Spotify’s arrival on the New York Stock Exchange is revolutionary only in one way. The music streaming service refused the usual public offering of stock and chose a “direct listing”, in which the price of the shares is set by buyers and sellers in the market without the help of investment bankers’ expensive underwriting and “stabilisation” services. Smart move: Spotify will have saved itself a few tens of millions of dollars in fees.
But, in another respect, Spotify has become a public company in a depressingly familiar fashion. Its founders are wedded to keeping vice-like control via a share structure with unequal voting rights. For unequal, read unfair: Daniel Ek and Martin Lorentzen own 38.9% of the ordinary shares but they have created “beneficiary certificates” with super-charged voting rights that only they can own. Include those holdings and Ek and Lorentzen have 80.4% of the votes.
As the prospectus is obliged to concede: “If our founders act together, they will have control over the outcome of substantially all matters submitted to our shareholders for approval, including the election of directors.” Put another way, for as long as the duo stick together, they are unsackable.
Most founders of big tech firms trample on the one-share one-vote principle, of course. Google, Facebook, Groupon and Snap, owner of Snapchat, all have share structures with unequal voting rights. Apologists tend to offer the thin justification that the founders are visionaries who must have freedom to play by their own rules.
The argument was always self-serving nonsense and, after Mark Zuckerberg’s inept handling of the fallout from Facebook’s data breach, one would hope that the dangers in formalising lack of accountability are now obvious. New York City’s pension fund, with a $1bn stake in Facebook, has got the message – it wants Facebook’s board to have an independent chair and outside directors who know more about data and ethics.
Spotify could have opted for better governance at the outset. It’s out of Sweden, where super-charged voting stock is not uncommon but the flipside is always strong protection for the rights of minority shareholders. Instead, Ek and Lorentzen have copied Silicon Valley’s obsession with complete control in all circumstances. Shame.
Disney waves magic wand for Murdoch
It always seemed unlikely that the future independence of Sky News would prove an insurmountable obstacle to the Murdochs’ £11.7bn full takeover of Sky, and here comes a belt-and-braces remedy: if the culture secretary, Matt Hancock, plays rough, the news channel will simply be sold to Disney.
Critically, that sale would happen even if Disney fails to complete its $66bn (£47bn) takeover of most of the Murdochs’ 21st Century Fox empire, including the current 39% stake in Sky. That clause looks to be a clincher. It is virtually impossible to object to a Fox purchase of Sky if Sky News would be flipped immediately to a new owner that carries no media plurality baggage.
What’s in it for Disney? Its chief executive, Bob Iger, probably hasn’t been gripped by a sudden urge to own a loss-making UK news channel. Rather, he is clearing the decks for the main event, as he will see it, which is the Disney–Fox deal. The side-arrangement on Sky News suggests a strong desire to defeat Comcast’s cheeky attempt to bag Sky for itself.
If a full-blooded takeover battle is in prospect, it’s great news for Sky’s outside shareholders. A share price of £13.25, up 2% on Monday, was barely imaginable before the Murdochs jumped into action in December 2016. The share price then was just 750p.
De La Rue appears to be losing it
If you’ve missed out on a £400m contract you expected to win, you’ll probably try anything to get the decision reversed. But De La Rue risks looking ridiculous in attempting a legal review to get its hands on the contract to print the UK’s post-Brexit passport. If the Franco–Dutch group Gemalto’s bid was technically secure, and cheaper than De La Rue’s offer by £12m a year, where is the problem?
De La Rue’s talk about being the best and most secure option “in the national interest” suggests this is really about stirring the patriotic storm and hoping ministers are blown into submission. It’s pretty low behaviour. De La Rue, which operates around the world, would rightly be outraged if it was on the receiving end.
