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Media Decoder Blog: News Corp. Will Provide $2.6 Billion to Its New Publishing Company

March 8, 2013 by Leave a Comment

News Corporation’s new publishing company will receive a $2.6 billion infusion of cash and have no debt when it separates from the company’s higher-growth cable channels and Hollywood studio this summer.

In a filing with the Securities and Exchange Commission on Friday, the company confirmed what analysts had expected: Rupert Murdoch will make sure his beloved trove of roughly 175 newspapers will have plenty of capital once they are split off on their own.

The $2.6 billion figure, $1.82 billion of which will come from the parent company, is slightly higher than investors had anticipated, leading to speculation that it might be used to acquire additional newspapers.

The Tribune Company, which emerged from bankruptcy late last year, is looking for a potential buyer for its eight newspapers, including The Los Angeles Times, which Mr. Murdoch has long coveted, according to several people with knowledge of his thinking who could not discuss the News Corporation chairman publicly. (Tribune may also decide to sell its papers as a bundle.)

The new publishing company, which will retain the name News Corporation, will include strong newspapers, like The Wall Street Journal, and weaker ones like The New York Post, that will no longer have the security of billions in revenue from Fox News, FX and movies like “Avatar.”

In an interview last summer when News Corporation confirmed the split, Mr. Murdoch said his newsroom employees “shouldn’t feel like they’ve got a crutch” in the entertainment assets.

In the six months that ended Dec. 31, the assets that make up the new publishing company had $1.31 billion in profit and revenue of $4.45 billion. Robert Thomson, who will serve as the company’s chief executive, will earn a base salary of $2 million and a performance-based annual bonus of around $2 million beginning in 2014.

The company warned investors in Friday’s filing about potential pitfalls to investing in the new News Corporation, including investigations and lawsuits related to a phone hacking scandal that erupted at The News of the World tabloid in Britain in 2011. Legal fees and other expenses related to the scandal cost News Corporation $250 million from July 1, 2010, through Dec. 31, 2012, plus $25 million paid to claimants to settle civil lawsuits, the company said.

The Wall Street Journal will introduce WSJ.Money, a glossy magazine devoted to wealth management and personal finance, on Saturday. The magazine arrives after The Journal’s publisher, Dow Jones Company, ceased putting out a printed edition of Smart Money. The move underscores the new News Corporation’s emphasis on the Journal brand, and its bullishness on print.

“While others have scaled back in print, we’ve continued to buck the trend,” Gerard Baker, managing editor of The Journal, said in a statement.

News Corporation’s announcement comes two days after one of its competitors, Time Warner, said it would spin off Time Inc., its publishing arm. Analysts expect Time Inc. to have a less favorable financial structure.

“In no way does this mean that Time Warner must follow the same blueprint,” Dave Novosel, a senior investment grade analyst at the research firm Gimme Credit, wrote Friday in a report.

Article source: http://mediadecoder.blogs.nytimes.com/2013/03/08/in-filing-news-corp-says-it-will-provide-2-6-billion-to-its-new-publishing-company/?partner=rss&emc=rss

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DealBook: Tribune Said to Hire Banks to Sell Newspapers

February 26, 2013 by Leave a Comment

The Tribune Company has hired investment banks to pursue a sale of its top newspapers, including The Chicago Tribune and The Los Angeles Times, a person briefed on the matter told DealBook on Tuesday.

The media company, which emerged from bankruptcy late last year, has hired JPMorgan Chase and Evercore Partners to run the process, said this person, who spoke on condition of anonymity.

Tribune’s move comes as little surprise. Speculation has been swirling around the media industry for some time that a number of potential suitors had emerged for the company’s holdings, a lot that may include the News Corporation.

Peter Liguori, Tribune’s recently appointed chief executive, told The Los Angeles Times last month that he had not ruled out a sale of the company’s newspaper brands but added that he wasn’t “going into this job with a fire-sale sign.”

A sale would help Tribune focus more on its bigger broadcasting operations, which includes WGN America and 24 stations across the country.

The company emerged from Chapter 11 protection on Dec. 31, under the control of the investment firms Oaktree Capital and Angelo, Gordon, as well as JPMorgan.

Shares in Tribune, which trade over the counter, were up 1.3 percent on Tuesday at $53.50. That values the media conglomerate at about $3 billion.

News of the hiring of the banks was reported earlier by CNBC.

Article source: http://dealbook.nytimes.com/2013/02/26/tribune-said-to-hire-bankers-to-sell-newspapers/?partner=rss&emc=rss

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DealBook: Malone’s Liberty Global Is in Talks to Buy Virgin Media

February 5, 2013 by Leave a Comment

John Malone, the chairman of Liberty Media, at a media and technology conference in Sun Valley, Idaho, in 2012.Paul Sakuma/Associated PressJohn Malone, the chairman of Liberty Media, at a media and technology conference in Sun Valley, Idaho, in 2012.

6:59 a.m. | Updated

LONDON – Liberty Global, the international cable company owned by the American billionaire John C. Malone, is in discussions to buy the British cable company Virgin Media.

In a brief statement on Tuesday, Virgin Media said it was in talks with Liberty Global, which serves almost 20 million customers worldwide.

“Any such transaction would be subject to regulatory and other conditions,” Virgin Media said in a statement. Spokesmen for both Virgin Media and Liberty Global declined to comment further.

Virgin Media, whose primary listing is on Nasdaq, is the second-largest pay-TV provider in Britain after BSkyB, which is partly owned by Rupert Murdoch’s News Corporation.

A potential deal for Virgin Media would put Mr. Malone head-to-head with Mr. Murdoch, his longtime rival.

In 2008, the Liberty Group, which has operations in 13 countries, completed its purchase of a controlling stake in DirecTV, the satellite television provider, from News Corporation in a cash-and-equity deal worth roughly $11 billion.

The deal came after Mr. Malone’s purchase of a 16 percent stake in News Corporation, which he then traded for the satellite television operator, a number of regional sports networks and around $550 million cash.

Liberty Global has been expanding its presence in Europe and has operations from Ireland to Romania, though it failed last month in its bid to acquire the Belgian telecommunications company Telenet Group for $2.7 billion. Liberty Global currently owns a 58 percent stake in Telenet.

Shares in Virgin Media, which was formed through several mergers of small British cable companies and a cellphone company in the 2000s, rose almost 16 percent in afternoon trading in London on Tuesday.

Its shares have jumped almost 60 percent in the last 12 months, as more consumers sign up for so-called bundled services, including Internet and cellphone contracts.

Virgin Media’s market capitalization stands at $10.4 billion. Including debt, its enterprise value is around $19.4 billion, according to data from Thomson Reuters.

To secure a deal, analysts at Espirito Santo said Liberty Global may have to pay as much as $24 billion, though they questioned whether the international cable company could afford to fund the acquisition because of its existing high levels of debt.

Analysts also said that it would be difficult for Liberty Global to make costs savings between its current European operations and those of Virgin Media, adding that Liberty had waited to make its move for Virgin Media until the British cable operator had carried out a series of upgrades to its network and restructured its debt.

“Unless another bidder comes out of the woodwork, it’s hard to see much more of a premium on the price,” said Patrick Yau, a media analyst at Peel Hunt in London.

The British billionaire Richard Branson, whose Virgin brand is now used for a variety of products and services, including airlines and banks, owns less than 3 percent of Virgin Media.

While the British cable operator has been picking up market share, the company currently has 4.9 million customers, or roughly half the number of subscribers as its larger rival, BSkyB, according to filings from the companies.

In August, Liberty Media, the media conglomerate also controlled by Mr. Malone, agreed to buy a stake in Barnes Noble for $204 million, but declined to buy the bookseller outright.

The move disappointed some investors after Liberty had earlier offered to buy a 70 percent stake of Barnes Noble for $17 a share if its chairman, Leonard S. Riggio, who owns around 30 percent of the company, agreed to the deal.

This post has been revised to reflect the following correction:

Correction: February 5, 2013

An earlier version of this article misidentified the leader of News Corporation because of an editing error. He is Rupert Murdoch, not Richard.

Article source: http://dealbook.nytimes.com/2013/02/05/liberty-global-in-talks-to-buy-virgin-media/?partner=rss&emc=rss

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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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The Media Equation: For Wall Street Journal, Leadership at a Crossroads

December 10, 2012 by Leave a Comment

That did not happen. Mr. Thomson’s version of The Journal, with a stronger focus on general news, a beefed-up Saturday edition and a luxury magazine, has been a hit with readers. It may not have the literary majesty of its previous incarnation, but the new bosses made it clear that was hardly a priority.

The Journal has added subscribers to become the largest newspaper in the United States by circulation and has reached a new group of advertisers outside the narrow confines of business. The financial results are tougher to know, but they won’t remain opaque for long. Early next year, News Corporation will split into two companies, with the entertainment assets bundled into the Fox Group and the publishing assets separated into a division that will retain the News Corporation name.

Mr. Murdoch will be able to invest in print without riling investors, but the publishing operation will no longer be connected to billions in revenue from hits like “Avatar,” “American Idol” and Fox News, making the challenge of running it a steep one.

That challenge will fall to Mr. Thomson, an entrepreneurial editor, but not someone who has overseen a sprawling publishing operation that includes broadcast properties in Australia along with newspapers there and in Britain as well as The New York Post, Dow Jones Newswires, and, of course, The Journal.

Making a splash in the slow-growth print businesses will be tough — the publishing arm of News Corporation is estimated to account for 24 percent of the revenue, but only 11 percent of the profits.

Which brings us to whom and what Mr. Thomson is leaving behind at The Journal and Dow Jones, the linchpin of the publishing division.

Mr. Thomson’s promotion will put the newspaper in the hands of Gerard Baker, his deputy who will succeed him as managing editor, and Lex Fenwick, the publisher of The Journal and chief executive of Dow Jones. The celebration of the next era was commemorated in a video that was posted online minutes after it happened last Monday. In it, Mr. Murdoch and Mr. Baker are seen popping the cork on a bottle of Champagne, which Mr. Murdoch promptly poured on Mr. Baker’s head as Mr. Thomson looked on. (Mr. Baker, who is Catholic, made the sign of the cross after his bubbly baptism.)

The celebration clanked a bit — Champagne in the newsroom is usually reserved for Pulitzer victories, something that hasn’t happened in five years on the news side at The Journal. But it clanked for another reason. Many people, including the dozen or so current and former employees I spoke with (who did not want to be identified criticizing their bosses, past or present), worry over Mr. Thomson’s departure because they think Mr. Baker and Mr. Fenwick are not up to their roles.

With a background as a neoconservative columnist from Britain, Mr. Baker shares Mr. Thomson’s politics, but little of his managerial experience or his history of reinventing newsrooms. Mr. Baker was a columnist at The Times of London and its United States editor and also worked as the Washington bureau chief of The Financial Times. His antipathy for the current administration was memorialized in an appearance on Fox News during which he satirized the president as a false messiah.

After three years as a deputy managing editor of The Journal, Mr. Baker has no initiatives to call his own and little constituency in the newsroom. On Tuesday, the day after he was appointed, he walked the halls of the newspaper and for the reporters I spoke with, seeing him out and about was a startling sight.

When he moved to The Journal in 2009, Mr. Baker was, by dint of interest and skill set, a columnist and pundit and, as I have written here in the past, he hasn’t been shy about imposing his political and religious views on news coverage. (This tendency remains strong, according to current employees.)

The irony of bemoaning the replacement of Mr. Thomson, a man they once feared, was not lost on many of the people I talked to. Mr. Baker’s succession became clear when Alan Murray, a longtime Journal editor whom many considered to be in the running for the job, said in November that he was leaving to become president of the Pew Research Center. Mr. Murdoch and Mr. Thomson obviously trust Mr. Baker, but he has little experience in running a big news enterprise full of many kingdoms and has yet to impress a deeply skeptical newsroom.

Mr. Fenwick has certainly played in the big leagues before, when he ran Bloomberg L.P. A flamboyant and hard-driving executive from the “Glengarry Glen Ross” school of management, he is feared by the executives who work for him, at least the ones who remain after a purge that made room for loyalists he brought over from his 25-year tenure at Bloomberg.

After arriving at the beginning of the year to replace Les Hinton, who had become embroiled in the hacking scandal in Britain, he dismantled the executive suite, ordering that managers leave their offices for an open floor plan that mirrored the environment at Bloomberg. Unfortunately for his new employer, he has also replicated a management approach that came to be seen as counterproductive. In his final years there, his portfolio was diminished, and in 2008, he lost his role as chief executive of the entire organization and was put in charge of Bloomberg Ventures.

He is leading the effort to make Dow Jones a player in the financial data business by developing a proprietary Web product to compete with Reuters and Bloomberg, instead of having the company’s information carried on those competitors’ terminals. Although deferential to Mr. Thomson, he habitually berates and bullies people who work for him in very public settings, according to other senior executives who have witnessed the tirades. An expansive Reuters article in October suggested that Mr. Fenwick was erratic, profane and hard to work for, and many of the people I’ve spoken with at The Journal say the account was all too accurate. And he is now in the indelicate position of reporting to Mr. Thomson, who had reported to him.

Mr. Murdoch’s choices for his new company pose a risk for The Journal, its employees and readers, like me, who still treasure the paper. And these are the men Mr. Murdoch has picked. Would I bet against them? Perhaps, but that would just be speculation. Mr. Murdoch has already bet his company on them.

E-mail: carr@nytimes.com;

twitter.com/carr2n

Article source: http://www.nytimes.com/2012/12/10/business/media/for-the-wall-street-journal-leadership-at-a-crossroads.html?partner=rss&emc=rss

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5 Are Arrested in British Tabloid Scandal

January 29, 2012 by Leave a Comment

The arrests appeared to be an intensification of the police investigation into the role of The Sun, Britain’s highest circulation daily newspaper, in the illegal news-gathering techniques that prompted Mr. Murdoch, 80, last summer to close The Sun’s sister newspaper, the weekend News of the World.

Police investigations of wrongdoing at The News of the World, involving the illegal hacking of cellphone voice mail messages and the bribery of police officers for leaking confidential information, have led to the arrest of more than a dozen reporters, editors, executives and others who worked for that paper.

A statement issued by Mr. Murdoch’s News Corporation in New York said the arrests on Saturday resulted from information provided to the police by the company’s Management and Standards Committee, which was charged by Mr. Murdoch last year with rooting out what the company called “unacceptable news gathering practices by individuals” at the newspapers of the company’s British subsidiary, News International.

The company’s cooperation with the police investigation was part of its commitment, the statement said, “to undertake a review of all News International titles, regardless of cost, and to proactively cooperate with law enforcement and other authorities if potentially relevant information arose at those titles.”

That review has run parallel to the company’s efforts to reach out-of-court settlements with politicians, celebrities and others who have been identified by the police as among at least 800 victims of illegal voice mail hacking. This month, Murdoch executives reached court-approved settlements amounting to nearly $1 million with 37 phone hacking victims, including Jude Law, the actor; Ashley Cole, the soccer star; and John Prescott, a former deputy prime minister.

The police said that three of the men arrested Saturday were taken from their homes in London and neighboring areas of Essex County for questioning on suspicion of conspiracy in actions involving “aiding and abetting misconduct in a public office,” the criminal offense commonly applied to cases of bribery of public officials. The fourth man was arrested when he appeared at an East London police station, the police statement said.

The police officer involved, a 29-year-old man serving in the territorial policing command of the Metropolitan Police, the formal name for Scotland Yard, was arrested while at work at a central London police station. He was the second serving officer to be arrested as part of the investigation, known as Operation Elveden, following the arrest last month of a 52-year-old female officer. In all of the arrests, the suspects were released on bail.

Scotland Yard and News Corporation did not identify the Sun journalists who were arrested on Saturday. But the BBC’s Web site said they were Graham Dudman, a former managing editor; Fergus Shanahan, a former deputy editor; Mike Sullivan, the paper’s crime editor; and Chris Pharo, the paper’s head of news. The arrests of the men brought to 13 the number of those arrested in the investigation into the bribery of police officers.

Ravi Somaiya contributed reporting from Paris.

Article source: http://www.nytimes.com/2012/01/29/world/europe/5-are-arrested-in-british-tabloid-scandal.html?partner=rss&emc=rss

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DealBook: Bloomberg Suffers, Too, in Collapse of MF Global

January 13, 2012 by Leave a Comment

Mac Budd, left, and Rich Bryant watched markets on Bloomberg terminals for MF Global before the firm's collapse. Bloomberg lost nearly $1 million a month in revenue when MF Global failed.Michael Falco for The New York TimesMac Budd, left, and Rich Bryant watched markets on Bloomberg terminals for MF Global before the firm’s collapse. Bloomberg lost nearly $1 million a month in revenue when MF Global failed.

The collapse of MF Global has wreaked havoc on farmers, ranchers and other investors who were clients of the brokerage firm, prompting a loud outcry over the disappearance of $1.2 billion in customer cash.

But they are not the only ones to suffer. The financial information giant Bloomberg L.P. lost about 600 subscriptions to its computer terminals — which translates to nearly $1 million in monthly revenue — after MF Global filed for bankruptcy on Oct. 31. The sudden loss of business caused Bloomberg employees to miss their target sales by 12 percent in 2011, people briefed on the matter said, a shortfall that could take a toll on the firm’s bonuses.

While $1 million sounds like a rounding error for Bloomberg, which generates nearly $7 billion in revenue a year, the hit underscores the symbiotic relationship between Wall Street and Bloomberg.

The terminals, with their orange type on black screens that spew real-time market quotes, news and data ranging from sports scores and horoscopes to hedge fund holdings and credit-default swaps, are ubiquitous on Wall Street. Bloomberg, which competes with Reuters, FactSet Research System and News Corporation’s Dow Jones, has more than 314,000 terminal subscriptions worldwide. The income from those subscriptions accounts for about 85 percent of the company’s revenue; each terminal subscription costs about $20,000 a year.

That income stream has enabled Bloomberg — which is still controlled by its founder, Mayor Michael R. Bloomberg of New York — to pay for a huge global news operation of nearly 2,300 journalists who produce some 5,000 reports a day.

Given its reliance on subscriptions, Bloomberg is susceptible to turbulence on Wall Street. Terminal subscriptions first declined during the financial crisis. Lehman Brothers, which collapsed in September 2008, alone had about 3,500 subscriptions.

Yet the damage was ultimately tempered. Some Lehman employees started hedge funds, which required their own terminals. When Barclays bought Lehman’s American operations, the British bank expanded its terminal outlay to accommodate a wave of new employees.

MF Global was a dream client for Bloomberg. For a modest-size brokerage firm, it had a surprisingly large number of subscriptions, according to former employees. Of its 2,500 employees, nearly one-third had subscriptions. (MF Global still has about 200 subscriptions as it continues to use terminals in bankruptcy.)

Wall Street firms often provide machines for only their traders, bankers and investment executives. At MF Global, however, terminals were distributed more broadly — for instance, a human resources employee had one, according to a former employee who spoke on the condition of anonymity.

Such costly expenses were being reined in before the firm’s collapse. Bradley Abelow, the firm’s chief operating officer, had ordered that some terminals be returned, the former employee said.

The close financial ties between the two companies were reflected, at least initially, in bankruptcy court. Bloomberg Finance was listed as a creditor in MF Global’s first bankruptcy filing on Oct. 31, which said it was owed roughly $276,000 for an undisclosed reason. In MF Global’s most recent filing this month, however, the company is no longer listed as a creditor.

“We are still a creditor of MF Global,” a representative for Bloomberg said Thursday, adding that she did not know why the company was omitted.

“Bloomberg had a good year in terms of sales of our core terminal product in a difficult market,” she said, adding that subscriptions over all rose by 14,000.

Bloomberg is not the only one touched by the bankruptcy of MF Global. Others that did business with the firm, as well as Wall Street lobbying firms and trade groups, like the Securities Industry and Financial Markets Association, that received regular fees, have been affected.

But those losses pale in comparison to many MF Global customers, who are out an estimated $1.2 billion that was supposed to be protected. As MF Global began to spiral downward, the firm raided client funds to meet its own obligations.

The Commodity Futures Trading Commission is leading the investigation into MF Global, while the Federal Bureau of Investigation and the United States attorney’s offices in New York and Chicago are exploring potential criminal wrongdoing.

Two months after it was found to be missing, no customer money has been recovered, though investigators have tracked where some of it went. About $200 million was transferred to JPMorgan Chase on the last business day before MF Global filed for bankruptcy, according to people close to the investigation. In addition, as the company was unwinding its balance sheet, customer money was funneled through a clearinghouse, the Depository Trust and Clearing Corporation, the people said.

James Giddens, the court-appointed trustee for MF Global.Mark Lennihan/Associated PressJames Giddens, the court-appointed trustee for MF Global.

The delay has outraged customers, some of whom need the cash to help make ends meet.

On Thursday, the trustee overseeing the return of customer money held a meeting to address the concerns of MF Global clients. More than 100 people were at the downtown Manhattan Marriott to hear about the state of the investigation from the trustee, James W. Giddens.

Mr. Giddens stressed that the inquiry was complex and meant combing through more than 100 terabytes of data — or the equivalent of 950 miles of pages stacked together.

But the clients seemed unimpressed. “It was a waste of time coming here,” Eric Brown, a broker affiliated with MF Global, said after the meeting.

Others looking for the trustee to take action against JPMorgan and Jon S. Corzine, MF Global’s former chief executive who was also the governor of New Jersey, found little satisfaction from the meeting. “Customers haven’t been made whole, and they’re in the toilet,” said one customer, Peter Suarez. “This is a joke.”

Michael J. de la Merced contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=7cf8b4016f028815bbb7aecb5d84f874

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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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DealBook: Murdoch’s Sons Rebuked by News Corp. Shareholders

October 25, 2011 by Leave a Comment

James MurdochOlivia Harris/ReutersJames Murdoch

The News Corporation’s independent shareholders voted largely against reinstating Rupert Murdoch’s sons James and Lachlan to the company board, according to a tally the company filed with the Securities and Exchange Commission on Monday.
 
Although the Murdoch family’s control of a large percentage of voting shares all but guaranteed that all 15 board members would be re-elected after a contentious shareholder meeting on Friday, the detailed tally showed widespread opposition to the roles of James and Lachlan Murdoch.

Investors also voted heavily against Natalie Bancroft, an aspiring opera singer and socialite, and Andrew S. B. Knight, a former News Corporation executive who serves as the head of the board’s compensation committee.




The results of Friday’s vote were not expected to have a significant effect on the company’s leadership since the Murdoch family controls 40 percent of voting shares. And Prince Walid bin Talal of Saudi Arabia, who controls about 7 percent of voting shares, has publicly backed the Murdochs and their management.
 
Still, James, the company’s deputy chief operating officer, has come under increased scrutiny in recent months as News Corporation’s British newspaper unit deals with a phone-hacking scandal at its now defunct News of the World tabloid. He was re-elected with 433 million votes, or 65 percent of the total.

Lachlan MurdochPaul Hackett/ReutersLachlan Murdoch

His brother Lachlan received 440.9 million votes, or approximately 66.3 percent.
 
Ms. Bancroft, who joined the board after the acquisition of her family’s company, Dow Jones Company, was re-elected with 66.4 percent of the vote, while Mr. Knight received 67.7 percent.


And while Rupert Murdoch, the chief executive, easily retained his additional position as chairman, he was re-elected with 84.4 percent of the vote, one of his lowest approval rates in years. Chase Carey, the chief operating officer and a likely successor to Mr. Murdoch, fared better, garnering a 90.5 percent vote.

News Corporation scored some victories, to be sure. Its two newest directors, the former New York City schools chancellor Joel I. Klein and the venture capitalist James W. Breyer, were elected with more than 96 percent of the vote.

And a floor proposal to prevent Mr. Murdoch from serving as both chairman and chief executive failed spectacularly: Just 0.22 percent of votes cast were in favor of the initiative.

Still, such a significant vote against James and Lachlan Murdoch could eventually affect the future makeup of the company, analysts said. Until The News of the World scandal broke open this summer, James had been seen as a likely candidate to take over for his father.
 
“Shareholders can send a message that the company has to heed,” said Doug Creutz, a senior research analyst at the Cowen Group.

In an interview ahead of the shareholder vote, he pointed to a 2004 campaign by several thousand shareholders to oust Michael Eisner from his chief executive post at the Walt Disney Company. Not long afterward, he was replaced by Robert A. Iger.

Article source: http://feeds.nytimes.com/click.phdo?i=256b11c44dfc1704677035004346ab20

Filed Under: Business News Tagged With: , ,

DealBook: Pension Investor to Vote Against Murdochs on News Corp. Board

October 14, 2011 by Leave a Comment

LONDON – Hermes Equity Ownership Services, which represents British Telecom and other large pension funds, said Friday it planned to vote against the re-election of Rupert Murdoch and his sons to News Corporation’s board at next week’s shareholder meeting.

Hermes EOS, indirectly owned by the BT pension scheme, Britain’s largest, said News Corporation’s directors failed to react to concerns about the composition of the board. The institutional investors also raised concerns that calls for an independent investigation into corporate governance and the culture at the media conglomerate went ignored, following the phone hacking scandal at one of its publications were also ignored.

Jennifer Walmsley, director of Hermes EOS, said she had a number of meetings with the independent directors of the board to discuss the demands but that they have “not reacted with sufficient urgency.” Hermes EOS, which represents about 0.5 percent of News Corp., plans to withhold support for Rupert Murdoch, his sons, James and Lachlan Murdoch, as well as Arthur Siskind and Andrew Knight.

“They’ve made some very minor changes to the board so far, which is rather a tinkering around the edges,” Mrs. Walmsley said. “To know why the change isn’t happening, you only have to look at the composition of the board.”

“Members are either family members, owe their position to a relationship with the family or are somehow linked to the family,” she said. “We want to see family members and affiliated directors to be replaced.”

It’s a sign of the mounting pressure on the board. On Monday, Institutional Shareholder Services, a major investor advisory firm, recommended Monday that investors vote against the vast majority of the company’s board at the shareholder meeting on Oct. 21.

Still, such efforts may not have much sway. Mr. Murdoch, who is the company’s chairman and chief executive, controls about 40 percent of the voting shares.

Concerns about the management grew after the phone-hacking scandal in Britain that has led to the arrests of several News Corporation executives earlier this year. Institutional Shareholder Services criticized ”a striking lack of stewardship and failure of independence by a board whose inability to set a strong tone-at-the-top about unethical business practices has now resulted in enormous costs — financial, legal, regulatory, reputational and opportunity – for the shareholders the board ostensibly serves.”

Additional revelations this week of a controversial circulation deal at the media company’s Wall Street Journal Europe that lead to the resignation of the newspaper’s publisher were just the latest proof that an independent investigation into all of News Corporation was needed, Mrs. Walmsley of Hermes EOS said.

Article source: http://feeds.nytimes.com/click.phdo?i=edbedf0378170ae270f7cf43149c5277

Filed Under: Business News Tagged With: , ,
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