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. Jazzzzzzzz

    Ahhh, well does the APPLE fall far from the tree?

    July 27, 2011 at 9:46 pm | Report abuse |
  2. Philip

    Rupert's got bags under his eyes too, ladies. What's up with that?

    July 27, 2011 at 10:02 pm | Report abuse |
    • Yoda Murdoch

      When 900 years old you reach look as good you not. Mmm? Woohehehe.. Now who wants to sword fight? 😉

      July 27, 2011 at 10:19 pm | Report abuse |
    • Mmmmm

      he's applying his hemorrhoidal cream in the wrong place...

      July 27, 2011 at 10:54 pm | Report abuse |
  3. And you thought 'Justice' was slow

    The Guardian broke this story over a year ago, but none of the major media picked it up. It wasn't until Murdoch's thugs hacked into a missing girls cellphone and tampered with it that others became even interested. It wasn't until Parliment got ruffled that it hit the boon tube. Does it really take that long for the message to get through your tv? You bet it does. The wheels of Justice grind slow. Murdoch's wheels fell-off two years ago. but he's so big, he's just now coming to an axle-grinding stop. Kick him again while he's not moving Mr. Wayne. Please.

    July 27, 2011 at 10:13 pm | Report abuse |
    • kyle

      Nothing will come of this, FoxNews has dismissed this as a non news topic, the other stations are to scared to pick this up. the Hacking laws are for the little people and those that break them will be thrown in jail without trial or proper evidence or even be accused of a crime. Bradly Manning and a host of other hackers have had their lives destroyed for attempting less. Murdock and his thugs will prevail. its good to be king.

      July 28, 2011 at 12:08 am | Report abuse |
  4. Mmmmm

    With all that eaves dropping you think Murdoch played wall street fairly?

    July 27, 2011 at 10:24 pm | Report abuse |
  5. Madame Royale

    Perhaps his bags are packed, he's ready to go,
    Taxi's waiting, he's blowing his horn...

    He's leaving on a jet plane....

    July 27, 2011 at 10:32 pm | Report abuse |
  6. Joe

    When I got my first cellphone in '87 it quickly became clear to me that the conversations were being tapped. That was because the tapping on clear signal was done through open mike and you could hear the guests laughing at conversational idiocies... in the meantime the cellphone hacking has gone digital and the taps are less intrusive. Nonetheless, this is all nothing new. In the old days of land lines, the hackers were mainly cops and telephone union workers. Why did the union workers tap the phones? On orders from Moscow central, who in those days gave orders to unions all over the world. They would routinely tap the calls of management during strikes and negotiations in order to get the upper hand... except that the managers knew it was going on and would carry on bogus conversations to mislead the listeners, and only hold real conversations in person. Like we all should. Remember when you used to talk to people IN PERSON? It's really nice. You should try it again.

    July 27, 2011 at 10:37 pm | Report abuse |
  7. Philip

    Joe...thanks for posting that very intersting expose'. Do you perhaps have a book that I could reference? Websites are corruptable, all of them. You are correct about eavesdropping on phones. Before the digital age, the giant phone companies donated these huge burdonsome switching machines that helped the authorities keep tabs. Now, they have microsoft engeneering back-doors in their operating systems. Did i say now? They've been doing it since Windows 98. Calling it "Windows"...something you can see through both ways. It's a joke man! And the jokes on US.

    July 27, 2011 at 10:54 pm | Report abuse |
  8. raven

    I use my phone for lotsa things, I keep my work schedule on it, I wake up to the alarm on it, I sometimes get directions from it, i google info from it and acourse I use it to comment here on CNN. Its odd that you mention talking cuz I rarely use it for that purpose.kinda fascinating how little i use it to TALK .I text sometimes tho .And we dont even have a hardline anymore .wierd .

    July 27, 2011 at 11:00 pm | Report abuse |
  9. Bilbo

    I know he tapped my phone because in the 90's I was going to start an ultra conservative cable news channel and call it Fuch's News.

    July 27, 2011 at 11:33 pm | Report abuse |
  10. Gandolph Swedish Wizard

    Bilbo old friend.. I certainly hope you're not still chasing that gold ring? Who am I going to have play with my staff, smoke green leaf with and sail our smoke ships into eachother's smoke holes with? You shall not pass!.. unless you'd like to make a pass at me then it's quite alright..

    July 27, 2011 at 11:47 pm | Report abuse |
  11. RTFH

    How quickly we forget.... Remember Oliver North..... and nothing happened (or changed).

    July 27, 2011 at 11:55 pm | Report abuse |
  12. www.onlinetimez.blogspot.com

    justice must be served

    July 28, 2011 at 1:23 am | Report abuse |
  13. NadePaulKuciGravMcKi

    How much of the 'official' September 11 story is true?

    July 28, 2011 at 2:48 am | Report abuse |
  14. about officials

    We have sporting officials who, when caught cheating and lieing are fired. Oftentimes, it's the sports 'talking heads' who, after publicly abalyzing every single detail, show the audience EXACTLY what happened. The outgoing official isn't pardoned by the incoming one. In politics, it's the exact opposite for all the heads.

    July 28, 2011 at 7:58 am | Report abuse |
  15. chillipepper

    Murdoch is a great American Patriot. He is innocent. Thank God he is here and gives a voice against the Government Media complex. We have a watch dog. Also I'm thankful to liberal media. Once the Conservatives takeover in 2012. Then they can be a watch dog. We need both sides watching each other. Liberals might make things up and think of some far fetched connections. But most people can see through that. Bottom line people need to hear both sides

    July 28, 2011 at 8:16 am | Report abuse |
    • bachmanntwit

      Murdoch is a flaming POS who was run out of his home country of Australia for trying to use his media empire to influence elections. Same as here with Faux news.

      July 28, 2011 at 9:05 am | Report abuse |
    • Harold

      @chilipepper: He is part of the government/corporate media complex and he also has liberal programming (Notice the word "programming").. He is a sensationalist and does it all not for country (UK not US) but to get everyone up in a frenzy, so he can cash in. He's a snake like the rest of them.

      July 28, 2011 at 11:35 am | Report abuse |
    • Harold

      Correction.. He's an aussie. The descendant of a criminal colonist no doubt. Kind of funny nobody knows what nationality he is.. Myself included until now.

      July 28, 2011 at 11:40 am | Report abuse |
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