The trembling at News Corp has only begun

Geoff Colvin at Forbes writes:

Some people aren’t at all surprised by the unending scandal at Rupert Murdoch’s News Corp. They are the investors, insurers, lawyers, and others who had read the “Governance Analysis” report on the company from The Corporate Library, a research firm. The firm grades companies’ governance from A to F, and for the past six years News Corp. has received an F — “only because there is no lower grade,” says Nell Minow, who co-founded The Corporate Library in 1999 on the premise that governance “can be rated like bonds, from triple-A to junk.” News Corp.’s overall risk, says the prophetic report: “very high.” Risk of class-action securities litigation: “very high.” Scandal-related lawsuits are already piling up.

For those who think corporate governance is the concern of prissy do-gooders who don’t understand real-world business, News Corp. (NWS) is the latest example that the truth is just the opposite: Governance is the foundation of real-world business. If it isn’t solid, trouble is inevitable. For News Corp., it’s the reason the trouble is far from over.

News Corp.’s variety of lousy governance is simple — one man exerts control wildly out of proportion to his stake in the business.

At The New Yorker, Anthony Lane describes how a tabloid culture runs amok.

On March 21, 2002, a thirteen-year-old English schoolgirl took the train home. Usually, she took it all the way to Hersham, seventeen miles from London, where she lived, but on that day she got off one stop before, at Walton-on-Thames, to get something to eat. From that decision flowed two events, one terrible and final, the other more ambiguous and by no means complete. The first was the death of the girl, whose name was Milly Dowler. Walking home from Walton, she was abducted and murdered by a man named Levi Bellfield. Her body was found six months later, in a field twenty-five miles away, by mushroom pickers. The second consequence has been the fraying of an empire, and the sight of its emperor under siege. Many people have dreamed of such a day; far fewer would have predicted the swiftness with which it arrived; others view it as an overreaction tinged with hypocrisy and hysteria; and only the unworldly would claim that the end is nigh. Empires strike back.

The emperor is, of course, Rupert Murdoch, the chairman and C.E.O. of News Corporation; the owner of Twentieth Century Fox, Fox News, and the Wall Street Journal; the proprietor, in Britain, of the Times, the Sunday Times, and the Sun, and the holder of a 39.1-per-cent stake in BSkyB, the country’s leading satellite-broadcasting company; an Australian by birth and an American by choice; the proud father of six children; the thirty-eighth-richest person in this country; and, in the words of his mother, the adamantine Dame Elisabeth Murdoch, now a hundred and two years old, “that wretched boy of mine.” Never underestimate the wish, in the heart of a child, even a child aged eighty, to please the matriarch and prove himself less wretched in her eyes. It takes only three minutes, near the start of “Citizen Kane,” to shift from the stony stare of Mrs. Kane, as she watches young Charles leave forever, to the bullish proposal of the grown lad: “I think it would be fun to run a newspaper.”

The Guardian reports:

Former staff at the News of the World are understood to be underwhelmed by efforts by News International to find them work after they were handed a list of potential jobs which included posts in Siberia, Russia and Dubai.

Some former News of the World journalists said that former News International chief executive Rebekah Brooks’ promise that as many staff as possible would be redeployed is proving an empty gesture as the vast majority of the alternative jobs being discussed are either non-editorial or entail a move abroad.

A job list given to ex-NoW staff include exotic positions such as oil reporter or “symbology analyst – Russian language” for parent company News Corporation’s Dow Jones wire service and “materials manager” for Fox in Siberia.

“The idea that you would go from the News of the World to becoming an oil reporter for Dow Jones, a high end financial wire service, is laughable,” said one former employee.

And:

The editor of the Times, James Harding, has admitted that News International’s handling of the phone-hacking crisis was “catastrophic” and that it impacted on the paper’s sales.

Harding said readers had cancelled subscriptions to the Times and to digital versions of the paper in the immediate aftermath of the revelations about Milly Dowler’s phone allegedly being hacked by News International sister title the News of the World.

Asked whether News International would recover and if he still felt the way the company had reacted had been “catastrophic”, as described by one of his paper’s leader columns, he said: “Yes, I think that would be a pretty descriptive word for what it happened and the struggle they had in getting to grips with it.”

And Roy Greenslade writes:

News Corporation is certainly counting the cost of Wapping’s phone hacking scandal. Top lawyers don’t come cheap.

According to The Lawyer magazine, the barrister hired by the media company for his legal advice, Lord Grabiner QC, commands fees of £3,000 an hour.

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