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:
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News Corporation has formally withdrawn its (fake) promise to make Sky News independent so that it could avoid a deeper regulatory review of its BSkyB bid.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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