Outlook: Murdoch caught by the Internet bug
Wednesday 28 April 1999
Mr Murdoch has three good reasons for feeling less than happy with Mr Booth. He's already blamed Mr Booth's predecessor, Sam Chisholm, for Sky's failure to obtain regulatory approval for its Manchester United takeover; the way Mr Murdoch sees it, Mr Chisholm's combative style rubbed the regulators so much up the wrong way that they were bound to be poisoned against Sky. But Mr Booth was the man who fronted the bid and Sky's fruitless attempt to get it past the MMC, so he cannot be seen as entirely blameless.
Another is the less than spectacular launch of Sky Digital. Off to a slow and plodding start, Sky has failed to deliver the early knock-out blow to ONdigital Mr Murdoch hoped for. And a third is Sky's failure to gain any kind of a foothold in continental pay TV. In truth, this latter setback may have more to do with Mr Murdoch himself than Mr Booth, but a good boss never blames himself, does he.
For all of these reasons, Mr Murdoch might have thought the time right for a replacement. All the same, this doesn't appear to be a Murdoch axing in the old style. What is interesting about this changeover is that the choice of successor is not to be Mr Murdoch's alone, or that's the spin Sky is giving to the whole thing, anyway. As far as we know, this is the first time independent directors have had any kind of a proper say in the future of Sky's management, which hitherto has been run as if a wholly- owned subsidiary of Mr Murdoch's News Corp.
Furthermore, Mr Booth isn't leaving the Murdoch fold. As many former Murdoch executives can testify, it is usual practice in the Murdoch empire to be shifted into some sort of departure lounge job before being exited entirely, and that may indeed be Mr Booth's eventual fate. Even so, it does seem genuinely to have been the case that Mr Booth received an offer from Bill Gates at Microsoft, and Mr Murdoch made an effort to keep him by constructing a similar post within his own company.
That effort, moreover, seems to be coming at a high price. Even for Mr Murdoch, $300m of risk equity is hardly chicken-feed, and the Silicon Valley venture capital market, which seems to be where Mr Booth and the money are heading, is already an overcrowded one. Mr Murdoch's interest in the Net is quite a specialist one - interactive digital TV - but even so, he's late into the game. He's also on record as saying Internet companies are hugely overvalued and that the web will end up destroying more companies than it creates.
Which possibly explains why Mr Murdoch has to play the Internet game, however expensive it proves in the short run. Any company with global media pretentions going forward has to have a stake in the Internet, for defensive reasons if no other. The Internet is not just an alternative means of distribution, it also threatens to gobble up a very significant share of worldwide advertising revenues. Whether Mr Booth was pushed or jumped, Mr Murdoch certainly needs somebody to bolster its Internet ambitions.
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