Is this the beginning of the end of Rupert Murdoch's media empire?

Phone-hacking and the News Corp share price
Posted July 25, 2011 15:32:56

Track the News Corporation share price as key events unfolded in the UK phone-hacking scandal during July 2011.

Hover over each day to view events as they occurred.

No trading data is available to show share prices over the weekends.

Worries mount for Rupert Murdoch’s U.S. holdings

By RYAN NAKASHIMA

and MICHAEL LIEDTKE

The Associated Press
First published Jul 20 2011 06:00PM
Updated Jul 20, 2011 11:58PM

Los Angeles • Emerging relatively unscathed from a British parliamentary hearing on the phone hacking scandal, Rupert Murdoch returned to the United States on Wednesday, where his company faces a host of financial and legal challenges.

As the scandal runs its course in the U.K., Murdoch’s News Corp. must confront at least two U.S.-based shareholder lawsuits, a possible Standard & Poor’s credit downgrade, and the beginnings of a federal investigation.

The conglomerate Murdoch controls through a family trust owns a movie studio, a broadcast network, pay TV channels and newspapers around the globe. It made $33 billion in revenue last year and generates about $2 billion in cash every year. The company has the financial capacity to withstand fines or most other corporate calamities.

Even so, News Corp. could face further damage to its standing. Standard & Poor hass put the company on notice that it may cut its investment-grade "BBB+" credit rating in the next 90 days. The move could affect nearly $15.5 billion in borrowings and raise the company’s costs when it obtains loans in the future.

"We see increased business and reputation risks associated with the broadening legal inquiries going on," said Michael Altberg, the S&P analyst who issued the notice Monday. Even after what some said was a good performance by Murdoch at Tuesday’s hearing, those risks remain, Altberg said.

News Corp. has been called to task in the U.K. over alleged phone hacking and police bribery by journalists at its now-shuttered tabloid, News of the World. Ten people have been arrested in a scandal that has reached into the highest police ranks and the office of the prime minister.

With severe damage already done to his reputation and newspaper in Britain, Murdoch must guard against a similar backlash in the U.S. now that the FBI is investigating whether News Corp. employees bribed police officers to obtain information about victims of the 9/11 terrorist attacks.

Protecting News Corp.’s U.S. franchise is crucial because it includes the company’s crown jewels — the 20th Century Fox movie studio and television holdings that include the highly profitable Fox cable networks and 27 broadcast stations. Movies, broadcast television and cable television account for nearly 60 percent of News Corp.’s revenue and an even higher proportion of the company’s earnings.

Last night on Media Watch (a local institution that castigates the media for doing bad things, when it does them) host Jonathan Holmes introduced an interesting thought, at least locally.

Apparently News International/Ltd's big money comes from the entertainment side and they only really hold onto the news media side because Rupert has a passion for it, in profit terms its not so important to the profit margin. Holmes suggested that if News were to divest themselves of their news media holdings we could see some even scarier people moving to buy them. It won't mean much to non-aussies, but I got the sense he was implying that maybe a Gina Reinhardt or Twiggy Forest (mining magnates with political agendas) would step in. That News haters should be careful what they wish for.

To some extent it is interesting for me to see brits argue.

Do you think US legislators will go after News International following events in Britain?

Quote:

To some extent it is interesting for me to see brits argue.

Argue? You should see them at the Tyne/Weir derby!

So, I don't know about all that. Clue me in?

If it is proved that James Murdoch deliberately lied to our parliamentary committee, as it seems he certainly did, then it may not be possible for him to work in the industry (in higher management) here or in the USA. And Rupert is 80 years old.

I've seen it said that major shareholders think News International would be worth more without the Murdoch family in charge. They may be voted off the board, even if a lawsuit is not brought against them in the US

Meanwhile Murdoch runs his media empire in the US as an unvarnished political operation. Fox News Channel, run by career Republican operative Roger Ailes, is home to the most consistently vitriolic critics of Barack Obama. Leaked memos and emails from Fox vice-president of News, John Moody, and Washington managing editor Bill Sammon allegedly offer evidence of top-down directives to control the message throughout the news day, from linking Obama to Marxism and socialism, to denigrating a public option in the US healthcare debate, to promoting scepticism about climate change.

Fox News Channel hosts have also been linked to political violence. Glenn Beck (who got his start in television from CNN, to its eternal shame) lured a massive cable audience to his daily chalkboard-enabled rants, detailing complex liberal/progressive conspiracies with a healthy dose of historical revisionism. In July 2010, Byron Williams loaded his car in Northern California with a small arsenal, donned body armour, and set off for San Francisco, intending to massacre people at two of Beck's regular targets, the Tides Foundation and the American Civil Liberties Union. When police tried to pull him over for speeding, Williams started firing and was arrested. He told reporter John Hamilton: "I would have never started watching Fox News if it wasn't for the fact that Beck was on there. And it was the things that he did, it was the things he exposed that blew my mind."

So, what is the definition of an "untarnished political operation"?
Even in Murdoch terms?

To claim that he has no interest or knowledge of what the presenters at Fox News actually say, is disingenuous.
He is their boss.

Sir Hugh Orde, the president of the Association of Chief Police Officers, has lambasted Rupert Murdoch, saying the chairman of News Corporation had shown a complete denial of responsibility for what had gone on in his company.

He contrasted Murdoch's behaviour with the leadership shown by Sir Paul Stephenson, the Metropolitan police commissioner who quit last week over his indirect links with former News of the World editors.

Orde is tipped as a possible replacement for Stephenson, and it is the second time in a few days that he has attacked the irresponsibility of News Corps.

Speaking on the BBC's Andrew Marr programme, Orde said "You saw the chief officer of the police service of this country, Sir Paul Stephenson, saying, 'Look this happened on my watch. I am responsible. I am therefore … It's on my watch. I am resigning.' Compare that to Rupert Murdoch – complete denial of any responsibility of his organisation."

Writing in Jane's Police Review at the weekend, Orde said: "What we have seen over the last few days is police officers standing up, explaining their actions and decisions and being held to account for them. Across the country, in serving our communities, police officers expect to have to do no less.

"It is a stark contrast to the way in which others have sought to meet their responsibilities."

News Corporation can respond that top executives have now stepped down, notably Les Hinton, chief executive of News International at the time of the phone hacking, and his successor, Rebekah Brooks.

The culture select committee is due to meet on Friday – when it releases a report on football governance – to discuss how to handle the apparent conflict of evidence between James Murdoch, News Corps International chief executive, and other former News International executives, including Colin Myler, the former editor of the now-closed News of the World.

Myler said he did show a crucial email – known as the "For Neville" email – to James Murdoch before News International's decision to pay out around £700,000 to Gordon Taylor, chief executive of the Professional Footballers Association in an out-of-court settlement after Taylor threatened to sue the paper.

James Murdoch insisted he did not know about the email, but Myler and Tom Crone, the News Group's former head of legal affairs, have claimed he is mistaken.

Culture select committee members said they hoped to write to Myler and Crone.

They will also be writing to the firm of solicitors Harbottle & Lewis to ask the firm to explain the origins of a carefully crafted letter dated 29 May 2007 claiming that it had not found "reasonable evidence" that senior editors were aware of the actions of Clive Goodman – the royal reporter who went to prison for phone hacking -or that "others were carrying out similar illegal procedures". Harbottle & Lewis reviewed emails from the accounts of Andy Coulson and five other individuals, according to documents published by the culture select committee.

A request for information will also be sent to Lawrence Abramson, a former senior partner at the law firm. The firm of solicitors is not yet clear whether it has legal immunity from News Corps to discuss the exchanges.

Committee members want to ask for evidence from Jon Chapman, News International's former director of legal affairs, about his knowledge of the level of phone hacking. It has been suggested that in 2007 Chapman and Daniel Cloke, then News International's human resources director, reviewed the emails between the six named News of the World members of staff before sending them to Harbottle & Lewis.

It is thought unlikely that the committee will meet in public before September, but this does not prevent compilation of written evidence.

In a separate development, an opinion poll carried out by YouGov for the Sunday Times showed the proportion of people who believed David Cameron was performing "well" had fallen to 39% while his "performing badly" figure at 55% was the worst of his premiership. At the end of May, Cameron was on 48% – 46% showing a net positive of two.

At the same time the proportion who believed Miliband was performing badly had fallen to 50%, down from 60% before the phone-hacking scandal broke. The proportion who believed he was performing well was 35%, up from 25%. So for the first time more people believed Cameron was performing badly than they did Miliband. YouGov surveyed 2749 adults between 21 and 22 July.

News Corp management and standards committee has written to all News International staff ordering them to retain all emails and documents regarded as a relevant to police and parliamentary inquiries into phone hacking.

The email reads: "if you are uncertain whether a document is relevant or falls within the definition of 'document', you should preserve it. Care should be taken to avoid overwriting any electronic file that might be relevant."

In the grand scheme of Murdoch's financial interests, how does the extreme right wing view of Fox News suit his purpose?