|July 20, 2011|
|Thinking the Once Unthinkable at News Corp.|
|By Kevin McCauley|
|We had to revise the O'Dwyer's poll, “Who will be the next victim of News Corp.’s hacking scandal?” twice last week. A third change may be in the works.|
The first revision was to remove News International CEO Rebekah Brooks as an answer, after the protégé of News Corp. CEO Rupert Murdoch stepped down from her post. She was replaced on the poll by “British newspaper group,” which currently ranks as the No. 1 response.
Les Hinton, CEO of Dow Jones and a 52-year employee of Murdoch, followed Brooks off the poll's list of answers. He is being replaced by U.K. Prime Minister David Cameron, who has cut short his tour of Africa to deal with the hacking fallout. That get-out-of-Africa ASAP decision came in the wake of bombshell resignations of Scotland Yard chief Sir Paul Stephenson and his No. 2 and counter-terrorism honcho John Yates due to their all-too-cozy ties with News International.
The once unthinkable is indeed now very thinkable.
Bloomberg reports that News Corp.’s board has junked its rubber stamp and is mulling whether a change is needed at the very top to restore the reputation of the battered company.
The 80-year-old Murdoch, who told his Wall Street Journal last week that everything is going well, appears to be in denial over the gravity of the hacking mess. In a bungled PR move, he was pictured in London last week smiling with Brooks just before she quit on Friday and was arrested on Sunday.
To its credit, News Corp. hired Edelman to stop the PR hemorrhaging and is expected to enlist more PR firepower. That may not be enough for News Corp’s independent directors, who have watched the stock price drop 13 percent since the July 4 news that the now defunct News of the World hacked the phone of a 13-year-old murdered girl.
News Corp.’s board is oddly well-equipped to deal with hacking issues. Venture capitalist Tom Perkins was a Hewlett-Packard board member during its hacking scandal. Board member Viet Dinh, who represented Perkins during the H-P fiasco, is the chief author of the “USA Patriot Act,” which set official U.S. wiretapping policies. Bloomberg says they are leading the charge of independent directors, who account for nine of 16 board seats.
As owner of 40 percent of News Corp.'s Class B voting shares, the Murdoch family isn't going anywhere. My bet: Rupe gets bumped up to chairman emeritus and his well-respected daughter Elisabeth, 42, takes over with her brother 38-year-old James, News International chairman and News Corp. deputy COO, being shown the door.
News Corp. bought Elisabeth’s Shine TV production company for $615M earlier this year. Though the deal triggered cries of nepotism, the transaction may turn out to be the ticket to News Corp’s redemption.
Rupe set the stage for his own exit with Friday’s statement regarding the resignation of Hinton. “News Corp. is not Rupert Murdoch. It is the collective creativity and effort of many thousands of people around the world,” he said.
It’s time for Elisabeth to shine on a much larger stage.
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