The media may want to bury the news that 296 advertisers don’t want their commercials shown on the Glenn Beck show, and the NewCorp management may pretend it’s no big deal, but as we are told over and over, "maximizing shareholder value" is the most important thing in the world.

So what should a concerned investor in a company do when the corporate managers keep employing someone who has gone from an asset to a liability? What actions should they demand management take? And if management doesn’t act, how should they respond?

Below I ask these questions to the largest institutional investor of NewsCorp, probably the only people on the planet with enough clout to demand real answers. I’ve asked these kind of questions to Rupert Murdock, the CEO of NewCorp and was brushed off.

Last Sunday I learned that I underestimated the number of advertisers who won’t touch the Glenn Beck show by 215!

Fennec Fox by tanakawho

Cato Stonex
Taube Hodson Stonex Partners Limited
London, UK

Dear Cato:

Are you pressuring NewsCorp to wring more money out of Glenn Beck? If not, why not?

Last Sunday, Mark Leibovich in the New York Times wrote, "as of Sept. 21, 296 advertisers have asked that their commercials not be shown on Beck’s show (up from 26 in August 2009). The NY Times article talks about how Beck is using Fox/NewsCorp resources to make money for himself, which wouldn’t be problem if the show was returning more revenue for Fox. Right now a show with 1/8 the ratings of Beck which had actual advertisers would provide more revenue than Beck. Why is Fox allowing it and what are you going to do about it?.

If they say they can’t get more ad sales out of him, or give you some BS about how he has "plenty of advertisers" make them prove it, with numbers. You invest in companies that will make money for your fund. You can do this by being long on growth stocks or short on losers. Beck was an asset for NewsCorp, he is now a liability. What is NewsCorp going to do to fix that?

THS Partners is the largest institutional of NewsCorp. If you saw one of your other portfolio companies not maximizing their revenue potential what would you do? Sit around and let the CFO and Chairman lie to you? "It [The Glenn Beck show] has plenty of advertising," (In London you will notice zero ads on the Glenn Beck show, which isn’t exactly "plenty".) In the US Beck runs house ads for NewsCorp properties and Goldline ads. The fish (retail investors) say things like, "Murdock is making a ton of money off of Beck." because they don’t follow the business. You, I and the television executives selling ad space know what Beck’s "empty calories" mean. Lower revenue for Fox.

At what point does Beck’s inability to provide revenue become a material event for NewsCorp? If Beck died tomorrow that would be a material event, right? Beck’s ability to provide significant revenue for Fox died months ago.


Act Now Before Beck Dies or Announces his Pending Death.

Speaking about Beck dying, you might have read about his mysterious medical ailments. By the time this letter gets to you he will announce his diagnosis. If the fish read he is going to die soon they will dump NewsCorp stock. They are stupid and think that Beck’s departure will hurt NewsCorp revenue. What will hurt is the stock from their panic selling. They don’t understand that Fox has been already been hiding Beck’s crappy revenue performance by taking money from other places inside Fox. You know how these things work. If Fox wants to keep their numbers up, and someone like Beck isn’t pulling his weight, someone else has to pay. A Fox executive doesn’t get his bonus or a program’s marketing budget gets cut. Ad salesmen get very unhappy when they who can’t convince any advertisers but Goldline to associate with the race-baiting and insanity of Glenn Beck. These people are mad at Glenn and are talking to the media. Someone who lost his commission, bonus or budget gave the New York Times the exact number of disgusted advertisers who won’t advertise on Beck’s show. 296.


Alies Cares about Winning Elections for Republicans in The Fall. You Care about Making Money, Now.

Roger Alies is thumbing his nose at you because quarter after quarter he keeps a money-losing host in a prime network position. He may believe that Beck will help Republicans win elections in America and that it is worth stealing from internal budgets at Fox. Now this might be fine if your main goal is more Republican victories in the fall. But NewsCorp is supposed to make more money every quarter, and if Alies wants to get some candidates elected he should do what Chairman Murdock does and donate money directly to the groups promoting them. Instead, he is treating Fox like his own personal GOP promotion machine. Good for the GOP, not so good for NewsCorp shareholders in the short term.


Beck’s Followers are Going to Kill People

When Beck’s followers kill people it’s not going to hurt his ratings. It will help ratings, however it will keep advertisers away and that should hurt the stock.

What may surprise you is that here in America people on both the left and right in the media will circle the wagons around Beck to declare that he can not be held legally responsible for "crazy people" who act as "lone wolves" and kill people. Expect someone from the ACLU to stand up for him. From NPR to MSNBC, the media will defend Beck. They will talk about the government’s duty not to interfere because of his First Amendment rights. Beck being the inspiration for an army of "lone wolves" with guns who attack his chalkboard featured players isn’t something that anyone in the government wants to address. The FCC has $500,000 fines for the f-word but will not touch anything to do with right wing incitement toward the left, Muslims, abortion providers and anyone associated with George Soros (in real life or in their imagination.)

Beck has been coached in the right way to incite violence, this is clear from reading the jailhouse interviews of Bryron Williams (who was inspired by listening to Beck to pick up guns to go assassinate leaders of the ACLU and the Tides Foundation here in San Francisco).

Your question after future killings of course is simple, "How will Beck’s followers killing people impact the NewsCorp stock?" Again, the fish don’t know that the FCC has nothing to say about radio and TV hosts suggesting that someone needs to "do something" about George Soros or the Tides Foundation. They might think that NewsCorp will have to pay a fine or something. After the next round of killings inspired by Beck, a few more advertisers might leave, but at this point there aren’t many left.

There will be some talk about moral responsibility, but being morally irresponsible isn’t a firing offense at Fox (or most corporations for that matter). As long as Beck is bringing in revenue he can be as morally irresponsible as he wants. Right? Because it’s all about increasing revenue. However, you now have proof that Beck is NOT increasing revenue — if that isn’t a firing offense, what is?


Inside Scoop from the People who Are Costing Fox News Millions in Revenue

I’ll let you in on some inside scoop. I know and have talked to both the people at Color of Change and StopBeck, the two groups that have successfully convinced 296 advertisers that Glenn Beck is bad for their brand. They aren’t quitting their efforts any time soon. Their work is dismissed by Murdock and Fox because they don’t want to admit how powerful it is. In the US the other media outlets also don’t want to talk about how powerful this action is because they are afraid they will be next. So they downplay it, mock it and pretend that people like Lou Dobbs was fired from CNN because of the sudden change of heart from CNN executives. BS. It was because groups like Presente and BustaDobbs convinced advertisers to leave his show. CNN wanted to stop losing advertisers. They didn’t want to act as the sugar daddy for Dobbs who should be making them revenue. Murdock has a long fuse when it comes to supporting money-losing entities, but at some point he needs to at least come clean to you and the other institutional investors and explain how long he will keep a liability that was an asset on the payroll.

Cato, please tell NewsCorp that Beck needs to generate more revenue or he’ll be pushed off of Fox. They will listen to you.



A brain in a box.