Monday, July 11, 2011

News Corpse II: Scandal of the World

The News of the World, the 168-year-old newspaper that was the world’s most widely read, printed its final edition on Sunday, signing off with an oversize salutation: THANK YOU & GOODBYE. The scandal that led to its demise won’t be so neatly concluded.

For Keith Rupert Murdoch, the buccaneer chairman and CEO of News Corporation (which owned NOTW); for various News Corp executives, and for the media itself, events over the weeks and months to come will prove how 21st-century media, and 21st-century scandals, have never been respecters of borders and nationalistic distinctions.

And what’s already being called Murdochgate will show everyone the dangers of a master-builder mentality yoked to the laissez-faire culture of tabloid journalism and a ruthless obedience to the bottom line.

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On Saturday and Sunday, the brain trust at News Corp went into full damage control, hoping to contain the fallout from revelations that News Corp operatives were involved in hacking various telephone and voice-mail accounts of celebrated and ordinary British citizens — from Prince Charles to a Surrey schoolgirl, from Hugh Grant to soldiers of the realm killed in Afghanistan and Iraq — over a period of years. It was bad enough to drag Murdoch out of a business conference in Sun Valley, Idaho, and back to London to preside over the most pivotal, viral crisis in his corporation’s history.

And with good reason.

On Saturday, Jack Mirkinson of The Huffington Post offered a thorough overview of where this is probably heading. Up until now, it was thought that this was a UK affair, one of those veddy British imbroglios to be observed from afar (more on that skewed perspective later). But Mirkinson reported that James Murdoch, son of Rupert and director of News Corp’s international divisions, could face criminal charges both in the UK and in the United States.

From Mirkinson’s story:
“[James] Murdoch has admitted that he authorized out-of-court settlements to victims of phone hacking during his time as head of News International, the British division of News Corp--and that the company misled Parliament repeatedly. Murdoch said that he did these things without "full possession of the facts."

“[The British newspaper] The Guardian reports that this admission--and reported payments to British police officers--may render Murdoch criminally liable under both British and American legislation:

“ ‘The payments could leave News Corp - and possibly James Murdoch himself - facing the possibility of prosecution in the U.S. under the Foreign Corrupt Practices Act (FCPA) — legislation designed to stamp out bad corporate behaviour that carries severe penalties for anyone found guilty of breaching it — and in the UK under the Regulation of Investigatory Powers Act 2000 which outlaws the interception of communications.’ ...

“Since News Corp. is technically an American company, Murdoch could also be prosecuted under the FCPA, since the legislation, in the Justice Department's words, "was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business."
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The Red Queen in this sordid rabbit-hole world, former NOTW editor Rebekah Brooks, has so far escaped much attention, but that may change soon. She’s expected to be called in for questioning by British authorities, maybe in the next few days. Since the years-long genesis of this scandal occurred while she was in charge at NOTW, between 2000 and 2003, those questions are likely to be along the lines of “what did you know and when did you know it?”

Rupert Murdoch has demonstrated a fierce loyalty to Brooks. Before News of the World was shuttered, it was expected that hers would be the first head to roll in the scandal. Instead, Murdoch kept Brooks on the payroll, offed his 168-year-old cash cow, and eliminated the jobs of about 200 reporters in the process.

That loyalty to a fellow manager may come back to haunt him: With NOTW now history, some 200 reporters are loose in London and elsewhere, many of them no doubt angry enough to eagerly spill whatever they may know about how NOTW conducted its business. Nobody knows like the rank & file knows.

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Murdoch and Brooks both may formally offer the defense that they knew nothing about what their underlings were doing, that they were caught off guard by the actions of bad actors in the newsroom, freelancers of a dangerous kind. The question then becomes how could they not know it.

The Buccaneer Murdoch may not have known about the scandal metastasizing under his nose, nor the Red Queen, nor the Buccaneer’s son, nor long-time News Corp lieutenant Les Hinton, now a managing director at The Wall Street Journal.

Maybe. But the climate of permission, the ambience of latitude was something clearly created and cultivated by Rupert himself. The culture in which this could happen was an extension of the swashbuckling, zero-sum-game, take-no-prisoners style of the chairman, and no one else.

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Murdoch’s tireless drive for empire will cost him more dearly. For many months now Murdoch has sought to obtain full control of BSkyB, the satellite television concern he’s longed for. Now, his BSkyB bid is in trouble.

Murdoch seems to have gone about his business in these harrowing days in his more or less usual jauntily combative way, seemingly of a mind that, in the middle of a crisis combining the worlds of business, media and government — one that could make him and others the focus of legal inquiries on two continents — the BSkyB deal should proceed like nothing had happened.

Others are not so inclined. Others like the British government. Deputy UK Prime Minster Nick Clegg has urged Murdoch to reconsider his bid for the 61 percent of BSkyB his company doesn’t already own.

"Rupert Murdoch is now in town in London seeking to sort things out,” said Clegg in a statement reported today on the BBC News Web site. “I would simply say to him, 'look how people feel about this, look how the country has reacted with revulsion to the revelations. Do the decent and sensible thing, and reconsider, think again, about your bid for BSkyB.’ "

UK Culture Minister Jeremy Hunt has referred Murdoch’s bid for BSkyB to the governmental Competition Commission — apparently, in this context, the British counterpart to the Federal Communications Commission — for a final decision. That body would conduct an inquiry that could take up to six months, The Guardian (UK) reported today. It’s an inquiry that would consider, among other things, whether News Corporation, or Murdoch himself by extension, passes the "fit and proper" test — by the sound of it, a threshold of character and reputation — required for owning a UK broadcasting concern.

Other opponents include those who would be the British government. The Labour Party has pledged to fight the Murdoch takeover of BSkyB with a vote in the House of Commons on Wednesday. BBC News reported today that Labour leader Ed Miliband has said Murdoch should "drop the bid for BSkyB" which he called "untenable" in light of recent revelations.

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Can it get any worse? Believe it. A competing UK paper, The Mirror (its editors no doubt smelling blood in the water) reported today that a former officer with the New York Police Department said that NOTW reporters sought to obtain the voicemails of victims of the Sept. 11, 2001, attacks on the United States.

“[A] former New York cop made the 9/11 hacking claim. He alleged he was contacted by News of the World journalists who said they would pay him to retrieve the private phone records of the dead,” The Mirror reported.

“Now working as a private investigator, the ex-officer claimed reporters wanted the victims’ phone numbers and details of the calls they had made and received in the days leading up to the atrocity.”

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The Mirror story only underlines a point that, ironically, many in the punditburo haven’t fully understood. For days now, there’s been earnest debate about how soon it’d be before the Murdoch debacle spread to these shores. The nature of what’s been said on the air and in print points to a way of thinking about media that’s rooted in the analog, dead-tree world. All this speculation about when this scandal slipped beyond the territorial waters of the United Kingdom and threatened to become a wider story frankly misses the point.

You can’t have global reach into the media of the 21st century without that reach being an intrinsically international phenomenon. News Corp properties girdle the globe. Tonight on “Countdown,” Keith Olbermann reported that the market cap value of News Corp had dropped by $3.4 billion in one day. That kind of money doesn’t stop at the water’s edge of any country on earth.

The real crux of this issue has less to do with geographic boundaries and trans-Atlantic applications of criminal statutes, and everything to do with the pervasive liquidity of communications in a 24/7 era. The convenience of the boundaries the pundits are gravely debating is no longer in force, and hasn’t been for a long time.

Why do you think Murdoch is trying to acquire a satellite broadcast station?

Murdochgate was a global story from day one.

And it’s a story that promises to keep on giving. Rupert Murdoch is likely to be a more frequent flyer than he is already; expect his weekend shuttle from Sun Valley to London to be one of many between now and summer’s year’s end.

Given the scope of the biggest crisis News Corporation has ever faced ... it’s only fit and proper.

Image credits: News of the World 7/10/11: News Corporation. Rebekah Brooks: AFP. Murdoch: World Economic Forum. News Corp price chart:

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