After walloping McMillan Shakespeare, Rudd takes aim at News Corp

The prime minister gets personal.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Newly re-installed Prime Minister Mr Kevin Rudd isn't pulling his punches against companies and business leaders as he steamrolls towards Election Day. It started with the PM announcing significant changes to the fringe benefits tax (FBT)which led to McMillan Shakespeare's (ASX: MMS) share price crashing from $18 to a low of $6.75. Whether you agree with the policy changes or not, most would agree the PM could have gone about it in a better way.

As the commotion subsided last week, the PM turned his attention to a comment by New News Corp's (ASX: NNC) Chairman Rupert Murdoch questioning just how a Rudd government would fund the National Broadband Network (NBN). Rudd seemed to take umbrage with Murdoch's question and fired back, accusing Mr Murdoch and News Corp of self-interest in not seeing the Labor government's NBN framework succeed. The PM suggested that pay-TV business Foxtel — half owned by Newscorp and half owned by Telstra (ASX: TLS) — would face less competitive threats under the Coalition government's broadband proposal.

Given the increasingly poor near-term outlook for the Australian economy and the weakening budget position – it would seem a fair question by Mr Murdoch – particularly given the dire need to upgrade so many other hard infrastructure assets across the country.

Fairfax (ASX: FXJ) also got involved and appeared to side with the PM, or perhaps it was just taking the opportunity to criticise its main competitor News Corp, by reporting that, "News Corporation has a deep commercial interest in defeating the government and subverting the National Broadband Network."

While on the one hand all this can just be seen as 'politicking', it is interesting to consider the technical differences in Labor's and the Coalition's broadband policies.

Labor's version of the NBN, which will provide fibre-to-the-home as opposed to fibre-to-the-node (FTTN), is a better option in terms of providing bandwidth. While Turnbull rightly argues that 'most' homes should be perfectly well served by FTTN, some are suggesting Turnbull isn't allowing for the significant increase in bandwidth required should  internet protocol TV (IPTV) become widely adopted. Thus Labor's NBN would create the infrastructure to allow competitors to set up IPTV channels to rival Foxtel whereas arguably a Coalition's FTTN would not make this competition viable.

Malcolm Turnbull, the Shadow Communications Minister, issued a response stating that under the Coalition's broadband strategy the roll out would occur much quicker and if anything this speedy roll out would damage Foxtel sooner.

However according to Emma Dawson, the Exec Director of the Institute for a Broadband Enabled Society and also a member of the ALP, Turnbull is being clever by saying FTTN can deliver IPTV by ignoring "the reality of broadband use in the home: there's no allowance for the use of other applications at the same time as the operation of IPTV."

Foolish takeaway

The dive in McMillan Shakespeare's share price is a stark reminder to investors of the influence politicians and government policies can have over the future outlook for companies. Foxtel is arguably the engine room of News Corp now that it has split from Twenty-First Century Fox (ASX: FOX). The vulnerability of News Corp to any negative policies affecting Foxtel is cause for shareholder concern.

Interested in our #1 dividend-paying stock? Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

More reading


Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »