Discovery Communications, one of the TV industry’s highest-regarded broadcasters, needs to make its corporate governance more transparent. Same with News Corp, says corporate research firm GMI Risk List, which regularly reports on quoted companies which have, in the view of GMI, “particular [risk] factors that may correlate with negative events,” said Kimberly Gladman, GMI’s Director of Research and Risk Analytics.
Discover and News Corp appear in GMI’s ‘Top Ten’ list of villains who have less than ideal corporate structures or management practices that make them potentially risky bets for investors. Discovery, despite seeing its share price rise some 200 per cent over the past 3 years, is criticised because it has “two principal shareholders” who have “a disproportionate control” over the business. GMI add that Discovery has “a number of concerns about expense recognition and the quality of the balance sheet, including high levels of goodwill and debt.”
News Corp is still reeling from the ‘hackgate’ events of this past summer, and further problems over its control of BSkyB. Nevertheless, GMI says News Corp’s own “poor governance” contributed to its problems. Despite losing many senior executives over ‘hackgate’ GMI says News Corp has yet to learn any lessons. “There is little indication that the quality of the company’s governance is improving.” GMI adds that “the company’s investigation into the phone-hacking scandal is being led by directors with strong ties to the company and the Murdoch family.”
BSkyB’s quarterly results are released next Wednesday, October 19th.