Will Rupert Murdoch's woes cross the Atlantic?
| Los Angeles
Media mogul Rupert Murdoch, now at the center of an unfolding scandal in the United Kingdom, may soon find that the tremors threatening his life鈥檚 work extend far beyond Scotland Yard.
If angry shareholders have their way, the allegations of illegal phone hacking and corporate corruption that closed the 168-year-old News of the World, in London, will mark the beginning of a wide-reaching reckoning for the Australian business tycoon.
In a lawsuit filed Monday in Delaware, a coalition of institutional investors alleged, among numerous complaints, "These revelations show a culture run amuck within News Corp. and a board that provides no effective review or oversight."
Criminal charges are mounting overseas, and additional revelations were being issued from Scotland Yard throughout the day Monday. Major business deals, such as a proposed $14 billion satellite firm acquisition, are faltering. How much trouble does this mean for the powerful media empire?
鈥淚t鈥檚 maybe a bit too early to know if this is the first domino that will lead to the collapse of the whole structure,鈥� says Robert Thompson, founder of the Bleier Center of Television and Popular Culture at Syracuse University in New York. But if it did play out that way, he says, 鈥渢here would be a symbolic symmetry to it, because the News of the World was the first newspaper [Mr. Murdoch] bought when he began his media empire.鈥�
How widespread is the damage?
Longtime News Corp. observer Richard Levick says the writing is on the global wall. 鈥淭his is no Watergate,鈥� says the president of Levick Strategic Communications, a firm that specializes in crisis management. 鈥淭his is another Enron."
Mr. Levick notes the longevity and breadth of the charges to date, which he says permeate the entire company. 鈥淭hese span years and involve thousands of people,鈥� he says, adding that Monday鈥檚 lawsuit in US court is just the beginning of a response on this side of the Atlantic.
Some speculate that the UK charges may spur a Department of Justice investigation under the Foreign Corrupt Practices Act.
In civil court, the lawsuit filed Monday alleges loss of company value due to mismanagement. In addition, the intangible damage to American journalism should not be overlooked, says Levick. Look no farther than the Murdoch-owned Wall Street Journal, he says. 鈥淥n the Monday morning of this enormous scandal,鈥� he notes, the paper had only a small notice about the closing of the News of the World.
鈥淭his scandal is setting a new low bar for the fourth estate,鈥� Levick says, with a culture of do-whatever-it-takes to get a sensational story.
Others also see potential knock-on effects for American journalism. "The lack of ethics shown by Murdoch's powerful staffers in England is a transnational virus," writes Jeff Cohen, journalism professor at Ithaca College, in an e-mail. "News Corp. has regularly imported these British staffers to his US outlets, from the New York Post to Fox News to the Wall Street Journal."
News Corp.'s holdings span the globe. A very partial listing: 20th Century Fox, Fox News, Fox Television Studios, National Geographic Channel, 30 magazines (from Australian Golf Digest to Tattoo to Vogue Entertaining), dozens of newspapers including the Wall Street Journal and The Times of London, HarperCollins, and the Dow Jones Indexes.
Will Rupert Murdoch's empire survive?
Don鈥檛 underestimate Murdoch鈥檚 ability to weather the scandal, cautions Paul Levinson, author of 鈥淣ew New Media鈥� and professor of media and communication at Fordham University. After all, Professor Levinson points out, 鈥淢urdoch has had many adversaries over many years and he has still managed to build an impressive empire.鈥� However, he says, if any behavior akin to the Scotland Yard revelations appear in the US, 鈥渁ll bets are off. That would be the beginning of the fatal blow to his empire.鈥�
Even if Murdoch weathers these accusations, his ability to do business in future media will be severely hampered, says Robert Hurley of Fordham University, author of 鈥淭he Decision to Trust.鈥�
"If the lack of trustworthiness turns out to be systemic within News Corp., the odds are that there will be future betrayals that will come out," writes Professor Hurley in an e-mail. "This will undoubtedly affect Murdoch鈥檚 US position with viewers and investors over time,鈥� he adds.
Hurley draws an analogy to the way the Catholic Church dealt with sex scandals. The American pedophile scandal led to many fixes, he says, 鈥渂ut the hierarchy failed to realize that the issues were systemic and global. Subsequently betrayals in Ireland, Belgium, and Germany shocked people globally and even led the US Catholics to lose trust again,鈥� he points out.
Trust repair is a tricky business when done well, Hurley adds, 鈥渁nd is a recipe for disaster when done poorly.鈥�
