain, tax allowances for capital expenditure can in some years be more generous than accounting provisions for depreciation. In the long run, however, accounting profits and taxable profits should generally correspond. Yet in News Corporation’s British companies, taxable profits are apparently zero, while accounting profits are £1.4 billion.
One explanation may be the extensive—but legal—use of tax loopholes (see article) to shelter profits in offshore tax havens. Nobody likes paying tax, but News Corporation’s British arm is unusual in the degree to which it manages to avoid it. Other well-known companies doing business in Britain tend to pay a great deal more in tax.
Another reason why News Corporation pays much less than comparable companies is its origins. It has always been an international company, balanced between Britain, America and Australia. That makes it easy to shift profits across national boundaries. Yet most big companies are increasingly international; they too could, if they chose, manage their affairs in a similar way to Mr Murdoch.
So why do they not do what News Corporation does? Perhaps their tax lawyers are not as bright. Perhaps their boards are stuffed with conventional people who would be embarrassed to shelter profits in tax havens. Or, more likely, they may conclude that there are costs to Mr Murdoch’s way of doing things.
In particular, the complexity of News Corporation’s structure baffles analysts and puts off institutional investors. Money men suspect that the company’s profits may be based not just on the returns from Mr Murdoch’s businesses, but also on financial wizardry vulnerable to changes in tax law. This may be one reason why its share price has underperformed the American stockmarket over the past five years. A low share price makes investment more expensive for Mr Murdoch than it would be were he an empire-builder with a more transparent business structure.
In the long run, too, doubts arise about the sustainability of News Corporation’s elaborate structure. Will Mr Murdoch’s children, who he hopes will eventually run the company, be able to master its arcane complexity? If not, the empire, low taxes or not, could start to fall apart.
Here’s one way to see more of your daughter: Buy her company for $663 million. Ten years after starting her own U.K.-based production company, Shine Group, Elisabeth Murdoch is selling it to her father, Rupert Murdoch. Rupert says he expects his daughter to sit on the board of News Corp. and report to deputy chairman Chase Carey. “I look forward to them becoming an important part of our varied and large content creation activities,” said Rupert. “I expect Liz Murdoch to join the board of News Corporation on completion of this transaction.”
In the four years to June 30th last year, News Corporation and its subsidiaries paid only A$325m ($238m) in corporate taxes worldwide. In the same period, its consolidated pre-tax profits were A$5.4 billion. So News Corporation has paid an effective tax rate of only around 6%. By comparison, Disney, one of the world’s other media empires, paid 31%. Basic corporate-tax rates in Australia, America and Britain, the three main countries in which News Corporation operates, are 36%, 35% and 30% respectively.
Finding out the specifics of News Corporation’s tax affairs is difficult because of the company’s complex structure. In its latest accounts, the group lists roughly 800 subsidiaries, including some 60 incorporated in such tax havens as the Cayman Islands, Bermuda, the Netherlands Antilles and the British Virgin Islands, where the secrecy laws are as attractive as the climate.
This structure, dictated by Mr Murdoch’s elaborate tax planning, has some bizarre consequences. The most profitable of News Corporation’s British operations in the 1990s was not the Sunday Times, or its successful satellite television business, BSkyB. It was News Publishers, a company incorporated in Bermuda. News Publishers has, in the seven years to June 30th 1996, made around £1.6 billion in net profits. This is a remarkable feat for a company that seems not to have any employees, nor any obvious source of income from outside Mr Murdoch’s companies.
News Corporation does not help outsiders to understand its affairs. Its financial reporting is minimalist. Its full response to our questions about its tax affairs was, “News Corporation and its subsidiaries, including News International, prepares and files tax returns in every jurisdiction in which they do business. The company’s tax returns, and payments, are reviewed on a regular basis by relevant tax authorities.”
Investigating News Corporation’s tax affairs is made especially hard by accounting standards in Australia, where the company is incorporated. They are among the most lax of the developed economies. In America, too, many of the unlisted subsidiaries of Mr Murdoch’s listed companies are incorporated in Delaware, where there is no obligation on them to file publicly available accounts.
In Britain, however, the laws require Mr Murdoch to publish at least a few facts. That has enabled The Economist to go through 11 years’-worth of financial results of the 101 British companies listed in the latest set of News Corporation accounts as subsidiaries of Mr Murdoch’s main British holding company, Newscorp Investments, to find out how much tax they paid.
The answer is that since June 1987, although the group has made £1.4 billion in profits, it has paid no net British corporation tax at all. In some years the companies paid some tax but in other years they claimed rebates.
How have they managed this? Part of the answer lies with BSkyB, which is 40%-owned by News Corporation. The figure of £1.4 billion includes a net £317m from News Corporation’s share of BSkyB’s pre-tax profits. Tax is payable on those profits. But BSkyB has been able to set against them the substantial losses made during its expensive start-up of satellite broadcasting in the late 1980s and early 1990s.
Yet BSkyB accounts for only that £317m, leaving around £1.1 billion in other profits. Mr Murdoch might normally have been expected to pay around £350m in tax on this. To put that in perspective, such a sum could build seven new hospitals, 50 secondary schools or 300 primary schools.
There are few clues in the British accounts as to how Mr Murdoch has avoided writing the British government a large cheque. They disclose only that there are no tax bills because of the availability of tax losses. Yet the group has been profitable since its early losses from satellite television and the British recession in the early 1990s. Where do the tax losses come from?
In the short term, there is always a disparity between profits that appear in a company’s audited accounts, and profits that the Inland Revenue uses to calculate tax. Lots of adjustments are made to accounting profits to arrive at taxable profits. For instance, in Britain, tax allowances for capital expenditure can in some years be more generous than accounting provisions for depreciation. In the long run, however, accounting profits and taxable profits should generally correspond. Yet in News Corporation’s British companies, taxable profits are apparently zero, while accounting profits are £1.4 billion.
One explanation may be the extensive—but legal—use of tax loopholes (see article) to shelter profits in offshore tax havens. Nobody likes paying tax, but News Corporation’s British arm is unusual in the degree to which it manages to avoid it. Other well-known companies doing business in Britain tend to pay a great deal more in tax.
Another reason why News Corporation pays much less than comparable companies is its origins. It has always been an international company, balanced between Britain, America and Australia. That makes it easy to shift profits across national boundaries. Yet most big companies are increasingly international; they too could, if they chose, manage their affairs in a similar way to Mr Murdoch.
So why do they not do what News Corporation does? Perhaps their tax lawyers are not as bright. Perhaps their boards are stuffed with conventional people who would be embarrassed to shelter profits in tax havens. Or, more likely, they may conclude that there are costs to Mr Murdoch’s way of doing things.
In particular, the complexity of News Corporation’s structure baffles analysts and puts off institutional investors. Money men suspect that the company’s profits may be based not just on the returns from Mr Murdoch’s businesses, but also on financial wizardry vulnerable to changes in tax law. This may be one reason why its share price has underperformed the American stockmarket over the past five years. A low share price makes investment more expensive for Mr Murdoch than it would be were he an empire-builder with a more transparent business structure.
In the long run, too, doubts arise about the sustainability of News Corporation’s elaborate structure. Will Mr Murdoch’s children, who he hopes will eventually run the company, be able to master its arcane complexity? If not, the empire, low taxes or not, could start to fall apart.
News Corp. to Buy Shine Group
Stephen Lovekin / AP Photo
