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Media Decoder Blog: The Breakfast Meeting: Bloomberg and The Financial Times, and the First ‘Telecopter’

December 11, 2012 by Leave a Comment
The Breakfast Meeting

What’s making news in media.

The stars are aligning, perhaps, for the purchase of The Financial Times by Bloomberg L.P., the media company whose shares are 90 percent controlled by New York’s mayor, Michael R. Bloomberg, Amy Chozick and Michael Barbaro write. The departure of two top executives at Pearson, the owner of The Financial Times, has made the sale of the newspaper seem a possibility. Bloomberg, which makes its money primarily from desktop terminals, would have to weigh the business advantages of going backward technologically to print; one advantage would be to gain a well-respected daily platform for Bloomberg content. (Thomson Reuters is also said to be likely to bid on the newspaper.)

  • The mayor has been cagey on the subject. Asked by an editor at The Financial Times in London, where Mr. Bloomberg was visiting, if he would buy the paper, Mr. Bloomberg replied, “I buy it every day.”

The division of News Corporation into separate entertainment and publishing companies has led to a change in leadership at The Wall Street Journal, the flagship of the soon-to-be-created publishing company. The newspaper’s editor, Robert Thomson, will lead the publishing company, and his deputy, Gerard Baker, will succeed him at The Journal, an appointment that was christened by News Corporation’s chairman, Rupert Murdoch, in a widely shared video that left no doubt about Mr. Murdoch’s confidence in the appointment, David Carr writes in the Media Equation column. Mr. Baker’s background as a neoconservative columnist with little management experience has many on the staff — speaking anonymously — expressing worries about what direction he will lead the newspaper.

The life on the run of the software pioneer John McAfee has been an irresistible draw for news media outlets, Jeff Wise writes. Mr. McAfee, the creator of a defense to computer viruses and founder of the company that bears his name, had relocated to the jungles of Belize, and in recent days he is reported to be a “person of interest” in the death of a neighbor. Since then, he has taken flight to Guatemala, all the while dropping hints and granting interviews. In retrospect, Mr. Wise writes, his decision to let journalists from Vice magazine tag along may not have been so advisable.

As part of a sponsorship deal with Pepsi, the pop star Beyoncé will appear in a new TV ad — her fifth for the soft drink since 2002 — and her face will be on a limited-edition line of soda cans, Ben Sisario writes. But, under an unusual arrangement, PepsiCo has agreed to create a multimillion-dollar fund to support the singer’s chosen creative projects. For Pepsi, Mr. Sisario writes, “the goal is to enhance its reputation with consumers by acting as something of an artistic patron instead of simply paying for celebrity endorsements.”

This fall, NBC has pulled off a notable turnaround, from worst to first in the ratings, Bill Carter writes. Its strategy has been to rely heavily on its singing competition, “The Voice,” broadcasting more than 40 hours of the show this season, which has improved ratings of the programs airing near it. Senior executives at competing networks warned that NBC could be overplaying its hand; the current edition of “The Voice” ends Dec. 18.

John Silva, the inventor of the “Telecopter” in the 1950s while he was chief engineer of the Los Angeles TV station KTLA, died on Nov. 27, Paul Vitello writes. Mr. Silva was 92. From today’s vantage point, where TV station’s helicopters are vital to local news — whether for reporting on traffic jams, car chases or out-of-control fires — the invention seems inevitable. But Mr. Silva had to work around many hurdles to turn a helicopter into a mobile TV station — both to ensure that a signal could be sent out, and that the helicopter could safely travel with the extra equipment.

Article source: http://mediadecoder.blogs.nytimes.com/2012/12/10/the-breakfast-meeting-bloomberg-and-the-financial-times-and-the-first-telecopter/?partner=rss&emc=rss

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Media Decoder Blog: News Corp. Announces Its Corporate Split, and the Closing of The Daily

December 3, 2012 by Leave a Comment

News Corporation announced additional details about its coming split on Monday, including a plan to cease publication of The Daily, its stand-alone tablet newspaper.

The publishing company, which will keep the name News Corporation and will include The Wall Street Journal, The New York Post, HarperCollins and Australian television assets, will be led by Robert Thomson, the current editor in chief of the The Journal. (He will be succeeded at The Journal by his deputy, Gerard Baker.)

The entertainment company will be called Fox Group, and will include Fox Broadcasting, Fox News and the 20th Century Fox studio. Chase Carey, currently president and chief operating officer at News Corporation, will remain in that role at Fox Group, with James Murdoch serving as his deputy.

Rupert Murdoch, chairman and chief executive of News Corporation, will continue to serve as chief executive at Fox Group and will be chairman of the publishing company.

A company news release that announced the changes also mentioned the shuttering of The Daily. The tablet-only daily publication was introduced with much fanfare by Mr. Murdoch and Apple as a way to revolutionize the news business. But the publication struggled to gain readers and relevance.

Jesse Angelo, executive editor of The Daily and The New York Post, will become publisher of The Post. Some members of the staff of The Daily will be absorbed into The Post’s newsroom, the company said.

In June, News Corporation said it would split into two separate, publicly traded companies.

In a nostalgic memo to staff, Mr. Murdoch praised the idea of a separate company devoted almost entirely to newspapers. “Many of you know that a belief in the power of the written word has been in my bones for my entire life,” he wrote. “It began as I listened to my father’s stories from his days as a war correspondent and, later, a successful publisher.”

Amy Chozick is The Times’s corporate media reporter. Follow @amychozick on Twitter.

This post has been revised to reflect the following correction:

Correction: December 3, 2012

An earlier version of this post misstated the first name of the editor who will succeed Robert Thomson as editor in chief of The Wall Street Journal. He is Gerard, not Gerald, Baker.

Article source: http://mediadecoder.blogs.nytimes.com/2012/12/03/news-corp-announces-its-corporate-split-and-the-closing-of-the-daily/?partner=rss&emc=rss

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With News Corp. in Crisis, a Non-Murdoch Takes a Larger Role

January 23, 2012 by Leave a Comment

Mr. Murdoch was skeptical, saying he would rather focus on getting through the crisis than on the stock price, according to people familiar with Mr. Murdoch’s thinking who would not publicly discuss private conversations.

Mr. Carey persisted. As of this month, News Corporation had repurchased $2.5 billion of Class A shares and had largely kept investors happy, despite the continuing scandal in Britain. In the first week of trading in 2012, News Corporation shares rose to a 52-week record, or 30 percent above the lows it hit in the weeks after public outcry over the hacking scandal began in July and higher than it had been before.

The crisis in London has left Mr. Murdoch stretched thin and increasingly reliant on his No. 2, Mr. Carey, 58, who was once considered to be serving as a placeholder until one of the Murdoch children took over. Never in the $60 billion media company’s history has an executive other than Mr. Murdoch taken such a major role in running the daily operations.

“Chase is one of those people with no fear,” said Michael Ovitz, co-founder of the Creative Artists Agency. “He’ll say, ‘This is what’s good for you. And this is what’s bad for you.’ That’s hard to do when you’re dealing with a founder and patriarch.”

Mr. Carey, who wears blazers with elbow patches and a Wyatt Earp-style handlebar mustache, leads earnings calls, speaks at investor conferences and strategizes on everything, including retransmission fees with cable and satellite companies. Unlike Mr. Murdoch and his son James, who continue to face scrutiny related to phone hacking and the accusation that nepotism sometimes overrides shareholder interests, Mr. Carey’s outsider status makes him a steady and less polarizing figure, analysts said.

“He’s increasingly becoming the face of the company,” said Richard Greenfield, a media analyst at BTIG.

In August, Mr. Murdoch, 80, told analysts that Mr. Carey would take over as chief executive in an emergency. “Chase is my partner, and if anything happened to me, I’m sure he’ll get it immediately,” he said.

The question of succession at News Corporation is a delicate one. Most senior executives declined to comment on the record about Mr. Carey, expressing concern that any positive observations might appear as a slight to James Murdoch. Mr. Carey declined to comment.

Interviews with more than a dozen current and former associates reveal that Mr. Carey is in many ways Mr. Murdoch’s alter ego. He is aloof while Mr. Murdoch is engaged with the public (most recently on Twitter, where Mr. Murdoch has criticized opponents of antipiracy legislation); he is all-American while Mr. Murdoch is worldly (Mr. Carey once dragged a colleague to a sports bar while on business in Hong Kong); and he is apolitical while Mr. Murdoch is conservative.

“Every visionary has 40 bad ideas and three good ones, and you need those checks and balances,” said Greg Nathanson, the former president of the Fox Television Stations. “Murdoch’s visions were amazing, but he couldn’t execute them without a person like Chase.”

Mr. Carey, a New York native, college rugby player and die-hard Yankees and Giants fan, first joined News Corporation in 1988 after working in the home entertainment and finance divisions of Columbia Pictures. His mustache hides a scar from an injury from a car accident on the way to a football game at Colgate University, where he was active in the Delta Upsilon fraternity. The driver died, and Mr. Carey went through the windshield.

As the fledgling Fox network’s chief operating officer, Mr. Carey quickly became Mr. Murdoch’s preferred negotiator.

In 1993, Mr. Murdoch bet Mr. Carey $20 that the network known for “The Simpsons” and “Beverly Hills, 90210” could not capture the National Football League’s primary television rights from venerable CBS. The league had twice rejected Fox’s offers, and CBS had been known for football for 38 years.

Mr. Carey put together a $1.56 billion deal that beat out CBS and put Fox on the map. Mr. Murdoch paid up on his $20 bet.

Article source: http://feeds.nytimes.com/click.phdo?i=99411a943a48ab7b17c07edb1866d2aa

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Murdoch Company Settles With Dozens of Hacking Victims

January 20, 2012 by Leave a Comment

The High Court hearing on Thursday at which the settlements were detailed was a humiliating occasion for Mr. Murdoch’s News Group Newspapers, which published the now-defunct tabloid at the heart of the hacking scandal, The News of the World. In a courtroom so jammed with lawyers, victims and members of the news media that some people had to sit on the floor, News Group’s lawyer, Michael Silverleaf, repeatedly expressed the company’s “sincere apologies” for “the damage, as well as the distress” caused to victim after victim.

The list of 37 victims settling with the company included politicians, celebrities, actors and sports figures, as well as people in their inner circles — employees, spouses, lovers. It is unclear how much News Group will end up having to pay after all the cases are finally settled, but the total bill for the 18 victims whose settlement details were disclosed Thursday reaches well above $1 million.

According to the police, there may be as many as 800 victims.

Perhaps two dozen suits are pending. News Group says it is eager to settle all the cases, but it was not clear, during extensive discussions in court, that it was able to placate all those who have brought claims.

The settlements disclosed include those of the actor Jude Law, who received £130,000, about $200,000; Sadie Frost, his ex-wife, who received $77,000; Ben Jackson, his assistant, who received $61,000; Gavin Henson, a Welsh rugby star, who also received $61,000; and Denis MacShane, a member of Parliament, who received $50,000.

In each case, News Group also agreed to pay the complainant’s legal costs, any of which could easily have run into six figures. One complainant, speaking on the condition on anonymity, said that his came to more than $300,000 — an amount that does not include News International’s fees.

But perhaps more damaging to the company than the financial penalties was a statement from lawyers for the hacking victims.

“News Group has agreed to compensation being assessed on the basis that senior employees and directors of N.G.N. knew about the wrongdoing and sought to conceal it by deliberately deceiving investigators and destroying evidence,” the statement said, referring to News Group Newspapers.

The lawyers also said they had obtained, through nine disclosure orders from the court, “documents relating to the nature and scale of the conspiracy, a cover-up and the destruction of evidence/e-mail archives by News Group.”

In a statement, News International, the British newspaper arm of Mr. Murdoch’s global empire and the parent company of News Group, said it had “made no admission as part of these settlements that directors or senior employees knew about the wrongdoing by N.G.N. or sought to conceal it.” It added, “However, for the purpose of reaching these settlements only, N.G.N. agreed that the damages to be paid to claimants should be assessed as if this was the case.”

Lawyers said, however, that it was unlikely that the company would have agreed to calculate settlements on the basis that there was a cover-up if there were in fact no cover-up.

Until the end of 2010, News International denied that The News of the World engaged in any phone hacking and vehemently vowed to fight any legal claims. After that, it admitted that some of its reporters and editors knew about the hacking. Now it has acknowledged that hacking was pervasive, and with hundreds of potential victims still left to deal with, it recently set up a Web page where people who believe their phones were hacked can file claims electronically.

More than 20 people have been arrested on suspicion of phone hacking or illegally paying the police for information. No criminal charges have been filed yet.

Alan Cowell contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=34555c369812ffdb6abfc42128ddb8b9

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New Challenge to James Murdoch in Phone Hacking Case

December 14, 2011 by Leave a Comment

In statements released Tuesday, James Murdoch, who runs the News Corporation’s operations in Europe and Asia, admitted he had received and replied to the message on his BlackBerry, but he said he “did not read the full e-mail chain.” He said he stood by his repeated public denials that he knew of widespread hacking at the tabloid at the time he approved a large legal settlement with a victim of the practice in 2008.

But the new documents appear to add fuel to a controversy that has severely damaged the reputation of the News Corporation and the Murdochs’ leadership, both in Britain and the United States. The e-mail chain of messages backs ups the accounts of two of James Murdoch’s former senior executives, an in-house lawyer and an editor, who said they had told him of evidence that illegally intercepting voice mail messages to gather news and gossip went beyond a single “rogue reporter.”

The top e-mail in the chain — the one Mr. Murdoch replied to directly — came from the editor of The News of the World at the time, Colin Myler, who wrote that the potential legal fallout from the hacking problem was “as bad as we feared.” Mr. Myler urged Mr. Murdoch to call a meeting promptly to discuss the issue. Mr. Murdoch replied within minutes, saying he could be available that evening or the next day.

The e-mails do not show conclusively that Mr. Murdoch knew more about the extent of hacking than he has said. But they make clear that his subordinates informed him about the potential fallout at the time they were seeking his approval for an unusually large payment of more than $1 million to a victim of hacking. That victim had obtained evidence that the practice was common at The News of the World.

Mr. Murdoch, viewed as a possible heir to his father at the News Corporation, has come under pressure from British politicians and some shareholders of the global media company to explain how much he and other senior executives knew about the hacking. The e-mails seem likely to provide ammunition to critics of the News Corporation’s leadership who have expressed doubts that James Murdoch or his father could have been as unaware of intrusive reporting practices at the tabloid as they have claimed.

The e-mail messages were sent to the panel, the committee on culture, media and sport in the House of Commons, as part of an internal investigation by News International, the tabloid’s parent company. The parliamentary committee is investigating allegations that the tabloid illegally intercepted the voice-mail messages of hundreds, perhaps even thousands, of people in the news between 2001 and 2009.

After several years of denials, News International admitted widespread phone hacking earlier this year after a cascade of revelations, followed by dozens of lawsuits. At least 18 former News of the World employees have since been arrested, and the 168-year-old newspaper itself was closed this summer.

In several intense and dramatic sessions of the parliamentary committee this year, Mr. Murdoch and his former executives gave differing testimony over the crucial question of what he knew, and when. Directly contradicting Mr. Murdoch’s statements, the executives told the committee that they informed him in 2008 that the company line — that phone hacking was the work of one “rogue reporter” — was not likely to be true.

They say that when Mr. Murdoch approved a large settlement of £725,000, then about $1.4 million, in a phone hacking lawsuit that year, he did so with full knowledge that other reporters at the paper may have been involved in similar practices. Mr. Murdoch has consistently countered that on the contrary, he knew of only a single reporter who was guilty of phone hacking at the paper and that he approved the settlement, which included a confidentiality clause, because his lawyers told him it made financial sense.

The e-mails, from June 7, 2008, discuss that lawsuit, brought by a British soccer union executive, Gordon Taylor, whose phone had been hacked by The News of the World. One lawyer said the case was a “nightmare scenario” because it might uncover other voice-mail interceptions and names other journalists implicated. Another message noted that Mr. Taylor wanted to demonstrate that hacking was “rife throughout the organization.” As he forwarded the chain to Mr. Murdoch, Mr. Myler, the editor, warned that the situation was “as bad as we feared” and requested a meeting to discuss the matter further.

In a letter that Mr. Murdoch sent to the parliamentary panel, also released on Tuesday, he said he recalled no conversation with Mr. Myler that weekend and reaffirmed his position that he was “not aware of evidence that either pointed to widespread wrongdoing or indicated that further investigation was necessary.” He also apologized for failing to bring up the e-mail exchange when questioned extensively this year, saying he had been reminded of it only last week by the internal inquiry.

The lawyer who represented Mr. Taylor, Mark Lewis, who also represents several of those currently bringing lawsuits over allegations of phone hacking, said Tuesday that he was not convinced by Mr. Murdoch’s statement. “James Murdoch accepts that he signed the check to Gordon Taylor,” Mr. Lewis said. “Now we have to believe that not only didn’t he know but no one asked him what he thought of the e-mail he was sent.”

A spokeswoman for News International declined to answer further questions. But a company official, who did not want to be named discussing a continuing investigation, said Mr. Murdoch still maintained that he was never given access to crucial documents that showed, in detail, the depth of the illegality at the newspaper.

Article source: http://feeds.nytimes.com/click.phdo?i=0094672e6f3b61b40e04653d07d8b011

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Millions May Go to Girl’s Family in Hacking Case

September 20, 2011 by Leave a Comment

The person said the company, Rupert Murdoch’s News International, had offered about $3.2 million to the Dowler family, with an additional payment of about $1.6 million to go to charity.

The News of the World is believed to have hacked into the voice mails of hundreds, possibly thousands, of people, including celebrities and politicians. Widespread public revulsion resulted from the revelation in July that its victims included the 13-year-old Milly Dowler, who disappeared in 2002 and whose messages were intercepted and erased to make room for new ones even as her family searched for her.

That disclosure ultimately led the Murdochs to close The News of the World, the government to open several inquiries into the matter and the police to expand their criminal investigation into the paper’s conduct.

Mr. Murdoch, who seemed unperturbed by earlier accusations about his employees’ phone hacking, was demonstrably shaken by the news about Milly Dowler. He met with the Dowler family to apologize, and later told a parliamentary committee that he had been humbled by the episode.

News International would not disclose the amounts currently under discussion.

If both parties agree to the proposal, the settlement will be by far the largest to date in the hacking case. In 2008, Gordon Taylor, a soccer executive, received about $1.4 million from News International, the British newspaper arm of Mr. Murdoch’s News Corporation.

Don Van Natta Jr. contributed reporting from Miami.

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While Reporting Robust Profit, Murdoch Vows to Stay Head of News Corp.

August 11, 2011 by Leave a Comment

While defending his company as it faces accusations of widespread phone hacking in Britain, Rupert Murdoch insisted on Wednesday that he had the backing of News Corporation’s board and would stay on as its chief executive for the foreseeable future. Meanwhile, his company reported a drop in fourth-quarter profit but a gain for the year.

Buoyed by strong advertising growth at its television division, particularly from the broadcast of Super Bowl XLV on Fox, News Corporation said its net income from April through June was $683 million, down from $875 million a year earlier. The otherwise strong results were sapped by a $254 million loss on Myspace, the social networking site, which the company sold for just $35 million in June, a small fraction of the $580 million it paid for the site six years ago.

For the full fiscal year, which ended June 30, News Corporation earned $2.7 billion, up from $2.5 billion the year before.

“We have the most robust balance sheet in our history,” Mr. Murdoch declared in a conference call with financial analysts and reporters that drew considerably more attention than usual because Mr. Murdoch had not spoken publicly since his testimony before the British Parliament last month. The earnings report — which showed growth across News Corporation’s vast holdings in film, television, publishing and satellite broadcasting — was a testament to the company’s size and diversity.

Yet Mr. Murdoch spent much of his time on Wednesday answering for malfeasance in a small corner of his media empire: The News of the World, the Sunday tabloid he recently closed in Britain after widespread voice mail hacking by its employees was revealed.

He pressed the point that none of the issues at The News of the World had affected the other parts of News Corporation.

“There’s been no material impact on our operations outside the closure of News of the World,” he said. And he once again insisted that the acts were an aberration and not the kind of behavior that he or the company would ever condone.

“We’re all committed to doing the right thing,” he said. “We have taken decisive actions to hold people accountable and will do whatever is necessary to prevent anything like this from occurring ever again.”

As he tried to end speculation that he would be forced to give up his job, Mr. Murdoch also dismissed the suggestion that his son James was at risk of losing his job as a deputy chief operating officer.

“Chase and I have full confidence in James,” he said, referring to Chase Carey, News Corporation’s chief operating officer. “I think that’s all I need to say about it.”

Mr. Murdoch blithely addressed questions about who would replace him, joking that Mr. Carey would succeed him should he meet an untimely demise. “I’m sure he’d get it immediately if I run under a bus,” Mr. Murdoch, 80, said.

Analysts raised what has become a perennial issue for News Corporation: what would it do with its underperforming publishing division, which includes money-losing newspapers like The New York Post and The Times of London. After the hacking scandal erupted, word that News Corporation might spin off its newspapers spread on Wall Street. Mr. Murdoch rejected the notion outright.

“No,” he said. “I’m feeling very confident.” Except for The News of the World, he added, referring to the newspapers, “Everything else is fine.”

Cable television remained an especially powerful engine of growth for the company, accounting for $631 million of its operating income for the quarter and $2.8 billion in operating income for the year — more than its 20th Century Fox Films, the Fox Network and satellite broadcasting divisions combined.

Advertising at its domestic cable channels, which include Fox News, FX and the National Geographic Channel, grew 23 percent over the fourth quarter last year.

Operating income at the film division was helped by strong performers like the computer-animated “Rio,” and grew by 53 percent, to $210 million. But for the year, operating income in film was down 31 percent to $927 million, largely because of the success in 2010 of “Avatar,” which made for difficult comparisons.

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For Murdoch, a Board Meeting With Friendly Faces

August 10, 2011 by Leave a Comment

The meeting, held on the studio lot of 20th Century Fox and timed to coincide with News Corporation’s quarterly earnings announcement on Wednesday, included many people with deep and longstanding ties to Mr. Murdoch, his company and his family.

One is a former Goldman Sachs president who helped News Corporation broker mega-deals. Another is godfather to one of Mr. Murdoch’s grandchildren. Another ran Mr. Murdoch’s Australian subsidiary, News Limited.

And those are just some of News Corporation’s directors who are designated as independent — chosen because they comply with regulations intended to ensure that companies maintain a layer of objective oversight.

A perceived absence of true independence has long been a sore spot for those who criticize the News Corporation board as too deferential to Mr. Murdoch. Last week, in a rare attempt to mollify shareholders, News Corporation decided not to add Mr. Murdoch’s daughter Elisabeth to the board. It was widely expected she would join the board after the company bought Shine, her television production company, for about $675 million earlier this year.

News Corporation considers nine of its 16 directors independent, in keeping with Nasdaq rules requiring a majority of board members with limited company ties. Yet many of them owe their careers to Mr. Murdoch. Others made millions of dollars making him richer. Those include:

¶Roderick Eddington, the former chief executive of British Airways, who became deputy chairman of News Limited in 1997, a year after he was chosen to run Ansett Australia, the airline in which News Corporation owned a 50 percent stake.

¶Natalie Bancroft , the opera singer whose family agreed to sell Dow Jones and The Wall Street Journal to Mr. Murdoch in 2007, and who made a sizable fortune of her own from News Corporation’s $5 billion purchase.

¶Kenneth E. Cowley, who was chief executive and chairman of News Limited for nearly 20 years in the 1980s and 1990s.

¶Andrew Knight, who was executive chairman of News International from 1990 to 1994.

¶John L. Thornton, the former Goldman Sachs president, who advised News Corporation in a number of major deals, including its $1 billion purchase of Star TV, the Asian satellite service. The arrangement brought him and Goldman Sachs millions in fees.

¶Viet Dinh, a former senior official in George W. Bush’s Justice Department and the principal author of the Patriot Act. Mr. Dinh is also godfather to a son of Lachlan Murdoch, the oldest of Mr. Murdoch’s children. Mr. Dinh is ultimately responsible for the independent internal investigation going on into the phone hacking scandal at News Corporation’s British subsidiary, News International.

Mr. Dinh has brought on some of the biggest names in white-collar criminal defense to advise him and the other independent directors on the matter, hiring Mary Jo White, the former United States attorney for the Southern District of New York, and former Attorney General Michael B. Mukasey.

News Corporation’s board is hardly the only one in corporate America that is stacked with independent directors who have close relationships with the companies that shareholders have elected them to serve. But corporate governance experts said that the long history between News Corporation and many of its independent directors is a glaring example of how chumminess in the boardroom can allow and even contribute to mismanagement.

“I keep watching this and thinking that they don’t realize we can see them,” said Lucy P. Marcus, chief executive of Marcus Venture Consulting who writes about corporate governance issues for The Harvard Business Review blog network. “The reason we have corporate governance is not because it’s a nice thing to do. It’s because if you actually have a robust board, it can be beneficial. I don’t think News Corp. would be in the same trouble that they are in now if they had an independent board.”

To overhaul the News Corporation board or any other corporate board, the rules governing who is eligible to serve as a director would need to change. Right now News Corporation is in full compliance of the rules set by Nasdaq, the exchange on which its stock is traded, and federal law.

Nasdaq’s rules state broadly that independent directors cannot have a relationship that “would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.” Specifically, Nasdaq excludes anyone who was employed the company in the previous three years. The rules do allow, however, for former employees collecting retirement benefits to serve as independent directors.

Some News Corporation shareholders have already started to press the issue. Wespath Investment Management, a division of the board of pension and health benefits for the United Methodist Church and owner of about 1.1 million News Corporation Class A shares, wrote to the board last week objecting to, among other things, its seeming lack of independence.

“As shareholders interested in preserving the long-term value of the company, it is important that the board of directors act quickly to improve its governance standards,” the letter said.

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The Media Equation: Scandal Splinters a Family Business

July 25, 2011 by Leave a Comment

Mr. Murdoch, long a spectral presence who made his plays on a chess board of his own making, was brought low before a committee of Parliament composed of people he could not have been bothered with three weeks ago.

In testimony last Tuesday, he appeared as a supplicant, a faltering one at that, who interrupted his son James in the opening moments of the hearing, not to correct him, but to tell the members of the committee how sorry he was.

He is very sorry. Sorry that one of his tabloids hacked into the voice mail of a 13-year-old murder victim. Sorry that the scandal threatens to derail his plans of succession. And sorry to find himself suddenly in the public stockade.

Is he sorry that he and his employees created a culture and a business where all that seemed cricket? Probably not so much.

His family and the board of his company are sorry as well, but that will probably not end up meaning much. The protective instincts of the family were on broad display last week. James sought to leap in front of every hard question while Mr. Murdoch’s wife, Wendi, inserted herself into the fray when someone tried to shove a shaving cream pie at her husband. She has a mean right hook.

Rupert has his own protective streak when it comes to his family, and has gone to great lengths to make them central to the News Corporation’s success structure. But what his sons and daughters could soon find out is that if Mr. Murdoch is forced to choose between the family and the company he has built, he will choose the News Corporation.

“Rupert may end up having to make a choice between his son and the company, which is fairly biblical,” said a friend of the family who works in the media business and who declined to be identified when speaking about private family matters.

James Murdoch is done. He and his father both know that. His testimony curdled as he emitted it, and within two days a couple of former News Corporation executives publicly challenged it. The hooks are still in him, as Prime Minister David Cameron made clear when he said James still had “questions to answer.” And so he will, gradually sinking further into the mess he has overseen.

Oddly, the News Corporation’s stock began to tick up during the hearings as Rupert Murdoch testified, his large hands thumping as he dropped them to the table. But it was less about his performance than about the clear message that emerged: an era had ended. The family business is splintering. If James is out, as would seem to be the case, will his other offspring, Elisabeth and Lachlan, come swinging into view? I and others doubt that the charms of a global media enterprise being run as a corner grocery store will continue.

While the family reign seems certain to fracture, the News Corporation’s own fortunes are less predictable. A report by the analyst Michael Nathanson of Nomura Capital Investments nicely captured the moment. The market does not care if you have done bad things; it cares when you get caught.

“While we remain disappointed by the actions of a muckraking newspaper and frustrated that perhaps the least-valuable asset in the News Corp. portfolio could cause this much value destruction,” Mr. Nathanson wrote, “we continue to believe that the risk/reward for News Corp. investors remains positive.”

Reached later by phone, Mr. Nathanson suggested that the News Corporation had been cornered into doing the right thing, after doing a lot of not-so-right things. The fact that the company moved swiftly to buy back its stock — approving $5 billion of the oodles of cash the company has on hand — calmed the markets, if not the troubled waters that the company finds itself in.

“The loss of the BSkyB deal is significant and not good for the company, but in the long term, I think this will force the company to take a hard look at where they are putting capital,” he said, referring to the company’s abandoned bid for British Sky Broadcasting, Britain’s most lucrative satellite television network.

Historically, Mr. Murdoch has used the digital and broadcast parts of his empire to make money, and the more quotidian assets — newspapers, family influence and raw political power — to create running room for the rest of the organization. That was fine as far as it went.

E-mail: carr@nytimes.com;

Twitter.com/carr2n

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Murdochs Caught a Break at Hearing, Stock Analysts Say

July 20, 2011 by Leave a Comment

Instead of finding a signal that this was the beginning of the end of Rupert Murdoch’s run at the helm of his company, analysts stressed that there was no single revelatory moment during the proceedings. If the Murdochs seemed at times distant, even oblivious, to what was going on in their own company, there were no obvious admissions of wrongdoing or glaring contradictions in their testimony, analysts said.

“This was the best day these guys have had in a really long time,” said David Bank, media analyst for RBC Capital Markets. “No shoe dropped, no smoking gun was found, it all sort of sounded kind of contained.”

After losing billions of dollars in market value, the News Corporation’s stock recovered a significant chunk of its value on the Nasdaq, rising almost 6 percent during the day to close at $16.25 a share. And after Mr. Murdoch and his son James concluded two hours of often tense testimony to a House of Commons committee, there was little of the widespread scorn that has greeted almost everything the Murdochs have said and done in the more than two weeks since the most recent voice mail hacking scandal at News Corporation’s British newspaper operation erupted.

Summing up the high stakes and low expectations surrounding the hearing, another analyst, Thomas Eagan of Collins Stewart, noted: “Neither Rupert nor James did any damage to the company.”

Inside the company, executives seemed relieved at how relatively smoothly the process went.

“No one is despondent, no one thinks this went poorly,” said one person briefed on Tuesday’s events who asked not to be identified revealing private conversations. “I wouldn’t bet against those two.”

The day was not without its moments of anxiety for News Corporation executives and the team of outside personnel who spent the weekend preparing the Murdochs for their testimony. Both men expected to deliver opening statements. But just minutes before the hearing began, they were informed that no such remarks would be permitted.

The elder Murdoch’s headline remark from the hearing — that Tuesday was “the most humble day of my life” — was actually part of the scripted statement he had hoped to make. The News Corporation released the statement while Mr. Murdoch was still testifying. And Mr. Murdoch spoke it in full at the very end of the hearing.

Mr. Murdoch did appear to be thrown off in the beginning, struggling to complete his thoughts and pausing often as he spoke — a loss of orientation that some in his inner circle attributed to his surprise over not being allowed to deliver introductory remarks. But as the afternoon wore on, he appeared more collected. The same was true of his son.

Analysts noted that the market was watching James in particular, looking for signs of whether the man who is presumed to be the chief executive heir apparent was up to the task.

“It was a credibility-building day for James,” Mr. Bank said. “I don’t know that it makes succession by him any more definite, but it prevented what could have been the event of making it far less likely.”

And the market appeared to like what it saw. “Every time James spoke, the stock ticked up,” Mr. Bank added.

The elder Murdoch was being carefully watched by analysts who had been critical of his recent decisions at News Corporation and who have argued that he should step down as chief executive to remove the financial drag his leadership is causing the stock. Instead, Mr. Murdoch took the opportunity to reassert his control of the company.

When he was asked by Louise Mensch, a Conservative lawmaker, if he had ever considered resigning. “No,” he said emphatically.

“Because I feel that people that I trusted let me down, I think that they behaved disgracefully,” he said. “Frankly, I am the best person to clean this up.”

Even the attack by a pie-wielding assailant on the elder Murdoch seemed to work in his favor. After a 15-minute break in which the assailant was taken away by the police, Rupert Murdoch reappeared at the witness table in shirtsleeves and the dynamic in the room and on the cable channels covering the hearing live shifted in his favor.

The company still faces a reckoning on multiple fronts — in the British and American legal systems, on Wall Street and in the court of public opinion — that threatens its reputation and certainly its future in the newspapers. Reuters reported Tuesday night that the company’s independent directors had hired two prominent lawyers, former Attorney General Michael B. Mukasey and Mary Jo White, a former United States attorney for the Southern District of New York, to advise them.

Though Mr. Murdoch may have outperformed many expectations on Tuesday, he showed signs of strain at times.

Martin Dunn, a former News Corporation executive who most recently edited a rival newspaper, The Daily News in New York, said the elder Mr. Murdoch seemed tired, stressed and “a little beaten up” by the hearing process.

“It must be very hard, at 80 years of age, after spending four decades building up a company, to find yourself under attack in what is an unprecedented way,” Mr. Dunn said of the elder Mr. Murdoch. “I think that showed.”

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