Wednesday, October 12, 2011
Discovery And News Corp Flunk Research Firms Governance Tests
It’s unsurprising to determine that News Corp was among 10 companies given an “F” grade by corporate research firm GMI Ratingsfor management or accounting practices that may make sure they are dangerous bets for traders. But Discovery Communications — a Wall Street darling?The GMI Risk List, out today, jams the cable funnel owner for getting”a complex system of share classes and director associations” that provide”two principal investors disproportionate treatments for the organization.”GMI adds that Discoverys compensation practices “do not hold professionals to stringent performance standards.” What’s more, you will find “a quantity of concerns about expense recognition and the standard from the balance sheet, including high amounts of goodwill and debt.” Discovery’s stock has risen about 200% during the last 3 years — an issue Fortune reported recently in naming it among the “fastest growing companies” — even though it’s off 2.6% this year. For News Corp, GMI notes that although there is a “short-term investment impact” in This summer when theNews Around The Globe phone hacking scandal burst in to the open “the companys share cost has rebounded to the stage it loved prior to the scandal broke.” But News Corp’s “poor governance led to the recent problems, and will continue to put traders interests in danger.” Regardless of the resignation of large names including News Worldwide Boss Rebekah Brooks and Dow Johnson chief L'ensemble des Hinton — in addition to some changes around the board — “there is nothing indication that the standard from the companys governance is enhancing.”For example, GMI notes that “the companys analysis in to the phone-hacking scandal has been brought by company directors with strong ties to the organization and also the Murdoch family.” During the last couple of days investor advisoryfirmsInstitutional Investor Services and Glass Lewis made similar criticisms of News Corp, which the organization intensely declined.