Interdum stultus opportuna loquitur...

Tuesday, January 01, 2008

NonRant: Ron Paul, Faux News and News Corp

Note - from June 24th 2009, this blog has migrated from Blogger to a self-hosted version. Click here to go straight there.

Far be it, far be it from me, to weigh into the grubbiest and most sordid electoral market on the planet - the market for the US presidency. That said, I seriously think that we ought all to make noises - far and wide - about the mistreatment by the MainSwamp media of the Ron Paul campaign.

Odd, you might think... here is The Lovely GT, an anarchist who hates politicians, making any noise whatsoever about a politician (parasite type A) being maltreated by the MainSwamp media (parasite B). Perhaps he has taken a knock on the head, or he is still drunk from last night's reveillon (the second in a week). Neither are true.

The first musing (that I would normally be delighted to see the MainSwamp eat another of life's parasites) wold normally get a Rant Seal of Approval, but I have read a lot of Dr Paul's writings over the years. He must be approached with the cynicism that befits the Rant, however to be fair he appears to be a principled guy (although his oft-repeated belief in some form of Sky Wizard makes it clear that at least in one dimension he is deluded... but so are all politicians when it comes to God, it seems).

It must be made clear that although places like are weighing in behind Dr Paul, you will never find the Rant endorsing a politician, even if they represent the lesser of a hundred evils. I oppose the State in all its forms, so I hope Dr Paul rescinds the government if he is elected... but my hopes would not be high: he would either fold to the vast amounts of money on offer, or he would be killed. Simple as that.

But back to the point...

It seems that Dr Paul's candidacy is a being treated like an internet sideshow, particularly by news Corporation's Faux News ("Bush Decides, We Report"). Despite having had the most successful money-raising quarter for any US presidential candidate (and the largest one-day money raising in US political history), Dr Paul is not considered to be 'in the game' as far as the pablum=spooners at Faux are concerned.

Faux and the other corporate media are a bit like the senior partners at law firms - they think they are running a personal fiefdom, and will ignore any criticism unless the critics take aim via the client. Attack the revenue stream effectively, and you get their notice.  Get a government legal services panel to threaten to boot the firm from the panel (endangering a lucrative trough for these champions of free enterprise), and their Chief Executive Partner will all of a sudden treat your issue seriously (at least, in front of the representatives of, oh, let's say, the Victorian Department of Justice).

But I digress.

Thinking more of Faux News and their rather peculiar tilt away from Ron Paul's campaign (endangering, as it does, the political status quo, and a big bunch of lobbyists close to news Corp), it ought not surprise much: Fox's 'base' is co=terminous with the base of George W Bush: the self-styled "middle class conservatives" who are in large part ill-educated, and almost exclusively working class (in the US, 65% of self-proclaimed conservatives think that their income is in the top 10%... they can't all be right).

So in ignoring Ron Paul (or trying to) they are playing to their revenue stream. However it appears that the internet savvy Paul campaign - or more accurately some members who are Ron Paul supporters - are seeking their redress through Dr Paul's favourite instrument... the market.

There is, it would appear, the start of a fairly significant campaign for stockholders of News Corporation to dump the stock. 

Those who read the Rant - in either US or Oz flavours - will know that I have had a bear view on News Corp stock since the old NCP was above $20 (which equates to NWS priced in the high 20s). That was back when News was paying brokerage analysts (including the execrable Jessica "PomPoms for News!!" Reif-Cohen) to shill about PlatCo (spinning off their content distribution business... that was shelved in 2000).

Markets globally look weak, and although you could argue that pay-per-view TV is now a consumer staple (i.e., it's one of the things people won't cut back on), I think that on a valuation basis NWS relies heavily on subscriber growth rather than subscriber retention. And although paid content may not suffer a reduction in expenditure share by households who already subscribe, the marginal potential subscriber will decide 'No' in the event that their budgets shrink.

Add to that the idiotic acquisition of old-line newspapers - which I think was easily as stupid as their 2000-01 strategy ("we'll pay any multiple for anything with 'Net' or 'Com' in the name") - and you have a recipe for earnings that are even more stagnant than NWS's underlying earnings.

In short, I have no idea why any right-thinking investor would hold NWS in a portfolio. If I was silly enough to trade individual stocks, there are better candidates than NWS, but there is absolutely no investment merit whatsoever in the stock.

That said, it appears that there is a group of Ron Paul folks who are going to be at least trying to generat downward pressure on the stock. If they get any negative momentum going on the thing, you will also get the leverage punting funds joining in. (By "leveraged punting funds" I mean those crowds who refer to themselves as 'hedge funds' but in reality don't hedge anything, as recent "Got My $50mill payday... Oops No Money Left For Clients" announcements made crystal clear).

In an environment (which may well prevail in 2008) of falling markets and shrinking valuation multiples, NWS could easily fall by two-thirds... and as a cyclical business it would still not be worth buying for anything other than a short-term trade.

I have always said that only a fool would hold NWS...