Thursday 8 September 2011

Shameful phone hacking scandal forces change inside the Murdoch bunker


A community with a voracious appetite for scandal, it does appear we are experiencing Murdoch news fatigue. Like frogs in boiling water, we are losing sensitivity to the barrage of sensational News Corp instalments flowing from the phone hacking affair. On Tuesday, two former News International managers - head of legal affairs Tom Crone and News of the World editor Colin Myler - told a British parliamentary committee that James Murdoch had been made aware of widespread phone hacking despite his written statement to the contrary. The testimony was another milestone in the series of explosive revelations of systemic criminal phone hacking which had been going on for years but allegedly covered up by a corporate and police conspiracy. Advertisement: Story continues below Since the hacking affair was blown open, there has been a myriad of developments from the company, government and police - many of them astonishing. Much of this is highly significant to the Murdoch empire, and the ramifications have been difficult to digest. This shameful episode has changed the News Corp organisation and Rupert Murdoch's management style. In a corporate sense, the decision by Murdoch to undertake a $US5 billion ($4.7 billion) share buyback is, on its own, momentous. Aggressive expansion of the News Corp empire has been a hallmark of Murdoch's modus operandi. The decision to undertake a capital management program that allocated cash to shareholders rather than to acquisitions marks a major departure. The focus of News Corp's strategy in the past has been on raising funds and using available cash to expand, and avoiding the dilution of Murdoch family control. This was never more evident than in the creation of News Corp non-voting stock and the move to domicile the company in the lax regulatory jurisdiction of Delaware. The only other incidence of Rupert Murdoch bowing to outside pressure was in the early 1990s, when the Pittsburgh Bank famously forced News Corp to the brink of bankruptcy by threatening to block the rollover to a new debt package. News Corp has otherwise been run by Rupert Murdoch and in his way. The notion of appeasing minority shareholders is new to Murdoch, as is divorcing the hard-wired nepotism.