April 19, 2024

2 Top Deputies Resign as Crisis Isolates Murdoch

Les Hinton, the publisher of The Wall Street Journal since 2007, who oversaw Mr. Murdoch’s British newspaper subsidiary when voice mail hacking by journalists was rampant, and Rebekah Brooks, who has run the British papers since 2009 and become the target of unrelenting public outrage, both resigned in the latest blow to the News Corporation and its besieged chairman.

At first incensed by the assault on his company’s reputation, Mr. Murdoch insisted as late as Thursday that the executives had performed “excellently” in dealing with the crisis since it erupted two weeks ago. He was said to be loath to lose either of them, and became convinced that they had to leave only over the last several days, as executives and outside advisers flew in to help manage the crisis from the company’s gleaming granite and glass offices in Wapping, East London.

In arriving at the final decision, Mr. Murdoch was joined by his two sons, James and Lachlan, and Joel I. Klein, a senior News Corporation executive and former New York City Schools chancellor.

The resignations came on a day when Mr. Murdoch made a series of public mea culpas. He wrote a letter to be published in all British newspapers over the weekend acknowledging that the company did not address its problems soon enough. “We are sorry,” it begins.

He also visited the family of a murdered 13-year-old girl, Milly Dowler, whose voice mail was hacked by reporters at The News of the World while she was still listed as missing. According to the Dowler family’s lawyer, Mark Lewis, Mr. Murdoch held his head in his hands and apologized for the actions of his employees, who deleted phone messages after the girl’s mailbox had been filled so they could collect more new messages.

Mr. Lewis said that Mr. Murdoch apologized “many times,” and that he was “very humbled, he was very shaken and he was very sincere.”

Whether these actions will do anything to quiet the backlash against the News Corporation is unclear. Mr. Murdoch, Ms. Brooks and James Murdoch, the company’s deputy chief operating officer and Rupert’s younger son, are set to testify next week before Parliament, where they will face questions from politicians who have become suddenly unafraid to publicly condemn the man whose favor they once saw as a key to political success.

Mr. Murdoch has become an increasingly isolated figure, not only in Britain but within his own company. The departure in recent years of top executives who often provided a counterweight to his famous irascibility and stubbornness has left him surrounded by fewer people who can effectively question his decisions. He initially rejected Ms. Brooks’s offer to resign from News International, his British subsidiary, despite advice to accept it from senior News Corporation executives, said people briefed on the company’s discussions.

Ms. Brooks, who was editor of The News of the World when the abuses began in 2002, repeatedly told the Murdochs that she knew nothing of the hacking and that she would be exonerated when all the facts came out.

In her farewell message, Ms. Brooks acknowledged that she had become a distraction. “The reputation of the company we love so much, as well as the press freedoms we value so highly, are all at risk,” she wrote. “As chief executive of the company, I feel a deep sense of responsibility for the people we have hurt and I want to reiterate how sorry I am for what we now know to have taken place.”

On Friday, former staff members at The News of the World questioned why Ms. Brooks did not resign earlier. “Our paper was sacrificed to save her career, and now she’s gone as well,” one former employee said, requesting anonymity because he did not want to jeopardize his position in severance negotiations. “Who knows why they’ve chosen to do it now, as she’ll have to appear before the select committee anyway.”

Until Friday, Mr. Hinton had been largely an offstage figure in the scandal. But questions grew about what he knew about the improper practices going on at the newspapers under his watch, even though he has testified twice before Parliament saying that he believed the hacking was limited to one rogue journalist and a private investigator employed by The News of the World.

John F. Burns reported from London, and Jeremy W. Peters from New York. Alan Cowell contributed reporting from Paris, and Ravi Somaiya from London.

Article source: http://www.nytimes.com/2011/07/16/world/europe/16hacking.html?partner=rss&emc=rss

The Murdoch Style, Under Pressure

But the widening voice-mail hacking scandal at the British tabloid News of the World threatens to stain the company’s image in a way that other embarrassing incidents at News Corporation’s far-flung media properties — which also include the Fox networks and The New York Post — have not.

In the past, Mr. Murdoch has either outlasted his critics or acted swiftly to limit the fallout. And on Wednesday he was in damage-control mode again. The company moved quickly to denounce the hacking and announce its intention to cooperate with the police, but the damage was proving difficult to contain.

There is a growing consensus within the company that Rebekah Brooks, the chief executive of News International and onetime editor who has become the focus of much of the outrage over the hacking, will be forced out of her job, according to people with knowledge of discussions inside News Corporation.

The possibility of firing Ms. Brooks is one that several people close to Mr. Murdoch said he was fiercely resisting because he was loyal to her and viewed the campaign against her as a vendetta by the company’s political enemies.

One of these people, who did not want to be identified discussing internal matters, said there was also a belief within the company that Andy Coulson, the former News of the World editor who was forced to quit as communications director to the British prime minister, will also come under increasing scrutiny.

So far the harm has been limited to the company’s reputation. The News Corporation does not yet face heavy financial losses, even as the advertiser boycott of The News of the World grows. Still, the company’s shares dropped 3.6 percent on Wednesday to $17.47, after rising for most of the year. The episode could threaten the biggest deal on the News Corporation’s plate: British approval of its complete takeover of BSkyB, the satellite television company.

David Bank, a media analyst for RBC Capital Markets, said the hacking scandal had so far been a blip in the company’s vast business holdings.

“It feels like a lot more noise than substance,” he said, noting how little the newspapers contributed to the company’s bottom line. The News of the World is just a piece of News International’s large footprint in Britain. The company also publishes The Times of London and The Sun.

Over all, revenue from the publishing division of News Corporation accounted for only 17 percent of its revenue in the last nine months. In that time, cable network programming accounted for 61 percent, and film, which includes the 20th Century Fox studio, was 20 percent.

Still, Mr. Murdoch was evidently worried enough about the fallout from the hacking scandal that he convened what someone close to him described as a “war council” in Sun Valley, Idaho, where he was attending a media conference. Mr. Murdoch was there on Wednesday with his wife, Wendi, and his son Lachlan. Ms. Murdoch was seen by a reporter at the conference, but Mr. Murdoch was not.

Mr. Murdoch, weighing into the controversy for the first time since some of Britain’s leading politicians called for an investigation into the News Corporation’s news-gathering practices, called the accusations of hacking “deplorable and unacceptable” and vowed to cooperate with any police inquiries.

But with damaging revelations about the extent of the hacking emerging each day — the latest were reports that The News of the World had accessed voice mails belonging to family members of dead soldiers — Mr. Murdoch’s regretful expressions of disapproval could go only so far.

“Depending on where the investigation goes, how widespread it goes and who knew what when, this is something that could tarnish him seriously,” said Rem Rieder, the editor and a senior vice president for the American Journalism Review. “This seems institutional.”

The News Corporation is no stranger to scandal. Fines for indecency, lawsuits charging anticompetitive business practices and libel claims are a fact of life for the company, which has been able to easily absorb the financial inconvenience.

Tim Arango and Evelyn M. Rusli contributed reporting.

Article source: http://www.nytimes.com/2011/07/07/business/media/hacking-scandal-poses-new-threat-to-news-corporations-image.html?partner=rss&emc=rss