Murdoch seeks to defuse investor concerns over phone hacking scandal
News Corp. Chief Executive Rupert Murdoch addressed investors for the first time since a phone hacking scandal forced the closure of one of the company’s British tabloids and withdrawal of its bid for satellite operator British Sky Broadcasting.
Murdoch delivered a strong denunciation of the conduct of journalists working for the now-defunct News of the World tabloid, who allegedly intercepted voice-mail messages of murder victims and soldiers killed in combat. That behavior sparked public outrage, and prompted News Corp. to shutter the sullied 168-year-old publication.
“I want to be very clear about where I stand,” said Murdoch Wednesday during the start of the company’s earnings call with analysts. “I’ve run this company for more than 50 years. The kind of behavior that occurred in that newsroom has no place in News Corp.”
Murdoch also forcefully declared he would remain at the helm of the media conglomerate he built -– seemingly addressing reports that the 80-year-old executive might cede the CEO title to News Corp. Chief Operating Officer Chase Carey.
“The board and I believe I should continue in my current capacity as chairman and CEO,” Murdoch said. “Make no mistake, Chase Carey and I run this company as a team and we are committed to doing the right thing. The strength of that partnership is reflected” in the company’s fourth-quarter earnings.
News Corp. reported a net income of $683 million in its fiscal fourth quarter that ended June 30, a decline of 22% over a year earlier. Revenue for the quarter rose 11% to $8.9 billion. These results were dragged down by the $254-million loss the company recorded from the June sale of Myspace. The once high-flying social network, which News Corp. acquired for $580 million six years ago, sold for $35 million to an Orange County firm specializing in online advertising.
News Corp. also incurred a breakup fee of approximately $63 million when it decided in mid-July to withdraw its bid for the remaining shares of BSkyB that the company does not already own. The company was forced to at least temporarily walk away from the satellite broadcaster amid public outrage over the British phone hacking scandal.
Murdoch sought to reassure Wall Street that News Corp. is setting things right after the series of damaging disclosures, which have caused the company’s stock to drop 24%.
“Our fundamental goals at News Corp. are to produce sustained value for shareholders … and to it with integrity,” Murdoch said.
Amid continued denunciations from the public and powerful politicians, the company abandoned its $12 billion bid for BskyB, Britain’s largest pay television service. The satellite broadcaster would have provided News Corp. with a predictable -- and growing -- revenue stream and reduced the company's reliance on less-predictable advertising dollars.
The Australian-born media mogul and his son, James Murdoch, were summoned to appear before a committee of Parliament to answer questions about the conduct at News of the World. The elder Murdoch –- while making statements of contrition -– denied ultimate responsibility for the phone hacking.
James Murdoch has been asked to provide more information about his knowledge of journalists’ conduct as head of the News International unit that includes the company's British newspapers. Three former executives have provided information that contradicts Murdoch’s statements.
The events unfolding in London are beginning to reverberate in the United States. The FBI has opened a preliminary inquiry into whether British journalists may have tried to hack the phones of victims of the Sept. 11 terrorist attacks.
Meanwhile, News Corp. and Elisabeth Murdoch shelved plans for the chairman’s 42-year-old daughter to join the media conglomerate’s board amid criticism about corporate governance. She was expected to do so after the company completed its $680-million acquisition of the London-based television production company she runs, Shine Group. That deal closed in April.
Former Assistant Atty. Gen. Joel Klein, who joined News Corp. last November, has been asked to head an internal investigation, reporting to independent board member Viet Dinh.
-- Dawn Chmielewski
Photo: Newspapers in Melbourne on July 21, 2011 with coverage dominated by Rupert Murdoch's appearance before a British parliamentary committee. Credit: William West / AFP / Getty Images