As global media titans like Comcast, Disney and Rupert Murdoch do ferocious battle, someone needs to be looking out for the consumer’s interest

For many decades giant American cable companies possessed what seemed like a licence to print money.

By bundling their exclusive blockbuster entertainment content such as live sports with other programming, which was still desirable but which had less mass appeal, they could effectively compel customers to purchase expensive all-in cable subscriptions. The profit margins were extraordinarily plump.

Then along came Silicon Valley and spoiled the party.

By offering relatively cheap online streaming services like Netflix and Amazon Prime, these newcomers created a business model with the potential to destroy the cable empires.

Why buy an expensive cable cord subscription when you can simply use your broadband connection to access your home entertainment through your internet-ready TV, or your computer, or your tablet, or even your phone?

And what if those cash-rich Silicon Valley companies started to seriously compete in bidding wars for those desirable exclusive sports, movie and TV content rights, currently in the hands of the cable companies? What if they started to make the content themselves by establishing studios?

The mass “cord cutting” by Americans, long forecast by industry analysts, hasn’t begun yet. Americans are slow to change their habits. Many have Netflix alongside their cable packages. Yet it’s still clear which way the content wind is blowing, especially with younger “digital natives” far less likely to be in the habit of subscribing for cable.

So how do the cable companies respond? If you can’t beat them join them is one option. Why not buy smaller digital streaming companies and beef them up into potential rivals to the big Silicon Valley players?

Some cable companies have already diversified, acquiring content creators such as movie studios and news networks. They could leverage that exclusive content to serious challenge the incumbents in the battle for digital subscribers.

That was likely a significant motivation for Disney’s recent $66bn bid for 21st Century Fox.

Another tactic for the cable leviathans is simple acquisitions: get even bigger and expand into new cable markets abroad. Control more broadband distribution networks.

Large revenues means larger cash flows, which means more investment firepower for new content production and bidding wars for content rights.

That’s how best to understand Comcast’s dramatic attempted gazumping of 21st Century Fox’s bid for Sky today.

Where is the public interest in all this? The focus here in the UK in relation to the Sky takeover battle has, understandably, been on preserving the plurality of the UK news media environment.

Such concerns fell away somewhat when Rupert Murdoch agreed to sell the majority of his 21st Century Fox business to Disney. Unlike Murdoch, the home of Mickey Mouse doesn’t already control any major British news brands.

And there are no obvious news plurality issues in relation to Comcast, the company behind a couple of large US news broadcasters, owning Sky News. MSNBC is not a big influencer of public opinion on these shores.

It’s possible there might even be more welcome investment in UK TV news if the deal goes through.

Yet there are, nevertheless, grounds for concern.

Competitive and dynamic as the Western world’s media landscape seems on the surface, size still confers power, both commercial and political.

It’s reasonable to be suspicious when the same company potentially provides your home broadband, streams your content, creates that content and also provides your news. There are a lot of potential barriers to customers switching there. Or it’s possible to imagine them being erected. It’s perhaps not a coincidence that, as well as having the largest revenues among media companies in America, Comcast is also one of the firms most complained about by consumers.

This ferocious global battle among giant multinational media and technology conglomerates for content and distribution networks can feel like a remote drama peopled by stupidly-rich oligarchs, moguls and financiers. Perhaps a fitting subject for a new Netflix drama. Fetch the popcorn.

But make no mistake: what these titans are all battling over is our attention and access to our wallets. And it’s essential that our interests as consumers are adequately safeguarded by regulators.

The understandable anger of Britain’s striking lecturers

"The students are revolting!" is a familiar cry. Not so much for their teachers. But we nevertheless heard it last week as UK academics kicked off a strike in protest over plans by university bosses to downgrade their pension schemes. Instead of a defined benefit arrangement - a guaranteed annual payout from employers on retirement based on salary - they'd receive a defined contribution. That is, the cash accrued with individuals and employers feeding cash in a pot until the point of retirement.

In the old days, students might have welcomed (more) days in bed. But in this era of £ 9,000-a-year tuition fees many (though not all) are less understanding of industrial action from their tutors. Although pension reforms would apply to lecturers' future contributions rather than their accumulated entitlements, they are right to think reform would make them worse off in retirement.

Defined benefit schemes in the private sector have been closing to new entrants for many years because they are deemed too expensive and burdensome for employers. The numbers of people in active schemes has more than halved over the past decade. Defined contribution is now the norm almost everywhere except in the public sector. So is this part of that inexorable trend? Are lecturers, selfishly, standing athwart history yelling stop? 

It's worth examining why academics are being asked to swallow this reform. The most recent annual report from the Universities Superannuation Scheme says its investment portfolio has done well lately, rising by 12 per cent a year over the past five years, taking total assets in the scheme to £60bn in 2017. Indeed, that strong performance is the reason given for the scheme awarding large pay rises to its investment managers, including the scheme's chief executive, last year.

So what's the problem? That the scheme's liabilities have risen even faster than assets since 2014, hitting £73bn. Why? Have there been big pay rises for academics over that time? An unexpected surge in members' longevity, meaning the scheme will need to pay out pensions for longer? No.

The answer is that it's the accounting treatment of those future pension promises. Government bond yields fell by around 1.5 percentage points between 2014 and 2017. That means the discount rate conventionally applied by auditors to a scheme's future liabilities also shrank. The upshot is that the present value of liabilities has risen substantially and the scheme's deficit (liabilities minus assets) more than doubled from £5.3bn to £12.6bn in three years.

The administrators don't think the deficit is actually that big. But they've still downgraded their estimates of the appropriate discount rate for the scheme's liabilities, partly on the basis they think investment returns may well be lower in future than in recent years, and they now put the deficit at around £6.1bn.

This, they say, is simply too large for comfort and supposedly demands substantive remedial action.

Universities don't want to increase their employer contributions, claiming this would mean less resources for students, so they say the only option is to reduce the generosity of the scheme for members.

Like a hung over student in an early-morning seminar, many non-specialists will be forgiven for struggling to follow that explanation. Suffice to say, there are grounds for being suspicious of these actuarial methods of estimating liabilities and for the general view that a scheme's deficit, even one of this extreme size, should be a cause for alarm and the justification for drastic cuts in entitlements.

For one thing, as interest rates rise, defined benefit schemes' liabilities will automatically shrink. UK 10-year sovereign bond yields have already risen around 30 per cent on the levels of March 2017 when the scheme presented its last annual report, and that alarming near £13bn deficit.

Aggregate data on the accounting value of all defined pension scheme deficits from the UK's official pension fund lifeboat, the Pension Protection Fund, shows deficits are extremely sensitive to market interest rates, with swings from just £1.2bn in 2011, to £244bn in 2015, and back down to £162bn in 2017.

Deficits estimated in other ways are also highly sensitive to eminently challengeable assumptions about future rates of returns on assets.

Defined benefit pension scheme deficits should certainly not be casually dismissed. Employers clearly have a responsibility to take prudent action to ensure they are an in a position to meet their pension promises to employees. Yet the brute fact is that accounting deficits matter more for some pension schemes and employers than others. Large schemes with significant deficits attached to ailing companies, as we've seen in the outrageous recent cases of BHS and Carillion, are particularly vulnerable.

But the chances of the entire British university sector going bust and all 390,000 lecturers being dumped into the UK's pension lifeboat scheme seem pretty remote.

Whatever view one takes over whether academics' defined benefit scheme should survive, or whether they should have to put up with a defined contribution scheme like most of the rest of us, the question should really be determined by considerations of fairness, not panic over an inherently volatile accounting deficit.

And it's not surprising remuneration hikes for investment managers have not gone down well while members are effectively being asked to bear future cuts, The accounts for the university lecturers' pension scheme show its underlying costs jumped from £108m to £122m in 2017, driven, in considerable part, by those performance bonuses. This underlines another germane point for this particular pensions showdown and also others. The bigger threat to most people's standard of living in retirement is not pension scheme deficits but the excessive fees extracted by the managers of their pots.

Ministers should stop appeasing obscurantist Tory backbenchers and publish their internal Brexit analysis

One would need to have been living under a rock not to know what the headline findings are from the Government’s internal economic modelling of Brexit scenarios.

All the outcomes – from departing with no trade deal, to staying in the single market – are projected to leave the British economy worse off relative to otherwise, according to last month’s well-publicised leak. So Brexit, according to the Government’s own modelling, will do economic damage to the UK.

Yet the Government refuses to publish the underlying research, even though ministers have been forced to agree to make the document available to MPs within the confines of Parliament. Apparently they believe publication would undermine the UK’s negotiating position with the rest of the European Union.

Why internal research which backs up what every other credible independent modelling exercise has found to be damaging is left to our imagination.

And, in fact, the real reason for the publication refusal was identified by Damian Green in his first interview since his resignation this week.

“There’s a great problem of politicians who won’t accept evidence,” he told the BBC. 

In other words, pro-Brexit ministers and the Brexit fundamentalists on the Tory backbenches don’t like the findings and so don’t want them to be released.

Green thinks his former ministerial colleagues should buck up and simply publish the work. “Let’s have this argument in public, that’s what democracies do,” he implored.

Perhaps the advice of technocratic experts is getting through. Did Green maybe hear Robert Chote, the head of the Government’s official spending watchdog, the Office for Budget Responsibility, who suggested earlier this month it had been a mistake to try to keep the work concealed in the first place.

Perhaps Green had an ear open when the Bank of England Governor, Mark Carney, at his most recent press conference likewise suggested the work should be released “so there’s an as informed a debate as possible.”

Yet does publication actually matter now, given we already know the bottom line results?

Beyond embarrassing those pro-Brexit ministers, who informed us that leaving the EU would be a great economic fillip for the UK, is there anything to be gained from it?

The answer is yes.

As Paul Johnson, director of the Institute for Fiscal Studies, argues in an article for Prospect magazine, it’s less the precise numbers produced by such modelling exercises themselves than the general picture that really matters.

And the general picture has been that the vast majority of qualified trade economists are confident the UK will grow more slowly outside the single market and customs unions due to it being, by definition, more difficult to export to our biggest trading partners.

“Although not quite 100 per cent certain, these sorts of claims aren’t far off,” Johnson explains. “The exact impacts, on the other hand, are highly uncertain. In public debate, the inevitable arguments about the exact number somehow end up clouding the solid general conclusion.”

His reference to the “exact impacts” represents a powerful reason for full publication of this work.

The Brexit minister Steve Baker, one of those politicians who has a problem accepting evidence, recently dismissed economic forecasts as “always wrong”.

And many people, including some high-profile journalists, seem to believe the stronger-than-expected performance of the UK economy since the June 2016 Brexit vote has borne out the truth of this claim.

Yet they have failed to grasp the crucial fact that all the long-term Brexit impact projections have been “conditional”. That means they are predicated on certain assumptions about the behaviour of the economy independent of the impact of the factor (leaving the EU) they are trying to model.

The actual path of the economy will almost certainly be different to those sketched out because lots of other unpredictable things are happening to our economy. For instance there may be stronger overseas demand for our exports as other countries experience an unanticipated boom, or perhaps, acting in the other direction, even weaker domestic productivity growth than feared. This can push overall GDP up or down relative to the conditional forecast.

But it’s a basic error to conclude from this aggregate divergence that the assessment of the impact of the factor being studied – Brexit – was wrong.

There is a world of difference between unconditional and conditional economic forecasts. Many people, even those who would be shocked at the suggestion they are unwilling to accept evidence, clearly need to be educated in that distinction.

But it’s hard to learn a lesson when ministers keep their civil servants’ modelling assumptions secret and when the basic nature of the forecast – conditional or unconditional – itself remains under lock and key.

And that’s why we should join Green in calling on ministers to stop appeasing obscurantist Tory backbenchers and get on with publishing this research in full.

The only thing worse than too much work is not enough of it

How does a 28-hour working week sound to you? More time to look after young children, or elderly parents? Or just more time to relax, to pursue hobbies? Appealing? Then perhaps consider a move to the Federal Republic of Germany before the Brexit drawbridge goes up.

After protracted talks and even a series of strikes, steel workers in Germany last week succeeded in getting their bosses to agree that they will be required to supply no more than 28 hours of labour a week if they don't want to. "The agreement is a milestone on the way to a modern, self-determined world of work," proclaimed the union leader Jorg Hoffman.

There is talk of similar arrangements being rolled out to other sectors of the German economy. "The credo of the new age: time is more valuable than money," was the response of the German business paper Handelsblatt to the deal.

But many people here in the UK don't seem to feel that way. For them, the new German credo of a shorter working week does not appeal. They want more hours, not fewer of them. Or at least that's what the data suggests.

The numbers of UK workers saying they wanted more hours than they were getting shot up during the last recession, according to the Office for National Statistics. At its peak, this pent-up demand was equal to around 45 million hours a week. It has since come back down to 38 million hours, but remains well in excess of the roughly 25 million level that consistently prevailed in the years before the 2008-09 recession.

On the surface the British labour market seems pretty tight, with the headline unemployment rate at just 4.3 per cent, lows not seen since 1975. The Chancellor, Philip Hammond, has even spoken of the UK approaching "full employment". But this particular measure of desired hours suggests there's still slack in the UK labour market and that many people would work more hours if only they were available.

Yet that's not the end of the story. In recent years the number of people desiring fewer hours than they are currently working has also risen. Before the recession this was equivalent to around 30 million hours a week in total. Now it's running at around 35 million, or almost equal to the aggregate extra desired hours figure.

What's going on? Why do so many people in our economy simultaneously want to work more hours while so many other people desire to work fewer hours? And why are both groups apparently rising? The truth is that that we don't really know for sure. This is a puzzle, to sit alongside some of the other mysteries of the UK economy such as the fact average wages are still growing incredibly weakly and productivity growth is still so lacklustre.

But labour market experts David Bell and David Blanchflower have been mulling some possible explanations. In a new paper for the National Institute of Economic and Social Research, released last week, the two academics hypothesise that the "monopsony" power of employers could have grown.

Monopsony describes a scenario where firms have a high degree of power over workers because there are no (or few) other local employers in competition for their labour. Bell and Blanchflower suggest that monopsonistic firms might have the ability to vary the hours they offer their workforce based on their own convenience, rather than the preferences of their employees.

They further speculate that the Government's tightening of the benefit sanctions regime in recent years (where the dole is withheld from people deemed not to be doing enough to find work) might have effectively reduced the ability of some workers to quit and look for another with a different employer. They may have resulted in many people effectively being trapped with lousy bosses.

But what about the fact that so many people also want to work fewer hours? Bell and Blanchflower also wonder whether monopsony power might have something to do with this as well. Employers could be sweating some of their workers, presumably the more productive ones, in the knowledge that those workers also have fewer outside options.

To test some of these hypotheses, Bell and Blanchflower looked in more detail at the characteristics of the workers who want more hours. What they found is that they tend to be younger, unskilled and frequently self-employed. Meanwhile, the workers who want fewer hours are more likely to be older, more skilled and more experienced. The fact that many of those who desire more work, but aren't getting it, are self employed suggests there could well be an overlap with gig economy and zero-hour contract workers.

This is not conclusive, but it's consistent with the theory of higher employer power, and that people are often stuck in suboptimal job "matches".

One of the superficially odd features of the rise of the gig economy is that many (not all) who work for companies such as City Sprint and Deliveroo are manifestly unhappy with their pay and conditions (certainly unhappy enough to demonstrate and lobby for fair treatment) and yet they don't seem to quit to work for better employers.

This points us to the conclusion that workers, at least, in this section of the labour market, have rather fewer outside options than we would assume by merely looking at the headline jobless rate and that competition for workers among firms is not as intensive as it would be in a genuinely tight labour market.

The Government published its response to the Taylor Review on the gig economy last week. It predictably ducked the major challenges of protecting vulnerable workers in this sector. Instead of legislation to ensure employers are clear about the status of workers it promises merely another consultation. And there was nothing on narrowing the damaging employee-self-employed tax wedge.

Yet the Bell and Blanchflower work suggests the Government's challenge here may well be even bigger than the one it ducked. It might require dismantling the market power of many employers and finally creating enough demand in the UK economy so more workers can be confident in walking away from those lousy bosses

The stock market is not the economy

Live by the stock market boast, perish by the stock market boast. "The stock market has smashed one record after another, gaining $8 trillion in value," Donald Trump bragged in his State of the Union address only last week. "That is great news for Americans' retirement, pension and college savings accounts."

And now, with the US stock market down more than 6 per cent in just two days of trading? With around $1.6 trillion (£1.1 trillion) wiped off the value of US companies since Friday? What does that mean for the savings of ordinary Americans? What does that say about the economic prowess of the President of the United States who has presided over the drop? Where are the tweets from the braggart-in-chief?

Nemesis has followed hubris for Trump, at least when it comes to the stock market. And how richly deserved it is. Yet this is, sadly, no morality play. Trump's learning curve is our world. And it's not just in the US were stock markets are sharply down. Some $4 trillion has been shed from equity markets around the world in the past week. So what do these market sell-offs mean for the global economy? What do they mean for all of us? 

The first thing to do is to appreciate something that was apparently beyond Trump: that the stock market is not the economy. Stock markets can boom when GDP is stagnant, when wages are flat, when living standards are going nowhere. And they can fall when economies are picking up speed and life, for many people, is getting better. The latter actually describes the current situation.

Indeed, one popular explanation for the sharp sell-offs in equity markets in recent days among analysts is that it is actually a response to the strength of the US and global economy. There was a tentative sign last week that US average wages, after more than a decade of weakness, might finally be creeping back up to the rates of growth seen before the global financial crisis and the great recession.

The implication of that, so the logic goes, is that the US central bank, the Federal Reserve, will have to put up interest rates faster in order to stop the domestic economy overheating and inflation getting out of hand. Lower interest rates automatically boost the prices of financial assets, including stocks and shares, so higher interests should have the opposite impact. So what we are witnessing is a natural correction. And because the US economy is still the world's largest and because the US dollar is the global economy's "reserve" currency what happens there is impacting on financial markets everywhere.

Perhaps. Another explanation is that US financial markets, and to some extent those of the rest of the world, have been in the grip of irrational euphoria for some time. One often-cited gauge of the value of US markets, which compares large companies' earnings to their stock price, suggests they are more overvalued than at any time except before the turn-of-the-millennium internet stock slump and the Wall Street Crash of 1929. Another much-watched general market volatility index is spiking too.

That could suggest what we are seeing is not so much a natural, short-term, correction, but the bursting of a bubble. In other words, there could be much more to come.

So which is it? The answer is that it's impossible to say with any confidence. And the people who claim they know with certainty really don't. What we can say is that even if a stock market bubble is in the process of popping, that does not imply that the real economy - whether in the US, the UK or anywhere else - is set to implode too. It does not necessarily mean we are heading into another recession, where companies go bankrupt and people lose their jobs.

Equity markets have slumped before without causing a recession, most obviously after the internet bubble burst in 2000. The FTSE 100 fell more than 50 per cent in the following years, but there was no recession in the UK.

More recently, the Chinese stock market in 2015 dropped more than 40 per cent in months but its domestic economy was largely unruffled. In 1987 US stock markets plunged by more than 20 per cent in a single day - Black Monday - but there was no discernible impact on the real economy. The large stock market drops in 2008-09 coincided with the global financial crisis, but they were not the cause of the crisis itself. Responsibility for that genuine economic disaster lay with the fragility of the global banking system.

Equity markets do matter for ordinary people. But they matter in entirely different ways than Trump thinks and many commentators imply. The performance of the companies in an index matters for ordinary people over the long term. That's because the stock of companies is a repository for peoples' savings. And most people are not saving for tomorrow, or next week, but for decades in the future.

Public markets also matter because large listed firms in most countries tend to be major employers, significant sources of private investment and productivity-enhancing innovation. It's important that they the companies in them are subject to sensible regulation, feel competitive market pressures, that they have good corporate governance, that they invest for the future and the right financial incentives act on their managers. All those factors should concern us deeply.

But the short-term ups and downs in stock prices are largely meaningless - except, of course, if you're a speculator or a monumentally hubristic politician.

Sometimes financiers get it right and perform a valuable public service

The world of high finance sounds rather like a zoo. It's not only the bulls and bears of the stock market, or the hawks and doves that flock around the central banks.

Investment banks are "vampire squids". Hedge funds are "locusts", speculating against decent companies and entire countries until they collapse into bankruptcy.

Jordan Belfort, the drug-addled conman who pushed dodgy stocks of hopeless companies on poor Americans in the 1990s, styled himself as the "Wolf of Wall Street".

And there is, sadly, a lot of truth in such stereotypes. Finance is often parasitic on the real economy and predatory in its behaviour towards clients and customers.

But critics and reformers should also recognise when some financiers do not conform to this negative characterisation; and to acknowledge when the industry performs a broad public service.

The first people who recognised that something was financially awry at the giant outsourcing firm Carillion were not regulators. They weren't civil servants. They certainly weren't the company's auditors. Nor were they the firms' bankers or passive asset managers, who invested in Carillion on behalf of pension funds and insurance companies.

It was hedge funds. Their research on the company revealed that Carillion was paying its suppliers very late - a classic sign of possible financial distress. They also noticed that Carillion was piling up large amounts of off-balance sheet debt. Hedge funds such as Marshall Wace and CapeView Capital started taking substantial short positions in Carillion (betting on the share price falling) as early as 2013. If only ministers, who continued bunging large public contracts to the firm right up until its demise, had been similarly on the ball.

The hedge funds didn't kill Carillion - its incompetent management did that. The hedge funds were effectively sounding a warning, albeit one that wasn't heeded by enough people.

The classic image of "sell-side" analysts working for stockbrokers and investment banks is that they are hopelessly compromised, tailoring their views on the prospects of firms to please their existing (or potential future) corporate clients, rather than to serve the interests of actual investors.

It's often true - but not always. Two years ago another outsourcer, Capita, was riding high in the stock market, its share price at £ 11, and was widely approved of across the City. But one analyst at the stockbroker Panmure Gordon, Michael Donnelly, broke with the consensus and cautioned clients about the sustainability of the business based on his own reading of the company's data. Last week Capita's share price fell below £ 2 and the new chief executive admitted that the company had, in fact, been appallingly run for years. Donnelly's warning was vindicated.

Purple Bricks is one of the new breed of online estate agents. Managers have claimed they successfully sell around 90 per cent of the properties they handle within 10 months - a comfortingly high proportion for homeowners thinking of paying the roughly £ 1,000 flat up-front fee for its services. But Anthony Codling, an analyst for the investment bank Jefferies, said in a note last week that his own research (ploughing through Land Registry data) suggested Purple Bricks is actually only selling around half of the properties on its books in that time, which is in line with the rest of the estate agent industry. The share price of the company, which is in the midst of an international expansion, sank in response.

Purple Bricks has rejected Jefferies' data, although it hasn't released their own to rebut it. But the point here is not the truth of any particular view on a company's finances or growth prospects, but one pertaining to the kind of behaviour we want from asset managers and financial analysts. These are instances of financiers ignoring the rubber stamps of auditors, brushing aside the confident assertions of company executives, going against the herd, and performing their own, original, research.

This is also what the small band of hedge fund managers profiled in Michael Lewis' The Big Short did with regard to US "sub-prime" mortgage loans that fuelled the disastrous international credit bubble before 2008.

The economist John Kay, who wrote an official review of equity markets for the Government in 2012, recommended that asset managers should have deep knowledge of and regular engagement with the managements of the companies in which they invest. This will involve digging out inconvenient facts.

"Obtaining better information about companies is essential to the efficiency of markets and society," he says.

The many critics of finance are quite right. The sector unquestionably needs wholesale reform. The wolves and vampire squids must be defanged. But high finance is not going to disappear, at least not while ordinary people have savings and pensions that they want to be invested in decent companies with reasonable growth prospects.

As well as getting justly angry at finance's many abuses, we need to have a vision of what we want the sector to be and the socially useful job we ultimately want financiers to perform. The past month has given us some signposts.