News Corp. Chief Rupert Murdoch Heads to London to Address Hacking Fallout

 

Murdoch will work from News International’s headquarters in London’s Wapping neighbourhood and meet with staff, a person familiar with Murdoch’s plans said today.

The unfolding crisis led to the arrest of the tabloid’s former editor, Andy Coulson, and prompted public anger over allegations its journalists bribed police for stories and hacked into the voice mails of crime victims. The U.K. government said yesterday it will take “some time” before ruling on News Corp.’s 7.8 billion-pound ($12.5 billion) plan to buy satellite- TV service British Sky Broadcasting Group Plc. (BSY)

News Corp., based in New York, said this week it will close the 168-year-old News of the World, a move that failed to stem the company’s stock slide or silence calls for the ouster of Rebekah Brooks, CEO of the News International publishing unit. While Murdoch, 80, and Deputy Chief Operating Officer James Murdoch have both supported Brooks, U.K. Prime Minister David Cameron told reporters he would have accepted her resignation.

Brooks, 43, said in a letter to the U.K. Parliament’s Home Affairs Committee published today, that she had no knowledge of any phone tapping and has no reason to believe any other of the company’s newspapers used the method to get stories. News International also manages The Times, The Sunday Times and daily tabloid The Sun.

New Jobs

Brooks told News of the World employees yesterday she will try to find them jobs after the newspaper shuts down, while signaling she will remain in her post. All the newspaper’s employees, about 200, will be paid for the next three months, she said.

“We are working hard to put our own house in order and do the right thing,” Brooks said in a memo to staff.

Murdoch plans to arrive tomorrow, Sky News reported earlier. Chase Carey, News Corp.’s chief operating officer, told Bloomberg News yesterday he was also going to London.

Shares of News Corp. and BSkyB, the U.K.-based broadcaster it partially owns, have fallen since accusations that its journalists hacked the phones of murder victims and the families of soldiers who were killed in Afghanistan.

News Corp., which operates the Fox television networks and film studios, the Wall Street Journal newspaper and book publisher HarperCollins, fell 68 cents, or 3.9 percent, to $16.75 yesterday in Nasdaq Stock Market trading. The shares were down 7.3 percent for the week. BSkyB fell 7.6 percent yesterday to 750 pence in London, and lost 12 percent this week.

Coulson Arrest

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

Coulson, 43, who resigned as Cameron’s press chief in January, was arrested in connection with the phone-hacking probe and an investigation begun this week into claims the tabloid paid police officers for stories, according a person familiar with the matter. The arrest is the highest-profile so far in the investigation that has ensnared seven people, including six with connections to the paper. Coulson has denied any knowledge of illegal activity when he was editor from 2003 to 2007.

News of the World’s former royal reporter, Clive Goodman, 53, was re-arrested yesterday and his office at the Daily Star tabloid was searched, Sky News reported. London police confirmed they arrested a 53-year-old man and searched his home in Surrey, England, yesterday and also raided a London business.

Damaging Information

A 63-year-old man was also arrested at a residence in Surrey in connection with the investigation, police said yesterday without identifying him. The 43-year-old man and a 53- year-old man were released on bail, police said in an e-mailed statement without disclosing the names.

Brooks hinted she expects more damaging information to surface, according to a transcript of yesterday’s address to staff posted by BSkyB’s Sky News. “Eventually it will come out why things went wrong and who was responsible, and that will be another very difficult moment in this company’s history,” she said, according to the transcript.

Brooks told News of the World staffers she was among those “betrayed” by the acts of others. She rejected resignation, saying she is “much more useful” leading the company through the crisis.

‘More Visibility’

“We have more visibility perhaps with what we can see coming than you guys,” Brooks said, according to the transcript. “I am tied by the criminal investigation, but I think in a year’s time, every single one of you in this room might come up and say, ‘I see what she saw now.’”

Those calling for Brooks’s resignation included opposition Labour Party leader Ed Miliband. A Channel 5 poll showed three- quarters of Britons saying she should quit. While Brooks discussed her resignation with James Murdoch this week, she didn’t offer to leave, News Corp. spokeswoman Daisy Dunlop said.

Brooks became head of News International in 2009 after serving as editor of The Sun for 6 1/2 years. Beginning her career as a feature writer for the News of the World in 1989, Brooks rose through the ranks and was editor of that newspaper from 2000 to 2003.

Criticism of Brooks intensified this week with a report that in 2002, when she was editor, the News of the World hacked into the phone of murdered schoolgirl Milly Dowler and deleted voice-mail messages, misleading her parents into thinking she might be alive and complicating the police investigation of her disappearance. Before this week, the phone-hacking scandal had centered on celebrities, politicians and athletes.

No Knowledge

Brooks said in her letter to the U.K. lawmakers she wanted to be “absolutely clear that as editor” she had “no knowledge whatsoever of phone hacking in the case of Milly Dowler and her family, or in any other cases during my tenure.”

News Corp.’s decision to close the Sunday tabloid came after companies including Lloyds Banking Group Plc (LLOY) and RWE AG (RWE) halted advertising in the paper to protest its activities.

The company now needs to find new revenue sources to replace the sales lost in the shutdown. It may add a Sunday edition of the daily Sun, according to industry observers including Marc Mendoza, CEO of Media Planning Group, Havas SA (HAV)’s media buying and planning arm.

A website titled thesunonsunday.com was registered July 5, according to allwhois.com, a domain-name database search engine. The company hasn’t made any decisions on any new publications or expanding existing ones, Brooks said in the memo.

‘Outrageous’ Practices

News Corp. can quickly regain advertisers’ trust with an overhaul of the “outrageous” journalistic practices that led to News of the World’s closure, Publicis Groupe SA (PUB) CEO Maurice Levy said yesterday. If the company in the next couple of weeks creates “a new News of the World with much more ethical behavior,” advertisers will return, said Levy, head of one of the world’s largest advertising agencies.

A final edition of the News of the World, to be published tomorrow, won’t carry commercial advertising, and News Corp. has offered its ad space to charities. So far “household name” charities have turned down the offer, preferring not to be associated with the tabloid, according to Rob Cope, the director of Remember a Charity, a London-based organization that tries to persuade people to bequeath money to charities it represents.

(Bloomberg News)


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