SALON

Friday, May 4, 2012 1:07 PM UTC

Murdoch’s murky future

A UK report declares him "unfit" to run an international company. Here's what it means for his U.S. media holdings

By

Topics: GlobalPost, Rupert Murdoch,

Murdoch's murky future(Credit: AP)
This article originally appeared on GlobalPost.

LONDON — How do you solve a problem like Rupert Murdoch?

Global PostThat’s the issue now facing sections of his media empire after a damning British parliamentary report labeled the powerful press tycoon unfit to run a major international company.

A committee of British legislators who have spent months investigating the phone hacking scandal involving one of Murdoch’s leading UK newspaper titles concluded this week with a majority verdict that the 81-year-old was “not a fit person” to be at the helm of News Corp.

Their findings grabbed attention not just in the UK but across the Atlantic, where headlines in the New York Times, Washington Post and Murdoch’s own Wall Street Journal must have made uncomfortable reading for News Corp. staff and shareholders.

The committee’s judgment carries no threat of sanction, but with lawsuits pending in the US over hacking and the threat of possible prosecution under the powerful Foreign Corrupt Practices Act, it will offer little in the way of reassurance.

Having conceded that the British parliamentary inquiry was right to highlight “serious wrongdoings” at the now defunct News of the World title, News Corp. took issue with the “unjustified and highly partisan” verdict on its boss.

Murdoch himself issued a statement to staff admitting mistakes but declaring that “our business has never been stronger.” News Corp.’s board also issued a statement saying it had “full confidence” in its CEO and chairman.

However, with criticism of Murdoch continuing to mount in the UK, questions were being raised as to what extent the report would harm his business interests both here and in the United States, with some shareholders suggesting it was time to shift power out of Murdoch’s hands.

A day after the report, elements of his $50 billion media empire appeared to be attempting to distance themselves from Murdoch, not just by prominently reporting the committee’s scathing assessment, but by explicitly stating their independence of his command.

There was speculation that a small surge in News Corp. share prices in the wake of Tuesday’s verdict reflected anticipation that the company would soon divest itself of its troubled UK newspaper titles and set wheels in motion to reduce Murdoch’s influence over the company.

Rupert Murdoch is “finished in the United Kingdom,” wrote Michael Wolff, author of “The Man Who Owns the News,” an unauthorized biography of the News Corp. founder. “Understanding that Britain is a lost front, he will retreat to his U.S. stronghold. From New York, the process of disposing of the British papers, which, by reliable insider accounts, has begun, will hasten.”

Of primary concern in the UK is whether the “not a fit person” verdict will have any impact on a separate inquiry by British communications industry regulator Ofcom over whether News Corp. is a “fit and proper” owner of a lucrative 39.1 percent stake in prominent broadcaster BSkyB.

Any decision that would force News Corp. to offload its BSkyB holding would be a considerable blow to the media giant, which had hoped to buy the broadcaster outright but later abandoned the deal after the phone hacking scandal inflamed opposition.

On Wednesday, BSkyB’s chief executive, Jeremy Darroch, used the publication of record financial results to disassociate his company from Murdoch and — clearly wary of the threat to its prized broadcast license — talk up its annual $1.6 billion tax contribution to the British economy.

“I would emphasize that it’s important to remember that Sky and News Corporation are separate companies,” he told reporters. “We believe that Sky’s track record as a broadcaster is the most important factor in determining our fitness to hold a license.”

Aware of the potential damage his presence could bring to the company, Murdoch’s son James last month stood down as chairman of BSkyB, saying he didn’t want to be a “lightning rod” for criticism over the hacking scandal.

Speculation is now mounting over whether the News Corp. brand will also be vulnerable to critical, financial and legal thunderbolts if Murdoch senior resists shareholder efforts to usher him into a backseat role.

“I think you have to be careful about extrapolating from what has been an appalling set of circumstances around one newspaper group … to the continuing demise of News Corp.,” said Charlie Beckett, director of Polis, a media and society think tank at the London School of Economics.

Beckett said that while the parliamentary verdict would certainly cast a shadow over any News Corp. deals, mergers or takeovers in the future, there was nothing inevitable about the demise of the company or its subsidiaries.

Likewise, he said that while there was support for scaling down Murdoch’s control over News Corp., shareholders would also bear in mind the fact that the media tycoon’s sharp business acumen has consistently paid dividends, regardless of any questions of ethical culpability.

“There are some people who would welcome the defamiliarization of the company, but you could also argue that this is a guy who has an extraordinary track record on delivering profit,” he told GlobalPost.

Beckett said that plans would already have been in place to arrange a succession of command, and while these may now be fast tracked down from five years to two, News Corp. would be unwise to proceed with too much haste.

“It’s in everyone’s interest for the thing to not fall apart in the next year or two. Even those people who want Murdoch to recede don’t want him to jump out of the top floor. That would be far too destabilizing.”

More GlobalPost

  • Murdoch strikes back

    The last time Murdoch was questioned in the UK, he ended up with a pie in his face. This time, it’s the government’s turn
    Barry Neild April 26, 2012

  • Protesters gear up for London Olympics

    The extent of protest leveled at London could be symptomatic of a broader problem with the games
    Barry Neild April 13, 2012
Barry Neild

More Barry Neild.

Next Article

You Might Also Like

More Related Stories

Featured Slide Shows

Gripping photos: The people of the Turkey protests (slideshow)

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • The protests take on a festive element as police forces move out of the park and square. Wearing a gas mask, this young man dances to traditional Turkish music in front of Taksim Square’s Ataturk Monument.

  • In Gezi Park since March 31st, this protester, originally caught off-guard by the Government’s teargas and water cannons, went out and bought a Russian army mask from WWII, preparing for what was to come.

  • This rambunctious boy seems to be enjoying the chaos. After taking this picture he threw a stone at the already destroyed building in the background.

  • Forming a line, the police face off directly with protesters in Taksim Square. After a while, they retreated and there was a general cheer – a back-and-forth dance that has been common since the beginning of this protest.

  • An elderly woman in Gezi Park reads the news. The tent community occupying the park was violently destroyed on June 16th.

  • Many different groups had set up booths to promote their cause in Taksim Square and Gezi Park. Standing in front of one, this man waves his flag while posing with conviction.

  • Many home-remedies are used to minimize the effects of tear gas. This woman has put a milky solution on her face, removing her mask after the tear gas dissipated. Before sunrise, the police came again for another round of teargasing.

  • People capitalize on the uprising -- selling flags, beer, gas masks, sky lanterns and spray paint to name just a few of the popular items.

  • On Monday morning, June 11, the police execute a strong offensive. Many plain-clothed police officers, like the ones seen here, clash with protesters in the side streets away from the main stand-off in Taksim.

  • The authorities seem to be most aggressive in the night, pushing protesters away from the square and park. After being teargassed this young woman catches her breath with other protesters on Siraselviler Street.

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

More Related Stories

Comments

 7 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

Salon is proud to feature content from GlobalPost, an awarding-winning international news site that focuses on original reporting from journalists stationed around the world. GlobalPost combines traditional journalistic values with the power of new media to offer a fresh perspective on global developments.

follow salon

Most Read

Popular on Reddit

links from salon.com

From Around the Web

Presented by Scribol
listener_new_rect The Listener: "We Are All Completely Beside Ourselves": Growing up primate

Recommendations