Murdoch’s Friends Offer Support After U.K. Condemnation
Rupert Murdoch’s executive friends have come out in defense of the media magnate this week after a U.K. parliamentary committee published a report saying he wasn’t fit to run an international corporation.
Real estate developer Donald Trump, billionaire Barry Diller and Jacob Rothschild, an investment banker who helped Murdoch buy the now-defunct News of the World tabloid more than 40 years ago, are among executives who sent out statements supporting the 81-year-old chief executive officer of News Corp. (NWSA)
Murdoch and his son James were censured in a parliamentary report May 1 over the way they handled a hacking and bribery scandal at News Corp.’s U.K. newspapers. The Culture Media and Sport Committee said Murdoch “turned a blind eye” to what was going on at his businesses. The scandal has led the company to shutter the News of the World, and police have arrested about 45 people as part of probes into hacking and bribery.
“We shouldn’t forget that he made a unique contribution to media in this country,” said Rothschild, a British baron who served on the board of British Sky Broadcasting Group Plc (BSY), the U.K.’s biggest pay-television operator in which News Corp. owns 39 percent. “He created a new industry in this country, a pay- television industry,” said Rothschild, the co-founder and chairman of J Rothschild Capital Management. Murdoch also saved the U.K. newspaper industry, he said.
The value of BSkyB has more than doubled since the company’s IPO on Dec. 8, 1994. The shares have also outperformed those of News Corp.
Rothschild, who worked alongside James Murdoch at BSkyB, described the younger Murdoch as hard-working and insightful into emerging technologies. James Murdoch stepped down as the chairman of BSkyB last month after saying the hacking scandal was drawing unwanted scrutiny of his role.
The board of New York-based News Corp., which is controlled and chaired by Murdoch, also came to the CEO’s support yesterday, saying it has “full confidence” in his fitness to run the company he built over six decades.
Diller, who worked for Murdoch as head of Fox Broadcasting for eight years, defended his former boss in an interview, calling him an “honorable” executive.
“One of the greatest assets that News Corp. has, and its shareholders are lucky enough to own a piece of, is Rupert Murdoch,” said Diller, who runs Match.com’s parent company IAC/InterActiveCorp. (IACI) “So long as Rupert is the CEO, there is a future for the company.”
For real-estate developer Trump, Murdoch is a “world class CEO” and “certainly fit to run his corporation,” according to his Twitter posts.
BSkyB gained 1.2 percent to 710 pence in London trading as of 1:30 p.m. News Corp. yesterday rose 0.5 percent to $19.89 in New York Stock Exchange composite trading. The stock has gained 11 percent this year.
The phone hacking scandal prompted News Corp. to abandon a 7.8 billion pound ($12.6 billion) offer for the 61 percent of BSkyB that it doesn’t own. U.K. regulator Ofcom is in talks with the police and examining civil lawsuits from hacking victims to ensure that the company is suited to control the remaining 39 percent. Appearing before Parliament in July, Murdoch said it was the “most humble day” of his life.
In addition to the police probes and the parliamentary committee, hacking at News of the World prompted Prime Minister David Cameron to set up a judge-led inquiry into media ethics that has also interviewed the Murdochs and may recommend new rules for the British media.
“This culture, we consider, permeated from the top throughout the organization and speaks volumes about the lack of effective corporate governance at News Corp.,” the parliamentary committee said.
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