In the Name of the Motherfu…I mean, Father

From Business Spectator:

The abrupt change in News Corp’s tactics as [it] tries to bring some semblance of control to the maelstrom it is experiencing in the UK hints at a longer-term problem for Rupert Murdoch and his succession plans.

On Wednesday News withdrew its undertaking to spin off Sky News from BSkyB enabling the UK government to refer its proposed bid for the pay television operator to its Competition Commission and ensuring that any final decision on the bid would be deferred for at least six months and probably closer to a year.

That appeared designed to avoid any immediate decision on the bid within an atmosphere of extreme hostility towards News and therefore to preserve the potential for another tilt at BSkYB once the heat eventually dies down.

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Within 25 hours or so, however, the tactics had changed and News Corp’s deputy chairman, president and chief operating officer, Chase Carey, announced that the group no longer intended to make an offer for the 61 per cent of BSkyB it doesn’t already own.

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That change of strategy was made doubly interesting by a report in the New York Times that claimed (citing three sources with knowledge of the discussions who declined to be identified because they were revealing confidential company deliberations”) that James Murdoch had argued that News should press ahead and seek regulatory approval for the deal.

It was instructive that it was Carey, and not Rupert Murdoch or James, who announced that the bid was being abandoned. James is, after all, executive chairman of News International, the entity responsible for News’ European and Asian businesses and the driving force behind the original proposal to bid for the rest of the pay TV service. Until yesterday, it was James who was making the announcements and apologies.

According to the New York Times, Rupert and Carey over-ruled him on the BSkyB strategy and consulted him only after the decision was all but final.

Only three and a half months ago, James was appointed deputy chief operating officer of News Corp. The move to New York was a clear signal by Rupert that James was his intended successor.

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James’ major claim to that position of heir apparent is his role in running News International and the bid for BSkyB that, until the phone hacking scandal exploded, was on the verge of gaining UK government approval.

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The bid is in tatters, The News of the World has been closed, News International’s reputation is in tatters and News Corp is engaged is a desperate attempt to control the damage and the threat that it might infect its other businesses.

There are already those in the US encouraging inquiries into the activities of News Corp’s UK papers in the US and the allegations that the phones of victims of 9/11 were hacked, as well as the potential for alleged payments to UK police being deemed criminal offences under US laws against corrupt payments to foreign officials.

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There is no doubt the hacking scandal and the way it has been managed has damaged James’ reputation, although there is equally no suggestion that he condoned it or was involved with it – he only became executive chairman of News International in late 2007, after-the-event. He hasn’t, however, distinguished himself in dealing with the mounting allegations or the crisis.

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Regardless, the affair will damage external perceptions of his credentials to succeed Rupert. That might not worry Rupert or James – the $US5 billion buy-back announced yesterday could, as has been noted elsewhere, be used to help secure the family’s control over News’ voting capital and decision-making – but the potential for internal opposition might be more disconcerting.

News Corp’s US executive ranks are peopled by tough, aggressive and ambitious executives. The role James now occupies was once held by his older brother, Lachlan, who resigned the position and left the company in 2005 after losing out in a collision with the powerful head of Fox TV, Roger Ailes.

James’ links with the carnage in the UK and the damage that has caused to News and its ambitions have made him vulnerable and created an opening for any within News who see him as baggage for the corporation or as a roadblock to their own personal ambitions.

From the BBC:

MPs are meeting to decide whether to summon News International chief executive Rebekah Brooks to answer questions on the phone-hacking scandal.

The Commons media committee also wants to question News Corporation’s Rupert and James Murdoch but cannot force them to appear as they are not UK citizens.

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Meanwhile, a 60-year-old man has been arrested over phone hacking.

The man was taken for questioning at a police station in west London on suspicion of conspiring to intercept communications as part of Operation Weeting – the police investigation into mobile interceptions by News International – a Scotland Yard spokesman said.

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In a statement, the MPs said that serious questions had arisen about the evidence Mrs Brooks and Andy Coulson, both of them former News of the World editors, gave at a previous hearing in 2003.

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The News of the World was shut down last week amid the mounting scandal over the alleged hacking of phones belonging to crime victims, politicians and celebrities.

Former Prime Minister Gordon Brown spoke out in the Commons on Wednesday against alleged law-breaking on an “industrial scale” at News International. He also said there had not been private deals with the company when he was in Downing Street.

Meanwhile, Democratic senator Jay Rockefeller said US authorities should consider whether journalists working for News Corp had broken US law.

Mr Rockefeller, who chairs the Senate’s commerce committee, expressed concern that phone hacking may have extended to American targets, including victims of 9/11, although he presented no evidence.

More congressmen, including the first major Republican, Peter King, called for a federal investigation into News Corp’s actions.

Others included senators Frank Lautenberg, Robert Menendez and Barbara Boxer.

Rupert Murdoch’s American assets include the Wall Street Journal and Fox News.

UK Prime Minister David Cameron has announced the terms of an independent inquiry into the hacking affair, which he said would examine the practices of the press.