Murdoch and the BSkyB bid scenario

IT WOULD be nice to be able to say that Rupert Murdoch has been utterly charming every time I have met him, but it would not be true.

However, he has been just that on several occasions over the past 25 years and this is significant because the Murdoch camp has gone out of its way to be unpleasant in the current row over the succession at BSkyB.

Some might conclude that is the way he is. I would conclude that he perhaps thinks unpleasantness might serve some greater business objective. Murdoch does not do things casually. He has an agenda, and he pursues it with an enviable single-mindedness.

So what is his agenda here and how does unpleasantness play a part? Some might think it is to give a platform for his son James to prove himself so he can take over from Rupert in due course. That might be part of it, except that it could have been achieved - indeed probably better - by charming rather than confronting the institutional shareholders.

So why the overt hostility? Well, in these politically correct days, institutional investors worry about their fiduciary responsibility to those whose money they manage. In plain English, they are terrified of being sued if they stick their clients' money into a company that does badly because the board behaves incorrectly.

That is why they are obsessed with governance and process. It is not because they think the business will be more profitable if its governance is 'correct'. It is because no one can sue them if it still all goes wrong.

BSkyB therefore presents a huge problem because it is quite clearly not governed in accordance with what passes for today's 'best practice'.

The events of the past few days have made it much riskier for institutions to continue to hold the shares, and the behaviour of Rupert's lieutenants has encouraged that view. Chances are some institutions will sell, others will be reluctant to buy and the shares will drift south.

Interesting that this should happen just as BSkyB is poised to become a seriously profitable business, with its big risks behind it. How odd that chief executive Tony Ball's departure should be announced days after he said the company would resume dividend payments.

However, if some time next year Murdoch's News Corp were planning to bid for the two-thirds of BSkyB shares it does not own, how convenient if the shares were to languish because of concerns over governance and continued uncertainty over dividend policy because it would make the business so much less costly to buy.

Far-fetched? Possibly. Conspiratorial? Certainly. But if it does happen, we should not really be surprised.

Airport extra

THE chances of an additional runway at Heathrow are slim and getting slimmer, according to reports yesterday, because the airport will be unable to meet tough new European Union rules on air quality.

The thesis is that until aircraft engines get significantly cleaner, in perhaps another 20 years, Heathrow cannot be significantly expanded.

That would be a terrible outcome for London business, and indeed for the whole UK economy, which badly needs Heathrow to maintain its position as a leading international airport capable of serving most of the world's key destinations with direct flights.

Ease of communication is a major underpinning of the City's role as an international financial centre and London's position as international headquarters for the world's corporations.

It is time, therefore, for some lateral thinking. There is a perfectly good runway just a short distance from Heathrow at RAF Northolt - a base virtually unused by other than RAF bigwigs, the occasional politician and the Queen's Flight.

It would be a relatively simple, cheap and speedy matter to make Northolt Heathrow's new runway to handle all domestic or short-haul flights and put in a fast ground link that would get passengers to Heathrow Central in little longer than it takes to get there now from Terminal 4.

It is on the A40, so would not add to congestion on the M4, and the Tube already runs right past it. But the proposal is rarely considered because no one want to upset the RAF top brass or the Queen.

The same argument can be applied in spades to Gatwick, where a well-organised group is campaigning for the expansion of the existing neighbouring small airport at Redhill.

We need more airport capacity - but we ought first to make sure we are using properly and efficiently that which already exists.