You’d be a brave man to bet against Rupert Murdoch or Michael Bloomberg
Call me a sentimentalist, but when Rupert Murdoch gave a speech here last week telling News Corporation to go carbon-neutral, and to inspire its many millions of viewers and readers to do likewise, I couldn’t help thinking that he must have been affected by the spectacle of human frailty revealed to him in his current efforts to take over Dow Jones, owner of the Wall Street Journal.
To bring the Journal into his portfolio, Mr Murdoch needs to win over the extended Bancroft family, descendants of a swashbuckling newspaperman called Clarence Barron who bought control of Dow Jones in 1902. Three generations later, Barron’s stake has been scattered among so many far-flung descendants that they have become absentee landlords — a good arrangement for editorial independence, a bad one for quality of management.
The Journal remains a fine newspaper, but Dow Jones has fallen well behind its big media rivals in the past couple of decades by investing badly or not at all. The unwieldy Bancrofts may now do their company one last great disservice by blocking its sale to News Corp — even though Mr Murdoch is willing to pay way over the market price, and the newspaper industry is mostly in decline.
Mr Murdoch, at 76, must surely be moved to reflect on how News Corp will look in three generations. He and his family hold a blocking stake, but there are wives and children to share the spoils and tensions among them already. Small wonder if Mr Murdoch, having sought to build a media company through which his genius would survive him, is moved to seek immortality through some more achievable goal, such as saving the planet.
Nor can it be entirely a coincidence that the bid for Reuters from the Thomson group of Canada came hard on the heels of News Corp’s offer for Dow Jones. When Mr Murdoch bought MySpace three years ago, he foresaw in his intuitive way the coming boom in ‘social networking’, or gossiping online. MySpace could easily have fetched three times as much a year or two later. Now Mr Murdoch is saying that there is value in financial-markets data, and you would be a brave man to bet against him.
The hope behind the Thomson–Reuters deal is that the merged companies will be better placed to challenge the number one in the industry, the privately owned Bloomberg. If so, it will be a battle of business models. Bloomberg sells one big box that gives you everything; Thomson–Reuters will sell lots of targeted services. You can see already why Michael Bloomberg, now mayor of New York and a putative presidential candidate, doesn’t look too worried. In any battle of simple versus complicated, bet on simple. But what if Mr Murdoch is wrong, and financial data in general is a dying business, just like news? You may never get free data as good as Bloomberg’s or Thomson–Reuters’ — but the gap may narrow enough to drive down the price ruinously.
Perhaps even then Mr Bloomberg will have an ace in the hole. The Bloomberg box, with its gossip-boards and instant messaging, pioneered social networking before MySpace and the like. If Mr Bloomberg does ever want to sell his empire, and he misses the top of the market in financial information, he can rebrand it as a MySpace for grown-ups and hope that internet euphoria will do the rest.
The next time anyone tries to tell me that low taxes and deregulation are the source of American economic vitality, I will hand him my tax return and offer him a sling to support his falling jaw. The cascade of federal, state and city taxes here in New York means that I pay more than 40 per cent of my salary to these various tiers of government — ten percentage points more than I paid in Brussels, and three times what I paid in Moscow.
Nor are the high rates even the worst of it. The American tax return is an obstacle course of impositions and exemptions and options and elections so insanely complicated that you either take a week off work to complete it or you pay an accountant, even if you are a salaried employee with your tax deducted at source. My ideal model for a tax code remains that of Estonia, where you pay the same flat rate on every kind of income. I am looking now at a note from Vanguard Fund Management which covers two sides of small print telling me how to declare $339 of dividend income. Longer, I suspect, than the whole of the Estonian personal tax code for individuals and corporations combined.
Ayear ago I predicted a property crash in Manhattan. Since then property has crashed almost everywhere in the United States except Manhattan. The main achievement of chicken-littles like me has been to divert some hesitant buyers into the rental market, driving up rents even further. The average rent for a one-bedroom apartment in Manhattan is now more than $2,500 a month, and most landlords require a tenant to make 40 times the monthly nut in annual salary. You need a six-figure income to live in a shoebox. The Manhattan Institute, a free-market think-tank, estimates that zoning, environmental rules, building codes, rent regulations, and other state and federal restrictions on building in New York end up by roughly doubling the price of an apartment here. We pay through the nose to get the shirt taxed off our back. I love New York, but it is sometimes a difficult relationship.
Speaking of the Wall Street Journal, its agony column was handing out advice the other day on ‘the proper protocol’ for men who want to wear jewellery, at home or in the office. It gave the all-clear to dog-tag pendants on rubber cords, embossed rings, and a bracelet or two. Diamond earrings were to be avoided, save in sporting and media circles. Bankers, lawyers and accountants were warned to avoid anything around the neck, though a ‘chunky link choker’ would be fine outside the office. A complicated business, this men’s jewellery. I think I prefer the British code: none.
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