6:37am

Sat May 5, 2012
NPR Story

News Corp. Fallout: The Implication Of Being 'Unfit'

Originally published on Sun May 6, 2012 10:26 am

Transcript

SCOTT SIMON, HOST:

This week, the British Parliamentary committee that was convened to investigate accusations of phone hacking and executive misconduct at Rupert Murdoch's News Corp., delivered its findings. And the headlines it created make uncomfortable reading for a media magnate who has been under the microscope for 18 months now.

MPs accused News Corp. as a whole of what they call willful blindness. And they went on to make some further damning observations on Rupert Murdoch's own competency.

Here's Labour Member of Parliament Tom Watson.

TOM WATSON: In the view of the majority of committee members, Rupert Murdoch is not fit to run an international company like BSkyB.

SIMON: BSkyB, of course, is the UK's biggest satellite provider. And business analysts say that this raises serious questions about the future of News Corp., which is based in the United States and owns, among other properties, Fox News, The Wall Street Journal and Harper Collins.

NPR's David Folkenflik joins us to talk about some of those concerns. David, thanks for being with us.

DAVID FOLKENFLIK, BYLINE: Sure thing, Scott.

SIMON: And I gather a few days into this, the word unfit was apparently carefully chosen by the members of Parliament. Why?

FOLKENFLIK: Well, it sure carries a punch in the UK. Fit and proper is the term applied to companies in the UK over whether or not they are - it's appropriate to grant them the ability to own major broadcast outlets there. So there is a minority but controlling stake that News Corp. and the Murdochs hold in BSkyB. It's a giant, as you've mentioned, and Ofcom, the media regulators there, is determining whether or not the Murdochs and whether News Corp. is a fit and proper owner of it, given all that we've learned in the last months about this phone-hacking and bribery scandal taking place at its British arm.

SIMON: Mr. Murdoch, of course, is 81. Until recently, he had a whole assortment of lieutenants in the business who were apparently lined up to take over the leadership of various elements of News Corp. What's happened to them?

FOLKENFLIK: Well, you've sure seen a lot of dominoes fall as a result of this scandal. You know, Rebekah Brooks was one of the most important people to Rupert Murdoch in his media empire. She has been arrested. There are four ongoing criminal investigations - one of which is focused entirely on whether she or her husband were involved in the obstruction of justice. You know, in this country, Les Hinton, who had worked with Rupert Murdoch since the 1950s in Adelaide, in a tiny newsroom in Australia, he had risen to be not only the head of News International, that British newspaper arm of the company, but come over here to become the publisher of The Wall Street Journal and the head of Dow Jones. He lost his job. He resigned amid it. And he was accused - one of the people accused of lying to Parliament about this very matter several years ago.

The tension inside the company has always been that Rupert intends very much for the mantle to be passed to somebody whose last name is Murdoch. He has at times been agnostic about which of his adult children - that is James, the number three executive there, his daughter Elizabeth, who's kept her distance despite being invited to join the board of directors last year, or his son Lachlan, who returned himself to Australia after some infighting there.

So there's this tension between the kinds of professional managers that Wall Street might like. Currently, the number two is a guy named Chase Carey. But Rupert Murdoch has always indicated he wants a third Murdoch generation to take the mantle of the company.

SIMON: The plans he had to take control of the satellite broadcaster BSkyB in Britain look shakier than ever. Could this effect extend to other Murdoch properties and ambitions for the future?

FOLKENFLIK: You've seen the stirrings of objections. Senator J. Rockefeller, the Democrat who oversees the committee that deals with the broadcast media, has asked for information from a wide-ranging British inquiry to see if laws were broken in this country by the company.

In addition, you've seen an ethics group in Washington challenge the FCC to see about whether or not broadcast licenses for News Corp's 27 television stations should be stripped. I don't see a huge percentage chance that those things are going to go anywhere, but those are the kinds of things that start to get in movement that can come into play and do some damage down the line.

SIMON: David, when this all shakes out, a lot of people still read Rupert Murdoch's newspapers and watch his television and cable entities. Is there any indication that this report begins to undercut the extraordinary influence he's had in so many areas of Anglo-American culture?

FOLKENFLIK: Well, I think I'm going to give you a split screen answer on that. In the U.K., I would argue that his political influence, what occurs off the page as a result of what's printed on the page, has been deeply undercut. People no longer want to be seen with Murdoch. People no longer want to, you know, pay fealty to him in the same way in the U.K.

In this country, you know, The Wall Street Journal was acquired well after these scandals were cut off, call it 2007. And Fox News is apart from this. Nobody's accused Fox of engaging in any of these practices - at least not that we know of.

That said, you know, if Murdoch himself is implicated to any degree greater than implicated in this past report, you could see people shy away from that or some effort to try to pry control of the company from him, even though he and his family together control about 40 percent of the voting shares of the corporation.

SIMON: NPR's David Folkenflik. Thanks so much.

FOLKENFLIK: You bet. Transcript provided by NPR, Copyright National Public Radio.

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