Tuesday, July 12, 2011

Crisis deepens for News Corp.

News Corporation shares plummet

9/11 victims 'targeted'
Sun and Sunday Times 'hacked PM Brown'
BSkyB bid under threat
Police and Downing Street criticised

Rupert Murdoch may have thought the worst was finally over after he put the last ever edition of the News of the World to bed on Sunday, but as he arrived in the UK over the weekend he faced a mob of reporters and fresh accusations that other tentacles of his media empire were less than squeaky clean.

Prior to Murdoch making the decision to shut down the 168 year old paper, the News of the World had already been accused of hacking the phones of murdered schoolgirl Milly Dowler, and possibly hampered an ongoing police investigation into her disappearance by deleting messages in order to make way for new ones. Then there were reports that 7/7 bombing victims had been the target of phone hacking. On Thursday it was revealed that soldiers, who had served in Afghanistan and Iraq, and their families had been targeted by the paper [News of the World hacking].

As public anger mounted and a media storm grew around the revelations, Murdoch made the call to shut the paper down in what appeared to be a damage limitation exercise. The decision was not greeted as warmly as he might have thought. Sacked staff and journalists were angry especially that they had been sacrificed while editor Rebekah Brooks held on to her job. The public viewed the closure cynically and many suggested that it was just part of a rebranding exercise and rumours began to circulate that a Sunday Sun was being planned. In fact a domain name had even been bought that seemed to add credence to this [Bloomberg].

As the last edition of the tabloid paper rolled off the presses the British prime minister David Cameron was fighting off criticism of having hired former News of the World editor Andy Coulson, who found himself in police custody on Friday last week. Meanwhile the police themselves were also in the spotlight after allegations that some officers had taken money in return for information provided to the tabloid paper [BBC / Sky].

Allegations of 9/11 hacking

Just as some might have thought it couldn't get worse there were reports that News of the World reporters had tried to hack the voicemails of dead 9/11 victims. According to a former New York policeman, now a private investigator, said that reporters wanted British victim's mobile numbers and details of calls in the days surrounding the tragedy. If true the backlash from the American public could be severe for the Murdoch empire. He currently owns the New York Post, the United States 7th largest paper by circulation. A drop in those sales could be significant for News Corporation. But there are also concerns of his television networks too. Fox News is owned by Murdoch's News Corporation and any decline in viewers could affect the company hard [Daily Mail / Mirror].

BSkyB bid under scrutiny

In Britain his bid for complete ownership of BSkyB may have been scuppered as questions have been raised in parliament. Ed Miliband, the opposition leader has already called for a full inquiry into the phone hacking and a halt to the sale of the satellite broadcaster until that is complete.

Murdoch is no stranger to public outcry. In the 1980s, Murdoch shifted production of News of the World and other newspapers from Fleet Street in central London to Wapping in the capital's still underdeveloped Docklands. In doing so, he broke the power of labour unions opposed to introducing new technology. Police fought strikers nightly outside the Wapping plant as the papers were printed.

But in the last week the revelations that have unfolded as to the practices at his media outlets may have gone too far for anyone to bear.

Former PM claims he was hacked

Late Monday the former prime minister Gordon Brown joined the long list of alleged hacking victims saying that journalists had targeted him for information concerning his son who suffered from cystic fibrosis. According to media reports private investigators working for The Sun and The Sunday Times had attempted to obtain information through illegal methods.

The reports say that the paper had tried to secure details of Brown's mobile phone, his medical records and his bank account. Illegal attempts were made by a "blagger" apparently working for The Sunday Times to access Brown's account from the Abbey National bank in 2000. In a letter to The Sunday Times' editor John Witherow, Abbey National's senior lawyer wrote, "On the basis of facts and inquiries, I am drawn to the conclusion that someone from The Sunday Times or acting on its behalf has masqueraded as Mr Brown for the purpose of obtaining information from Abbey National by deception."

A tape obtained by the BBC showed another "blagger" identified as Barry Beardall seeking, also in 2000, to trick Brown's solicitors Allen & Overy into handing over details of the amount he paid for a flat in Westminster owned by one of Robert Maxwell's companies. A story claiming that Gordon Brown had underpaid for the flat by up to £30,000 was the subject of a story in the paper.

The evidence of underhand practices mounts with another case in October 2006. Rebekah Brooks, then editor of The Sun, apparently contacted the Browns, informing them that she had obtained medical details about their four-year-old son Fraser. The Sun subsequently published a story stating that Fraser had cystic fibrosis. The story caused the family particular distress as tests had yet to confirm the diagnosis [BBC / Sky / CNN / Independent].

Stocks falling

The fallout is already considerable for New International, owner of the Fox TV networks and film studios, the Wall Street Journal newspaper and book publisher HarperCollins. On Thursday its shares dropped, fell 68 cents, or 3.9%, to $16.75 in Nasdaq Stock Market trading at 4 p.m. New York time. BSkyB also saw a fall in its stock price. On the same day it lost 62 pence, or 7.6% of its value, dropping to 750 pence a share. The stock had already fallen 12% from a record of 850 pence on July 4 before reports of the new allegations. But worst was to come. On Monday News Corporation stocks opened down 90 cents settling at $15.85. It has yet to drop to its July 200 low of $8.17, but it is not looking good for the media mogul whose empire is seemingly disintegrating around him.

Advertisers had already pulled out from their partnership with the News of the World, even before the decision to ditch the paper. If a public backlash grows concerning the Sun and the Times the losses for News Corp. could be crippling.

Fictional comparisons

Some media commentators have already liked Murdoch to Elliot Carver the fictional media tycoon depicted in the James Bond movie Tomorrow Never Dies. The film portrays the massive media enterprise manipulating the news as well as coercing, misinforming, incensing and even terrorising populations.

The fictional Carver is ultimately killed by Bond at the film's climax, but an official story is later released stating that Carver has drowned while onboard his luxury yacht in the South China Sea, while the authorities believed he committed suicide. This appears to refer to the death of Robert Maxwell, a reputedly corrupt media mogul who was reported missing from his luxury yacht and presumed a suicide in 1991.

Whether Murdoch's ship flounders, only time will tell. What is certain is that he and his media empire will have a rocky ride over the coming months. Rival newspapers and media outlets have been rubbing their hands in glee at the demise of the News of the World. Papers around the world have not only criticised Murdoch however. Some have pointed fingers at the buying public and at British journalism as a whole [BBC].

tvnewswatch, Beijing, China

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