NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Monday, July 11th, 2011

Rupert Murdoch’s empire in crisis following News of the World closure

Rupert Mur­doch’s News of the World may have print­ed its final edi­tion yes­ter­day, but the fall­out from the uneth­i­cal and like­ly ille­gal activ­i­ties of its for­mer employ­ees con­tin­ues to swell. The phone-hack­ing scan­dal is beyond a headache for Rupert Mur­doch — it’s become a cri­sis that is threat­en­ing his entire media empire.

Here’s a roundup of the most recent devel­op­ments since late last week:

  • On Fri­day, police arrest­ed Prime Min­is­ter David Cameron’s for­mer spokesman, Andy Coul­son (who was in charge of the News of the World while it was try­ing to cov­er up its activ­i­ties) and ques­tioned him about the phone hack­ing scan­dal. He was released sev­er­al hours lat­er, but his trou­bles are far from over. Cameron is under fire for his deci­sion to hire Coul­son and is also being pres­sured to come out against News Cor­po­ra­tion’s bid for BSkyB.
  • The Guardian is report­ing today that scum­bags work­ing for Mur­doch papers (not just News of the World) harassed for­mer Labour Prime Min­is­ter Gor­don Brown for years. They evi­dent­ly tried to get into his voice­mail, his bank account, his legal file, and fam­i­ly med­ical records.  “Brown was tar­get­ed dur­ing a peri­od of more than 10 years, both as chan­cel­lor of the exche­quer and as prime min­is­ter. Some of the activ­i­ty clear­ly was ille­gal. Oth­er inci­dents breached his pri­va­cy but not the law,” the arti­cle says.
  • The BBC’s busi­ness edi­tor reports that he has seen some reveal­ing emails that show that News of the World appar­ent­ly paid a police offi­cer assigned to pro­tect the roy­al fam­i­ly to get access to sen­si­tive con­tact infor­ma­tion. “In one of the dyna­mite e‑mails, Clive Good­man — the paper’s dis­graced for­mer roy­al edi­tor — was request­ing cash from the news­pa­per’s edi­tor, Andy Coul­son, to buy a con­fi­den­tial direc­to­ry of the Roy­al Fam­i­ly’s land­line tele­phone num­bers, and all the phone num­bers — includ­ing mobiles — of the house­hold staff,” the BBC’s Robert Pre­ston says.
  • The Dai­ly Mir­ror is report­ing that a for­mer New York police offi­cer is alleg­ing that News of the World employ­ees want­ed to pay him to retrieve voice­mail record­ings of vic­tims of the Sep­tem­ber 11th attacks. The Mir­ror quot­ed its source (who is not named or described) as say­ing, “His pre­sump­tion was that they want­ed the infor­ma­tion so they could hack into the ­rel­e­vant voice­mails, just like it has been shown they have done in the UK. The PI [pri­vate inves­ti­ga­tor] said he had to turn the job down. He knew how insen­si­tive such research would be, and how bad it would look.”
  • Forbes reports that a group of News Cor­po­ra­tion share­hold­ers has amend­ed a class action law­suit they filed in Delaware chancery court against Mur­doch and his board to take into account the events of this week and last. The suit, trig­gered months ago by a sweet­heart deal, alleges that Mur­doch and his fam­i­ly have been using News Cor­po­ra­tion to enrich them­selves at share­hold­ers’ expense. The updat­ed com­plaint con­tends:

    Through­out his tenure, Mur­doch has treat­ed News Corp like a fam­i­ly can­dy jar, which he raids when­ev­er his appetite strikes. Ignor­ing the dis­tinc­tion between the busi­ness of a pub­lic cor­po­ra­tion and a fam­i­ly busi­ness, the Board has repeat­ed­ly per­mit­ted Mur­doch to: (i) inter­twine ram­pant nepo­tism in the con­duct of Com­pa­ny busi­ness; (ii) under­take actions designed to main­tain his con­trol over News Corp; (iii) use News Corp resources for his own per­son­al and polit­i­cal objec­tives; and (iv) reward him­self hand­some­ly with exces­sive com­pen­sa­tion.

Mean­while, Mur­doch’s bid to take over BSkyB appears to be in increas­ing dan­ger of being nixed. Britain’s Labour Par­ty has called for a vote on the mat­ter, and the Lib­er­al Democ­rats have sig­naled they’ll back Labour in vot­ing to block News Cor­po­ra­tion’s acqui­si­tion of the broad­cast­er. Deputy Prime Min­is­ter Nick Clegg, the leader of the Lib­er­al Democ­rats, told the BBC:

Rupert Mur­doch is now in town in Lon­don seek­ing to sort things out. I would sim­ply say to him, look how peo­ple feel about this. Look at how the coun­try has react­ed with revul­sion to the rev­e­la­tions.

So do the decent and sen­si­ble thing and recon­sid­er: think again about your bid for BSkyB.

News Cor­po­ra­tion has for­mal­ly with­drawn its (fake) promise to make Sky News inde­pen­dent so that it could avoid a deep­er reg­u­la­to­ry review of its BSkyB bid. The move means that the deal will now go before Britain’s Com­pe­ti­tion Com­mis­sion. Mur­doch and his exec­u­tives may have decid­ed to do this out of the real­iza­tion that their takeover bid had already been jeop­ar­dized for the time being. They may be hop­ing to keep the bid alive long enough to weath­er the storm. Whether their strat­e­gy will actu­al­ly work is anoth­er mat­ter. We hope it does­n’t.

As of the time that this post was writ­ten, News Cor­po­ra­tion’s stock was down more than 7% in after­noon trad­ing. (These are Class B shares).

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One Comment

  1. I know exact­ly what you’re say­ing here. It’s just a stun­ning turn of events this past week. Could a media empire of News Corp.‘s size com­plete­ly unrav­el and… become worth­less? There are so many valu­able assets in the port­fo­lio but future earn­ings are going to be hor­ri­ble with all the law­suits and busi­ness clo­sures and fir­ings, etc. With the excep­tion of his U.S. Net­works, there real­ly isn’t a bright side.

    I just won­der how this will affect his month­ly book club meet­ing that he has with oth­er well known media moguls. Sun Val­ley was painful enough to watch.

    # by Jill Kennedy :: July 12th, 2011 at 10:36 AM