A calm in the Murdoch storm: What's brewing on the horizon?
A look at how the Murdoch Parliament testimony appeared in papers in Australia, where Murdoch also has a stake in the media.
July 27th, 2011
06:56 PM ET

A calm in the Murdoch storm: What's brewing on the horizon?

In the week since News International executives answered questions from Britain's Parliament on the UK phone hacking scandal, the frenzy has died down a bit, perhaps allowing Rupert Murdoch and his minions to direct the news rather than react to it.

Gone are the daily live blogs and Parliament has been in recess. In the past few days, stories about the troubles of Murdoch's News of the World have not been splashed across front pages as dominantly.

The much-needed time could be exactly what News Corp. needs ahead of some big meetings. And it gives us a chance to see where things stand and where they might be headed.

James Murdoch's place atop the mountain in jeopardy?

Going into the Parliament hearings, most of the focus was squarely on Rupert Murdoch, chairman and CEO of News Corp., but his son James emerged as a true key player in how this story would play out. In the days leading up to and during his testimony, Reuters and other media organizations reported that James Murdoch's position atop News Corp.-controlled satellite company BSkyB would be based on how his testimony went.

Immediately after he testified, things were murky about where he stood. But in the days following, accusations turned the murk into mud.

"Especially troublesome for James Murdoch was last week's public accusation by two former News of the World executives that he misled Parliament about when he learned that illegal reporting practices at the tabloid were more widespread," an article in the Murdoch-owned Wall Street Journal said.

The disputed testimony in front of Parliament set off a chain reaction of anger from some former workers about how truthful the younger Murdoch had been. "Pressure on James Murdoch Is About to Intensify" a New York Times headline proclaimed.

Fast forward to Wednesday.

It's a day before the BSkyB board is set to meet - and depending on what newspaper or site you read - James Murdoch's fate is either completely doomed or safe as ever.

The New York Times talked to several analysts who paint a grim picture for the younger Murdoch.

“The biggest issue is whether James Murdoch is to remain chairman,” said Steve Liechti, an analyst at Investec Securities in London. “Given the issues going on with News Corp. and James Murdoch’s position within that business, it may be seen that it is not appropriate.”

In the same article, the Times talks with a former financial services minister in the UK, who said he thinks there's a need for a shake-up at the board level. Paul Myners told the Times he thinks that James Murdoch should be out of the chairman spot, but remain on the board in a certain capacity.

"Most corporate problems can be traced back to poor corporate governance and this company falls short in that respect,” he said.

But over at the Guardian, the opinion seems to be that James Murdoch can now rest comfortably at the head of the board table after gaining some important backing.

"James Murdoch is likely to remain chairman of satellite company BSkyB after winning the support of the leading independent director ahead of a crunch meeting later this week," the paper writes. "Nicholas Ferguson, Sky's deputy chairman, is understood to have given Murdoch his backing after a 'long conversation' in a private meeting, despite continuing questions about the role played by Rupert Murdoch's youngest son in the phone-hacking scandal."

Whichever way the pendulum swings, the decision about James Murdoch and any others regarding the scandal out of the board hearing could have bigger implications. The Wall Street Journal writes:

"BSkyB directors, representing the company's shareholders, could be seen as a proxy for News Corp. shareholders, since the companies have many top shareholders in common. That means that any move or signal from BSkyB's board on Mr. Murdoch's status in light of recent events could be an indication of his standing at News Corp., too."

Adding to the fray: An inquiry started by UK media regulator Ofcom, which is looking at whether News Corp. remains "fit and proper" to oversee BSkyB.

What does the public think about that? The UK's Independent reports a survey it conducted showed 65% of those polled agree the scandal means the Murdochs are not "fit and proper" to own any part of BSkyB, with 26% disagreeing with the statement.

The still-unraveling story: How pervasive was hacking and what will the impact be?

According to a New York Times article by David Carr, the scandal itself has splintered the "family business."

"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."

The British judge leading the government-backed probe into illegal eavesdropping by journalists said he will start ordering people to testify and hand over documents "as soon as possible."

Brian Levenson, the judge, said the inquiry would try to deliver its initial report within a year, as instructed, despite the wide range of subjects it's supposed to cover.

Prime Minister David Cameron announced the inquiry July 13 in response to public fury at the accusation that people working for Rupert Murdoch's News of the World tabloid illegally hacked into the phone of a missing British schoolgirl who was later found dead. Anger from politicians, advertisers and the public almost immediately prompted the closure of the paper, a national institution and one of the best-selling papers in the English-speaking world.

Further accusations that the practice of phone-hacking was widespread, that police bungled an investigation into the practice, and that journalists bribed police have reverberated across the top levels of British power structures.  The scandal spread across the Atlantic with the accusation that papers in Murdoch's News Corp empire may have sought private details about victims of the September 11, 2001 attacks. The Justice Department has opened a probe into those claims.

Add to that the after the elder Murdoch, Rupert, faced Parliament, he's become a target of some former workers at News International.  The Wall Street Journal recounts some of the latest bad news:

"Last Thursday, the paper's most recent editor, Colin Myler, and its longtime top lawyer, Tom Crone, said they told James Murdoch in early 2008 of a crucial e-mail suggesting phone hacking went beyond a single journalist, contradicting the company line, put forward by Mr. Murdoch as recently as last week's hearing, that it didn't become aware that hacking was more widespread until much later. A third man — Jon Chapman, former director of legal affairs at News International — has also indicated he wants to correct 'serious inaccuracies' he claims were aired at the hearing."

The UK's Telegraph newspaper reported that the Parliament committee will ask James Murdoch to clarify his testimony and respond to the allegations.  The paper also reported that in response to the allegations News Corp. said James Murdoch stands by his testimony.

And The New York Times posted an article that questioned Rupert Murdoch's argument to Parliament that he's not as fully engaged in his media empire as many people think, noting that with so many employees, there was no way he could know what was going on at every level of every company. The article dubs him a "fully engaged boss," based on the accounts of other Murdoch veteran employees. One former editor told the paper Murdoch was never disengaged and "reads avidly" from “the best clippings service I have ever seen.'"

“I really didn’t buy that, to be honest,” said Roy Greenslade, a former Murdoch editor who is now a professor of journalism at City University London. “I’m sure he’s not as interfering as he was 20 years ago, but you can see through the way The Sun and The News of the World operate that his word remains law.”

Those series of comments have put a damper on the chances that the Murdochs/News Corp./News International et al. could end this quickly. With the new accusations of lies in the testimony itself, the winds are changing.

"It's a far cry from the sigh of relief some at News Corp. breathed after last week's parliamentary hearing, when the initial feeling was that nothing had transpired to make matters worse for either Murdoch," the article in the Murdoch-owned Wall Street Journal said.

Then, details of allegedly secret defense briefings regarding Afghanistan began to spill out. The Independent reported that Murdoch, his children, and other senior officials had "extraordinary access" to officials, including "more than two dozen private meetings between the family and senior members of the government in the 15 months since David Cameron entered Downing Street."

"In total, Cabinet ministers have had private meetings with Murdoch executives more than 60 times and, if social events such as receptions at party conferences are included, the figure is at least 107.

"On two occasions, James Murdoch and former News International chief executive Rebekah Brooks were given confidential defense briefings on Afghanistan and Britain's strategic defense review by the Defense Secretary, Liam Fox."

BBC reported that because of concerns about the number of meetings, especially during Murdoch's attempt at the BSkyB/News Corp. merger, "The minutes of those meetings will be published in the coming weeks" and that "minutes of a meeting with media groups opposed to the News Corp. bid will also be published."

A few more developments:

– Trinity Mirror, the publisher of several papers including the Daily Mirror, has launched its own internal investigation regarding phone-hacking practices. The publisher saw a nearly 10% drop in stock immediately after the story broke, the Wall Street Journal reports.

– The entire debacle has the making of a Hollywood story. For now, it will begin on the bookshelves. According to the Hollywood Reporter, the journalist who first broke the Murdoch phone-hacking scandal for the UK's Guardian newspaper, Nick Davies, has scored the first book deal.

But hang on, because the last chapter in this story seems like it is surely yet to be written.

soundoff (61 Responses)
  1. Jazzzzzzz

    @ RTFH ... And that sinister smile

    July 28, 2011 at 8:33 am | Report abuse | Reply
  2. palintwit

    Sarah Palin is a filthy, stinking, steaming pile of maggot infested trailer trash. And so is Michele Bachmann for that matter.

    July 28, 2011 at 9:08 am | Report abuse | Reply
    • robert saint amour

      well put ...

      July 28, 2011 at 2:32 pm | Report abuse |
    • Miss Spoke

      She will be working for Murdoch next.

      July 28, 2011 at 6:27 pm | Report abuse |
  3. CSnSC

    Good morning twit, great to see you've expanded your intrests, wait, no, thats the exact same crap you've been spewing for months. Even if I agree with you I dont give a dam about your boring, worn out opion. Hope you wake up tomorrow with an original thought.

    July 28, 2011 at 9:37 am | Report abuse | Reply
  4. saywhat

    Well we see now how powerful this Australian/American goon Murdoch is.
    He wouldn't be touched ,especially in the US where powerfuyl people & foreign lobbies routinely wield influence on lawmakers, to their advantage.

    July 28, 2011 at 12:48 pm | Report abuse | Reply
  5. Sorry

    Old story ..
    They've gone away with the crime..
    Let them be, We dont want more bloods

    July 28, 2011 at 1:46 pm | Report abuse | Reply
  6. robert saint amour

    is it not strange that cnn has no coverage of piers morgan's bs about hacking...

    July 28, 2011 at 2:34 pm | Report abuse | Reply
    • Miss Spoke

      They never seem to mention why he was sacked as a tabloid editor either. He published FAKE photos of British troops mistreating Iraqis. Put their lives at increased risk for a 'scoop'. Nice man.

      July 28, 2011 at 6:23 pm | Report abuse |
  7. Lars

    Oops, the hacking story just got more fuel. The Guardian reports Brooks gave Sarah Payne's mum a cell phone as a gift, to use after her daughter's murder. Oddly, it seems to have also been hacked. Like they say, beware of geeks bearing gifts.

    July 28, 2011 at 3:05 pm | Report abuse | Reply
  8. DrDrew

    Murdoch need not care about all this as he has Wendi to ride as needed.

    July 29, 2011 at 7:48 pm | Report abuse | Reply
  9. Ranzabar

    Big Red and Mini Me are sooooo doing the nasty

    July 31, 2011 at 12:05 am | Report abuse | Reply
  10. randall bramstedt

    Does anyone notice how coverage of the Murdoch scandal has COMPLETELY dried up on CNN.
    Forget about Piers Morgan, there simply is NO coverage of anything about the Murdoch scandal.

    Reminds me of Fukushima. What happened to that coverage? They are now having to
    build an underground dam there to contain the spread of radiation after it escaped into
    the water table. It has been declared to have released more radiation than Chernobyl.
    Where is the coverage???

    August 13, 2011 at 6:14 pm | Report abuse | Reply
  11. TERROR ALERT

    YES , WE CAN...YES , WE CAN...WE WILL WIN IN WAR ON TERROR (30 whities or what are terrorists will never come back alive...thank you lord....aaamen).

    What do you mean tragedy! It was just a birthday present for planet apes president !!! That's all ! Feels great to flip hamburgers and hip hop atop of good news...makes you feel vibrant and energized !!!

    ARIZONA = UTOYA = GOVERNMENT‘S "AFTERLIFE" CASH & $$ FLASH MOB (there was no shooting in Utoya or Arizona, but instead tear gas and on faces of multiculturalism maniacs while calling you a terrorists) !!! stateofterror.blogspot.com/ or stateofterror.wordpress.com/

    OBAMA = STALIN = BUSH or USA = SOVIET UNION
    avsecbostjan.blogspot.com/ or avsecbostjan.wordpress.com/

    Whitie is fighting war on terrorism just to come home and be pronounced as terrorist...turned in Timothy, jobless, homeless ...YESSS, WE CAN...YESSS, WE CAN...GABBY OPENED HER EYES (Obaminator’s psychotic speech in Tucson = failed “Apocalypse Now“)

    TEARS WON'T DO YOU ANY GOOD !!! AS BUSH STATED "THAT'S WHAT THEY ARE PAID FOR"(to die ) !!

    Don't worry O(s)bama, you have just saved USA what is lots of Dollars in your DEBT DEALS(DEAD AND ILL) as those best of America or Navy Seals would also grew older and then you already know how it goes !!!

    August 14, 2011 at 3:04 pm | Report abuse | Reply
  12. Dr. David

    This may be old news but has anyone considered that Michael Bloomberg and Bloomberg Business News is also so powerful that no one wants to challange his empire?? Murdock and his Fox network isn't the only one who controls the majority of the news world and the media. CNN should do some reporting on America's Monopoly from Park Place to Hong Kong because if Murdock's empire falls the Bloomberg empire will step in to take over. Is this too big for CNN to handle or Is CNN part of Bloomberg's empire already??

    August 16, 2011 at 8:03 pm | Report abuse | Reply
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