Posts tagged "News Corp"

Rupert Murdoch is now an old man on a lonely throne at News Corp

In his 80s, with no clear successor, the media mogul and his spun-off newpaper operation are in a precarious position

Matthew Parris went to the Orwell prizegiving the other day and suddenly saw red. Chris Mullin MP was giving a speech lauding fine investigative journalism – like that of this year’s winner, Andrew Norfolk of the Times – which he firmly asserted was achieved “despite” the efforts of newspaper proprietors. “What sneery, snivelling, ignorant, leftie rubbish,” wrote Parris.

“Who does he think pays for Norfolk’s investigations, or for my columns? Does he know nothing about the losses being clocked up by quality newspapers all over the world? … Does he realise how precarious now is the whole future of daily newspapers in Britain?” Call it, on second thoughts, a Rupert red mist.

These are testing times for star performers like Parris. Over in New York last week the old, soiled master of News Corp revels was unveiling his “new News Corp”, otherwise a distinctly vulnerable collection of papers from around the globe, many of which have proved a longstanding licence to lose his money. The Times, Sunday Times, New York Post and Australian are not profitable, to put it mildly. No wonder Murdoch’s new chief executive, Robert Thomson, pledges “relentless cost-cutting” across the shrivelled empire.

There’s a balance-sheet bonne bouche of $2bn and a wiping away of debts that will help News Corp mark two ride briefly high when it goes solo and public – though no longer listed in London – at the end of June. But there will also be no more lush, adjacent pastures of satellite TV or Hollywood blockbusters to assure US shareholder peace when loss-making papers have to be supported. 21st Century Fox won’t be indulging the boss’s little foibles any longer. Once the presses roll, he’s on his own.

Murdoch says his papers are “undervalued and underdeveloped”. Thomson (who used to edit the Times) says “print is still a particularly powerful platform”. This is the clearest possible test of their faith. If News Corp 2 can’t make it through the night, then all Parris’s worst fears come true. Murdoch may be non-executive chair of the enterprise. His family stockholding and reputation may still give him great influence, reputational or direct. But now, ploughing deeper into his 80s and surrounded by New York board colleagues who don’t share his love of printers’ ink, the vulnerability is obvious.

This is a fractious, uncertain empire now: a game of thrones as well as Wall Street. It will be governed, frankly, by how the markets behave. If they don’t like Rupert’s underdeveloped and undervalued babies, then the pressure will mount inexorably – and wash over to damage his rule of the film and TV giant. He hasn’t a son who can take up this burden. Hacking finished James’s ambitions in that direction. There is no frontline succession.

Perhaps the digital world will provide some answers – though his tablet-only Daily perished rather too fast for comfort. Perhaps subscription revenue can, in time, begin to make up for the print advertising streams running into the sand. Place no bets: this is precarious, edge-of-the-seat stuff, just as Parris perceives.

But I wish Thomson was slightly less keen on CEO-speak rhetoric (“We will boldly try new businesses and models, unafraid to learn, confident of overall success together”). And I’m especially anxious about the replacement News Corp logo, written in a sweeping semblance of Rupert’s fair hand. Does that mean he’s absolutely in charge – or only that he will still have to pay the bills at the end of a bruising day?

? Newsweek used to sell 3.3m copies per edition. Even when it was sold for a dollar, then folded in with Tina Brown’s Daily Beast in a digital merger last December, there were more than a million customers out there wanting their old print fix. So the story that Newsweek online was blazing a path into the future rather than lurching towards oblivion seemed to have some validity. But today? What’s left is up for sale again: think 50 cents. The owners want to “concentrate” on the Beast instead.

Sometimes going online-only is the sensible thing to do; but more often than not, it can seem like euthanasia with a buoyant press release.


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Posted by admin - June 2, 2013 at 09:25

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Murdoch signals fresh start with News Corp logo – but his hand is all over it

The new branding for the mogul’s publishing arm is a stab at being more informal, but in reality it sticks to the same old script

With all the grace of a hurried reminder to “get milk” or “phone mum” the new logo for News Corp attempts to bring the regrouped publishing wing of the company breezily back into view.

Formed from the handwriting of both Rupert Murdoch and his father Keith – which sounds creepier than it probably should – the logo reasserts that this is “a family business”. And a business-like scrawl it is, ushering in the organisation’s forthcoming split into News Corp (newspapers and book publishing) and the entertainment division 21st Century Fox.

From a man who last year resigned from his UK newspapers’ boards, it’s a way of ensuring his hand is still in the game. But while “homespun” isn’t a word usually associated with Murdoch and his empire, this is clearly a stab at pushing a friendlier, more informal face. And for that reason it doesn’t work. Of course it doesn’t: News Corp is a multibillion-dollar beast, not a bring-and-buy sale. Instead, it’s a fairly desperate attempt to lock the scandal-ridden past behind the strange spherical portcullis which was News Corporation’s previous symbol of choice.

For countless brands the twin grails of authenticity and heritage are intimated in the handwritten logotype. Coca-Cola’s logo – largely unchanged since the late 19th century – was written out in the bookkeeper’s best Spencerian script; while fashion designer Paul Smith’s seeming-signature, penned by a friend, drives home his still intimate involvement with the company he started in the 70s. Disney also retains its painterly swirls and playful mix of caps and lowercase – but did Walt’s handwriting ever give that much away about the man himself?

In the era of digital text, handwritten lettering can appear honest, candid even. Used here, as a fresh start on a new corporate page, it is more than a little ironic. And while the News Corp lettering claims to be in the Murdoch hand, it still remains difficult to place. It’s bizarrely impersonal, giving little away. It looks like it belongs on a whiteboard, or on a blank sheet of A4 on a table in an empty corner office. It so wants to be real, just jotted-down, but on closer inspection it’s only anonymous and isn’t actually that rushed-off at all.

Perhaps it harks back to newsgathering, but it isn’t the handwriting of any journalist I know, jammed quickly into notepads or on any scrap of paper to hand; no, this writing style is too thought-out, too measured. The “n” doesn’t join the “e”, the “w” floats free of the “s”. I’m no graphologist, but the final exaggerated flick on the “p” is the giveaway. Megalomaniac tendencies?

Mark Sinclair is deputy editor of Creative Review magazine


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Posted by admin - May 30, 2013 at 14:08

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Rupert Murdoch plans to ‘poison’ News Corp takeover bids

Rupert Murdoch announces year-long plan enabling News Corp shareholders to buy discounted stock in event of new investor

Rupert Murdoch’s News Corporation has established a so-called “poison pill” mechanism in an attempt to thwart a hostile takeover bid when it separates its entertainment and publishing businesses.

The plan, which will be in place for a year, will act as a powerful disincentive to anyone seeking to challenge Murdoch’s control of the two companies, a move due to be finalised on 28 June.

The provisions will allow existing shareholders to buy stock at a 50% discount if any new investor should acquire 15% of the company.

News Corp said in a statement: “The rights agreements are intended to protect the stockholders of the company and the new News Corporation from efforts to obtain control of such companies that their respective boards of directors determine are not in the best interests of the companies and their respective stockholders.”

News Corp will be split into two separate firms: a publishing firm, which will retain the News Corp brand, while the other entertainment business will be renamed 21st Century Fox. Both will be headed by Murdoch.

The company confirmed that Elisabeth Murdoch, the daughter of Rupert, who runs independent production firm Shine, will not sit on either board of the two companies. His sons, Lachlan and James, will be the only News Corp directors to retain seats on both boards. Murdoch will remain chairman and chief executive of 21st Century Fox, with Chase Carey as chief operating officer.

The move to split the News Corp empire follows last year’s promise to separate its entertainment and publishing businesses in the wake of the phone-hacking scandal and closure of the News of the World.

The publishing company will comprise the Times, Sunday Times and the Sun, the Wall Street Journal, the New York Post and the Australian plus daily titles in the cities of Sydney, Melbourne, Brisbane and Adelaide. The book publisher HarperCollins will also be included. The TV and film business will include the US news channel Fox News and the 20th Century Fox film studio.

The split means that loss-making newspapers will no longer be cushioned by the company’s more profitable entertainment interests and could lead to more cuts in the publishing companies.

This month the editor of Murdoch’s New York Post, Col Allan, issued a memo offering staff the chance to volunteer for pay-off packages in order to reduce the paper’s headcount by 10%.


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Posted by admin - May 25, 2013 at 08:24

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Rupert Murdoch’s pay to reach almost $30m after News Corp split

Media mogul’s pay could be 15% higher if he hits targets after spin-off of entertainment arm as 21st Century Fox

Rupert Murdoch will receive almost $30m (£19.4m) for running the two companies that will emerge later this year from the separation of News Corporation’s publishing and entertainment businesses.

For the year ending June 2014 he will receive up to $28.3m in remuneration from the two businesses, with a base salary of $8.1m, a target bonus of $12.5m and long-term incentives of $7.7m. This is 15% more than the $24.6m total remuneration he is eligible to collect at the end of June this year as News Corp’s chairman and chief executive.

News Corp, which will be split in two in the summer, revealed in a filing with US financial regulators on Friday that the billionaire’s pay is “competitive and appropriate given Mr Murdoch’s responsibilities associated with two separate public companies”.

Most of Murdoch’s pay will come from running 21st Century Fox, by some distance the bigger and more profitable of the two News Corp businesses that are to be floated separately in New York later this year.

Murdoch is to be chairman and chief executive of 21st Century Fox, which encompasses the Fox film and TV studios, the eponymous US TV network, cable channels including FX and Fox News, and News Corp’s 39.1.% stake in BSkyB.

Just $5m of his $30m total remuneration package comes from his role as executive chairman of the newspaper and book publishing business, which is retaining the News Corp name and includes assets such as the Times, Sunday Times, Sun, Wall Street Journal, the Australian and HarperCollins.

Murdoch will receive a base salary of $1m, a $2m target bonus and a $2m target long-term incentive opportunity for his News Corp work.

The company said that Murdoch’s pay regime has been overhauled to introduce a much larger element of bonuses dependent on performance-based targets, with his overall base salary staying at the current level of $8.1m.

“A significant portion of [Murdoch's] target total direct compensation [will be] at-risk and linked to performance … which will further align Mr Murdoch’s compensation with the interests of stockholders,” News Corp said.

Murdoch’s total compensation is likely to be higher than the target amounts outlined on Friday when factors such as pension contributions and other benefits are included. In the year to the end of June 2012 he was paid almost $30m.

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Mark Sweney


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Posted by admin - April 26, 2013 at 17:16

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Leveson: leave politicians to decide on media plurality

Leveson report suggests only minor changes for future mergers such as Murdoch empire’s BSkyB takeover bid

Lord Justice Leveson is highly cautious, even timorous, on what will be the key question for many of his readers, of how overweening power exercised by some media proprietors might be curbed.

He says politicians should be the ones to carry on deciding whether to intervene when they consider media plurality is threatened, rather than autonomous regulators: “It is in the nature of large media organisations that every one of us is exposed to their output on a regular basis and we all have views (and, in some cases, perhaps prejudices) that might affect such a decision if allowed to do so …

“It seems to me that those who argue that a public interest decision is rightly for a democratically-elected decision-maker are right. It is that person who is accountable to parliament and the electorate: that is the nature of our constitutional arrangements.”

All he recommends, for future media mergers, such as the Murdoch empire’s attempt to take total control of BSKyB, is a set of relatively minor improvements to transparency during the process: “The secretary of state should consult relevant parties as to the arguments for and against a referral, and should be required to make public his reasons for reaching a decision one way or the other.”

Leveson concedes that this might not appear to make much change, but he says this would make it easier to challenge poor decisions in court by judicial review: “It will ensure both the highest standards of probity and that a very rigorous test is applied to the reasoning behind the eventual position.”

He says it is “unarguable” that there needs to be more scope for the media regulator Ofcom to look regularly at plurality problems, and not merely when a merger or a takeover is occurring, but adds ” the precise mechanism for doing so is essentially a technical issue on which the inquiry is not best placed to reach a definitive conclusion”.

Anyone who thought Leveson would take a hatchet to the former culture secretary Jeremy Hunt for his behaviour over the Sky bid has had their hopes dashed.

Although he describes the Sky bid events as “an illuminating case study” that would cause a perception of bias, Leveson analyses the manoeuvrings over the ultimately withdrawn bid to take over 100% control of BSKyB in a way that broadly supports the already-presented government version of events.

He does not back the claim that there was a secret deal in which Murdoch’s papers would support the Conservatives in return for explicit commercial concession.

He largely exonerates Hunt from actually biased behaviour, and merely accuses him of a lack of supervision of his special adviser, and an “unwise” failure to spell out how closely he had been communicating with James Murdoch before being given the job of deciding on the Sky bid.

Leveson accepts the official line that Hunt’s junior special adviser, Adam Smith, who subsequently resigned, merely went too far out of inexperience and allowed himself to be ensnared into “inappropriate” email and text correspondence with the lobbyist, Frederic Michel, who was carrying out a “charm offensive” on behalf of News Corp.

This left Smith exchanging messages that appeared to accept “Mr Michel’s use of the language of common cause and conspiracy”.

“When faced with the intimacy, charm, volume and persistence of Mr Michel’s approaches, Mr Smith was put in an extremely difficult position.”

He got “way to close” to the lobbyist, “ultimately, as I have concluded, probably passing on confidential information about Government thinking which should never have been imparted to News Corp.”

But Leveson accepted: “There is much to say by way of mitigation for Mr Smith. He was inexperienced, had been involved in government for a matter of months and had never before been involved in (even if he had ever heard about) a quasi-judicial process. He did not receive what was to be, for him, sufficiently clear or detailed guidance”.

Leveson contents himself with a dry hint that the official version of events may not, in all eyes, be wholly credible: “I must admit to finding it surprising that Mr Smith, who had worked for Mr Hunt so closely and for so long should have kept him unsighted on the way in which he was performing what he saw to be his duty; that, as I understood it, was the role of a special adviser – to be the ‘eyes and ears’ of his principal. Both men, however, make it clear that Mr Hunt was unaware of the nature, and extent of his contact with Mr Michel.”


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Posted by admin - November 29, 2012 at 23:36

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Penguin authors and agents ‘terrified’ at prospect of News Corp takeover

News Corp deal would leave Penguin’s reputation in tatters, says co-author of book on downfall of News of the World

Rupert Murdoch’s News Corporation, described by Labour MP Tom Watson as a “toxic institution”, could find itself publishing his book on phone hacking as the publisher considers a bid for Penguin.

The reported £1bn offer from News Corp’s publishing arm, HarperCollins could be put to the board of parent company Pearson as early as Wednesday, the Sunday Times said. Any approach could spark a bidding war, as Pearson is already in talks with Europe’s biggest publisher, Bertelsmann, which owns Random House.

A deal with Random House would create a publishing house responsible for a quarter of English language books worldwide. A HarperCollins linkup would give the firm a market share of about 20%. Both are likely to face inquiries from the competition commission before a deal is finalised.

A number of writers warned that Penguin’s reputation would be damaged by a Murdoch takeover. Martin Hickman, co-author of Dial M for Murdoch, published by Penguin, said: “Penguin have a great reputation. They are a publisher with integrity and a wider social mission, so are not the most nakedly aggressive publisher out there. But with HarperCollins, their virtues would be lost.

“The idea of News Corp taking over Penguin is nightmarish for our book. I don’t think we’d see a paperback edition published by them and certainly not any updated editions. I don’t have the same fears with Random House, which I feel have integrity.”

Another Penguin author, David Lodge, best known for his campus trilogy, said he was fearful of a takeover by the Murdoch-owned company, although he pointed out that his publishing relationship with Penguin ends soon.

He said: “It would bother me if I was seriously connected with Penguin any longer. I don’t view it with any enthusiasm. I think the whole thing is going to reduce chances for authors placing their work if it was to go ahead.”

Other authors and agents, who declined to be named for fear of future publishing prospects, were also concerned to be associated with the Murdoch brand. One agent, who represents authors across all three publishing houses, said: “Authors have told me they are frightened by a Random House takeover, but terrified by a HarperCollins one.

“HarperCollins are far less author-friendly – they appear to be a monolithic and centralised organisation and, although Murdoch may not be pulling the strings, his mindset is certainly instilled in the company. Penguin is probably the only publisher that still has a gold-plated brand identity. Across the world they are known for paperback publishing and have an excellent reputation.

“Murdoch could come in and make assurances that he won’t interfere, but he said that when he bought the Times newspaper and you only need to look at what happened with Chris Patten’s book on China.”

In 1998 HarperCollins dropped Lord Patten’s East and West under Murdoch’s orders over fears it would be critical of China, where News Corp was hoping to expand. The company was forced to apologise and agree an out-of-court settlement.

Another Penguin author said: “This is all to do with Amazon and the big publishers hoping to challenge the website’s dominant position. But if Penguin ends up with HarperCollins that would be a terrifying prospect. It could well lead to Murdoch making an approach for the [Pearson-owned] FT.”

It is thought discussions with Random House are more likely to succeed and could lead to Penguin’s chairman and chief executive, John Makinson, being given a senior role within the new company.

The deal would provide Pearson with a clean break from book publishing as the company looks to focus its attentions on its education business, which makes up four-fifths of its turnover. Any deal with HarperCollins would boost News Corp’s publishing division ahead of a split in the company between broadcast and print.

Pearson, HarperCollins and Random House all declined to comment.


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Posted by admin - October 29, 2012 at 08:35

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News Corp strengthens compliance teams

Senior new appointments in wake of phone-hacking crisis include hiring of former SEC executive and federal prosecutor

News Corporation has hired a senior executive from the Securities and Exchange Commission and a former federal prosecutor to lead new compliance teams at its newspaper and book publishing, TV and film divisions.

News Corp’s general counsel and chief compliance officer, Gerson Zweifach, has created the framework in response to the News of the World phone-hacking scandal which has tarnished the media conglomerate and cost it in excess of $224m to date.

Five appointments will be made to beef up News Corp’s compliance procedures, with a full announcement on the new framework expected later on Monday.

The new appointments include John McCoy, the associate regional director of the SEC’s operation in Los Angeles; and Brian Michael, a former federal prosecutor for the US attorney’s office in New York.

News Corp has decided to move to a more centralised compliance structure, with the five new appointments reporting to Zweifach and responsible for activities in different geographical areas.

The new strategy aims to avoid any repeat of the phone-hacking scandal, which was initially handled by News Corp’s UK management, including James Murdoch and Rebekah Brooks.

“News International has recognised past failings, gone out of our way to identify what went wrong and have put a range of measures in place to ensure those mistakes are never repeated,” said a News Corp spokesman. “We aim to be one of the best governed media companies in the world.”

News International recently appointed a new general counsel in Paul Chinnery, the former company secretary and director of legal affairs at Channel 5, and Imogen Haddon, as chief compliance officer.

Zweifach added the responsibilities of chief compliance officer to his role as general counsel in February, about a month after joining News Corp.

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Posted by admin - October 1, 2012 at 13:34

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James Murdoch ‘set for top Fox Networks job’

Rupert Murdoch’s second son is being lined up to run News Corp’s Fox TV businesses in the US, according to a report

James Murdoch is reportedly being lined up to run News Corporation’s Fox TV business in the US despite being sharply criticised by British broadcasting regulator Ofcom on Thursday.

The role being discussed would put him in charge of the Fox Networks Group, which includes the Fox terrestrial TV network as well as cable channels such as FX and National Geographic, says a report in the Financial Times.

Murdoch had hoped the promotion, which would return him to pole position to take over from his father and to run the TV business when News Corp demerges it from its newspapers next year, would have been announced in July.

Sources told the FT that the new role had been formalised but Rupert Murdoch resisted the announcement.

Another source cited said that News Corp could not countenance announcing the expanded role in July until there was a better idea about what would happen in London, where potentially damaging Ofcom and Leveson inquiry reports were still on the horizon.

On Thursday, Ofcom declared BSkyB “fit and proper” to own broadcast licences, but the regulator was highly critical of James Murdoch’s handling of the phone-hacking scandal.

It found that Murdoch’s conduct in relation to News Group Newspapers “repeatedly fell short of the conduct to be expected of a chief executive and chairman” and that his lack of action in relation to phone hacking was “difficult to comprehend and ill-judged”.

If Murdoch ascends to the new role, there would be a new reporting structure at News Corp with Peter Rice, the Los Angeles-based head of News Corp’s lucrative Fox Networks, reporting directly to him.

Rice was promoted to this role in July and Murdoch had hoped his father would rubber stamp the deal then.

The move gave Rice control of all programming of the Fox Networks Group, including Fox Sports, Fox International and National Geographic channels. However, Fox News, run by Roger Ailes, remains a separate business.

In London, the phone-hacking scandal and its fallout will continue to cast a shadow over News International for some time. Lord Justice Leveson’s final report on the future of press regulation is still to come, there are several hundred more civil damages cases to settle next year, and the Metropolitan police investigations into alleged criminality at the publisher and any resulting prosecutions could continue for up to three more years.

Tensions are running high at Murdoch’s favourite paper, the Sun, over the mounting number of arrests of journalists. On Thursday afternoon, the chief executive of News International, Tom Mockridge, called an unexpected staff meeting to try to boost morale.

The meeting was called after the third Sun journalist in two days was arrested in relation to Operation Elveden, the Met police inquiry into alleged payments to police and other officials for stories, and to Operation Tuleta, the police investigation into alleged computer hacking which was recently widened to include alleged criminal breaches of privacy.

In all, 21 journalists at the Sun have now been arrested.

According to one staff member who was at the meeting, Mockridge is very uneasy about the continuing role of the management and standards committee, the internal inquiry unit that set up by News Corp to clear Wapping of all alleged criminal practices.

Mockridge told Sun staff that he had “no date” for when the arrests would end and said the company continued to co-operate with the Metropolitan police, as agreed by parent company News Corp.

He said it was up to News Corp, not News International, to decide when to end co-operation with the police.

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Posted by admin - September 21, 2012 at 19:45

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Sky ruled fit for broadcast licence, but James Murdoch comes in for criticism

Ofcom rules that BSkyB can retain its broadcasting licences, but criticises former chairman James Murdoch’s handling of the phone-hacking scandal

BSkyB remains a fit and proper owner of broadcast licences, media regulator Ofcom has concluded.

But the regulator is highly critical of the company’s former chairman, James Murdoch, over his handling of the phone-hacking scandal.

The judgment comes as News Corp is reportedly considering handing oversight of Fox Networks to James Murdoch. According to The Financial Times, Murdoch could soon be in charge of the media firm’s flagship Fox network, one of its most lucrative assets, and cable channels such as FX and National Geographic. Fox Networks does not include News Corp’s Fox News Channel.

Ofcom criticised Murdoch, the News Corporation deputy chief operating officer and former Sky and News International chairman, for his “lack of action” over the News of the World phone-hacking affair.

The regulator found that Murdoch’s conduct in relation to News Group Newspapers “repeatedly fell short of the conduct to be expected of as a chief executive and chairman” and that his lack of action in relation to phone hacking was “difficult to comprehend and ill-judged”.

NGN was the News International subsidiary that published the News of the World, which was closed in July 2011 after the most damaging phone-hacking revelations emerged.

Ofcom, which launched its “fit and proper” review of BSkyB’s broadcast licences on 6 July 2011, the day before News International announced it was closing the News of the World, concluded that there was no evidence to suggest that the pay-TV company was involved in phone hacking.

The ruling found: “There is no evidence that Sky was directly or indirectly involved in any of the wrongdoing either admitted or alleged to have taken place at [the News of the World] or the Sun.

“In the circumstances, and notwithstanding our views in relation to James Murdoch’s conduct, we do not consider, having taken into account all the relevant factors, that on the evidence available to date Sky is no longer fit and proper to hold broadcast licences.

“Whilst we consider that James Murdoch’s conduct in various instances fell short of the standard to be expected of the chief executive officer and chairman, we do not find that James Murdoch’s retention as a non-executive director of Sky means that Sky is not fit and proper to hold broadcast licences.

“We recognise that whether it is appropriate for James Murdoch to be a director in light of the events is a matter for the board and shareholders of Sky.”

Sky welcomed the long-awaited ruling as its share price rose slightly in early trading on Thursday, up 5p – nearly 1% – to 733p at 9am.

News Corp said it was pleased with Ofcom’s ruling regarding Sky, but disagreed with the regulator’s conclusions about Murdoch, saying they were “not at all substantiated by evidence”.

BSkyB said in a statement: “Ofcom is right to conclude that Sky is a fit and proper broadcaster. As a company, we are committed to high standards of governance and we take our regulatory obligations extremely seriously. As Ofcom acknowledges, our track record of compliance in broadcasting is good.”

“We are proud of our contribution as a broadcaster, the investments we make to increase choice for UK audiences and the wider benefits we create for the economy.”

News Corp said: “We are pleased that Ofcom recognises BSkyB as a fit and proper holder of a broadcast licence and remain proud of both News Corporation’s and James Murdoch’s distinguished record in facilitating the transformation of Sky into Britain’s leading pay television and home communications provider.

“We disagree, however, with certain of the report’s statements about James Murdoch’s prior actions as an executive and director, which are not at all substantiated by evidence. As Ofcom itself acknowledged, James deserves credit for his role as chief executive, then chairman and now non-executive director, in leading Sky to an outstanding record as a broadcaster, including its excellent compliance record.”

The Ofcom review was aimed at establishing whether the pay-TV broadcaster remained eligible to broadcast in the UK, given that News International owner News Corp is its largest shareholder, with a 39.1% stake.

At the point Ofcom launched its review, on 6 July 2011, News Corp was still bidding to take full control of Sky. It abandoned the bid the following week in the face of mounting public and political outrage over News of the World phone hacking.

After reviewing evidence subsequently submitted to the Commons culture, media and sport select committee and the Leveson inquiry, Ofcom concluded that Murdoch had no knowledge of an alleged News International cover-up of what has been branded the “industrial scale” of phone hacking at the News of the World.

“The evidence available to date does not provide a reasonable basis to find that James Murdoch knew of widespread wrongdoing or criminality at [the News of the World] or that, by allowing litigation to be settled and by allowing NGN and News International executives to make the representations they did, he was complicit in a cover-up,” the regulator said.

However, Ofcom was critical of Murdoch’s reaction to the payout to Professional Footballers Association chief executive Gordon Taylor in 2008.

The regulator said it was clear at that point in 2008 that Murdoch was aware of the existence of new evidence that News of the World phone hacking may have gone beyond one rogue reporter – as News International was claiming at the time – in light of internal documents in relation to the Taylor settlement. But he did not follow up by asking to see the opinion of the senior counsel hired by the company or finding out for himself what the evidence on which the settlement was based was.

“James Murdoch’s exercise of responsibility was less than we would expect to see exhibited by a competent chief executive officer,” the regulator concluded of this episode.

Ofcom also criticised Murdoch for not taking seriously a Guardian article in July 2009 headlined “Murdoch papers paid £1m to gag phone hacking victims”, which first revealed the Taylor settlement and that the practice went beyond a single rogue reporter at the News of the World.

The regulator noted from Murdoch’s own evidence to the culture select committee that he entrusted the handling of the response to the Guardian article to News International subordinates, rather than launch an investigation into whether phone hacking involved the three individuals referred to in internal communications. This information subsequently emerged during a culture select committee inquiry.

“We consider that James Murdoch’s failure to apprise himself of this information, given the information which he accepts he knew, fell short of the exercise of responsibility to be expected of the chief executive officer and the chairman,” Ofcom said.

Murdoch was also criticised for failing to respond meaningfully to a highly critical report by the culture select committee on phone hacking in 2010.

“We consider this lack of action by the chairman of News International in response to a widely publicised highly critical select committee report to be both difficult to comprehend and ill-judged,” Ofcom said.

It also expresses bafflement over Murdoch’s inaction when the phone-hacking scandal began to escalate with the publication of fresh evidence in the New York Times in September 2010 and with the launch of legal action by Sienna Miller, which became public in December 2010.

Ofcom noted that Murdoch gave evidence to the Leveson inquiry earlier this year that he immediately moved to get his house in order with three specific courses of action: an internal investigation; action against any employees involved in wrongdoing; and seeking fresh legal advice to get to the bottom of what was really going on.

“Having reviewed the relevant evidence relating to this period as a whole, we note that only one of these steps was taken in 2010,” Ofcom concluded.

“In light of the events which occurred in 2009 and 2010, in particular the publication of the [culture select committee] report, the growing civil litigation and the New York Times article, we find it difficult to comprehend James Murdoch’s lack of action, given his responsibility as chairman.”

His father Rupert Murdoch, News Corp’s chairman and chief executive, escapes censure by Ofcom. The regulator said it did not find the evidence provided a basis to conclude Rupert Murdoch had acted in a way that was inappropriate in relation to phone hacking, concealment or corruption by employees.

Ofcom also found that BSkyB was not involved. “To date there is no evidence that Sky was directly or indirectly involved in any of the wrongdoing either admitted or alleged to have taken place at the News of the World.”

News Corp said: “We are also pleased that Ofcom determined that the evidence related to phone hacking, concealment and corruption does not provide any basis to conclude that News Corporation and Rupert Murdoch acted in a way that was inappropriate, and that there is similarly no evidence that James Murdoch deliberately engaged in any wrongdoing.”

If the regulator had decided that either James Murdoch – who stood down as chairman of News International in March 2012 and as chairman of BSkyB in April, but remains on the board of the broadcaster as a non-executive director – or the company itself were not fit and proper owners, the regulator could have revoked its licences.

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Rupert Murdoch’s memo to News Corp staff – full text

Mogul’s message outlining review of compliance with bribery laws in several of its publishing arms, including News International

Dear colleagues,

As you are all aware, our company has been under intense scrutiny in the United Kingdom. I assured parliament and the Leveson inquiry that we would move quickly and aggressively to redress wrongdoing, co-operate with law enforcement officials and strengthen our compliance and ethics programme company-wide. With the support of our board of directors, I am pleased to tell you that we have made progress on each of these important steps.

Gerson Zweifach, senior executive vice-president and group general counsel, News Corporation, is now our chief compliance officer and has assumed overall responsibility for our effort to create a more robust global compliance and ethics programme. Lisa Fleischman, vice-president and associate general counsel, News Corporation, is our deputy chief compliance officer and will exercise day-to-day operational responsibility for the global compliance and ethics programme. In these capacities, Gerson and Lisa will report regularly to the board of directors and the audit committee regarding the content and operation of the compliance and ethics programme.

For purposes of the compliance and ethics programme, all of our business units will be organised into five compliance groups: the LA Cable and Broadcast Group; the LA Film and TV Production Group; the Europe and Asia Group; the Australia Group; and the New York News and Information Group. Each group will be headed by a group chief compliance officer who will report directly to Gerson and will focus full-time on compliance issues.

We have already strengthened and expanded our anti-bribery training programmes. To ensure the effectiveness of our entire compliance and ethics programme, we have recently initiated a review of anti-corruption controls in selected locations around the globe. The purpose of this review is to test our current internal controls and identify ways in which we can enhance them. Let me emphasise that the review is not based on any suspicion of wrongdoing by any particular business unit or its personnel. Rather, it is a forward-looking review based on our commitment to improve anti-corruption controls throughout the company.

We recognise that strengthening our compliance programmes will take time and resources, but the costs of non-compliance – in terms of reputational harm, investigations, lawsuits, and distraction from our mission to deliver on our promise to consumers – are far more serious.

As one of the world’s most innovative media companies, News Corporation serves a vital role in the global marketplace of ideas. Every day, hundreds of millions of people rely on us to provide high-quality news, sports programming, and entertainment. To continue to be worthy of the trust of our audiences around the world, we all have an affirmative obligation to adhere to the highest standards of ethical behaviour, consistent with our standards of business conduct. The enhancements to the compliance function that are already underway and that we are planning will help us to maintain those standards.

Please join with me in this important effort and give it your full co-operation and support.

Rupert Murdoch


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