Ethical Investment and the Media

Investing in media companies has always been controversial for ethical funds. It is a complex and imperfect industry and I suspect it always will be. Investment in media companies has long drawn criticism from some quarters and I doubt that will end any time soon. From allegations of political bias to competition issues and pornography there have always been, shall we say, challenges.

But there remain good reasons to consider such companies – even for ethical funds. As we have seen across the Middle East, the media – in its various forms – can be a phenomenal force for good. And even in the UK, where the issues are somewhat different, the printed press still has a role to play, disseminating information to millions of readers and helping to bind communities together.

As we all know, a free and open press is a core pillar of a democratic society. It can have many benefits, amongst them being a useful ‘check and balance’ for politicians and others who are keen to be in the public eye – but who, in being human perhaps, don’t always behave as we might expect.

Being grown up about things we do understand that mistakes happen and that businesses have to make money. But the goings on at the News of the World are breathtaking, both in terms of their timescales and their extent.

I have limited experience of the paper. I was not, perhaps unsurprisingly, a reader. My only experience of them, albeit some years ago, was however a good one. Somewhat nervous at the prospect of having to return a call from one of their reporters I was not at all sure what to expect. What I found was a well spoken, well informed and apparently genuinely interested gentleman who was a pleasure to deal with. He asked sensible questions and duly produced an article – about ethical investment – that was no doubt right for his audience.

I can only hope that employees such as he will recover rapidly from this episode – with some of them being a little wiser and more cautious perhaps.

Yet that may not be a view many would have of News Corp’s management. A Nasdaq listed company, 40% owned by a family trust, with significant Saudi support (according to their AGM materials) – their situation is likely to be individual, which is fair enough. Yet it seems pretty clear that the processes were simply not in place to ensure proper practices which would have benefited investors, employees and of course those affected by the phone hacking. For instance, splitting the role of Chairman and Chief Executive have long been seen as essential for good governance – yet is appears not to be a structure News Corp favours.

How those people whose phones may have been tapped must feel right now I can hardly bear to imagine. Privacy after all is a most basic human right.

The stories will no doubt run for some time and I am guessing further skeletons may emerge from their many closets.

It is my hope that, though often media shy, major investors will be fully engaged in the debates that will no doubt take place.

It would also be good to learn more about what engagement may have taken place over recent years with regard to these key management issues -whether from ethical funds or other fund managers.   After all clued up fund managers are well placed to make a useful constructive contributions to management – and should probably do so more often.  And hopefully they will – perhaps once they have digested the new 2010 Bribery Act – which somewhat ironically perhaps – came into effect on the 1st of this month!

Time for some blue Sky thinking amongst investors perhaps…

For a selection of related current press coverage see below:

News Corp Investors Point Finger

News Corp Investors Attack Murdoch

News Corp Sued by Shareholders

News Corp Sued by Shareholders over Phone Hacking Scandal