07.14.11

Dow Chief Quits in Phone-Hack Scandal

Dow Jones & Co. chief Les Hinton is the hack scandal's latest fall guy. Nick Summers on how the august Wall Street Journal is coping with its sleazy corporate cousins.

Update: Les Hinton, the chief executive of Rupert Murdoch’s Dow Jones & Co., which publishes The Wall Street Journal, announced Friday that he will step down. but says he was "ignorant of what apparently happened" when he oversaw Murdoch's British tabloids. Hinton was a top deputy to Murdoch for decades and ran News International, the British arm of News Corp., for a dozen years. In 2007, he swore to Parliament that phone-hacking at the tabloid News of the World was limited to just one rogue reporter—but in the past week numerous allegations have suggested that the corruption was much more widespread. Earlier today, current News International exec Rebekah Brooks announced her own departure.

On Tuesday, July 5, bureau chiefs and editors at The Wall Street Journal dialed into a conference call organized by Dennis Berman, the newspaper’s new editor in charge of corporate coverage. He trotted out some numbers: of the more than 1,200 front-page stories the Journal had run in the previous year, only 12 percent had been about corporations—formerly the paper’s bread and butter.

Since its 2007 sale to Rupert Murdoch’s News Corp., the Journal had been steadily devolving, old-timers thought, into a general-interest daily—still a fine newspaper, but no longer the essential first read of corporate America. “We have to raise our ambitions,” Berman said, according to someone who listened to the call. And it wasn’t hard to believe that the Journal would. A week earlier, it had won three Gerald Loeb Awards, the highest honors in business journalism, after being shut out in 2010 for the first time in decades.

At that moment, though, a long-simmering story in the British press was exploding, dictating that the next major corporation the Journal would be covering would be its own parent.

The bombshell admission by the News Corp.-owned tabloid News of the World that its reporters had hacked the voicemail of a murdered teen, giving her parents false hope that she might still be alive, has made the Murdoch company one of the most reviled on the planet, as more allegations of unethical practices at its various properties have surfaced. News Corp.’s hasty decisions to shutter the tabloid, as well as scuttle a $12 billion bid for complete ownership of a lucrative British satellite broadcasting company, have done little to stanch the outcry. In the sprawling story’s latest developments, the FBI opened an investigation into whether News Corp. outlets violated the privacy of 9/11 terror victims in America; Murdoch himself consented to testify before Britain’s Parliament; and Rebekah Brooks, the CEO of his U.K. newspapers, resigned.

phone-hacking-underhill
British Prime Minister David Cameron, top right, has resisted calls for an investigation into the practices of Rupert Murdoch's News of the World, where reporters accessed the voicemail of missing British teenager Milly Dowler in 2002. Rebekah Brooks, lower right, was editor of News of the World at the time. (Clockwise from left: Getty Images, AP Photo (2))

In the last week and a half, reporters and editors at the august Journal have had to come to terms with the fact that they share corporate DNA with publications that have paid police for news, paid large settlements to keep phone-hacking victims quiet, and provided Parliament with incomplete information, among other sins against journalism. The Journal's publisher, Les Hinton, has been widely discussed as a possible fall guy for their malfeasance. For the Journal, covering it all has been an awkward and frustrating challenge.

“It stinks. It makes our stomachs churn, to be bizarrely held accountable for some dipshit tabloid guys from eight years ago. It’s absurd,” said a staffer who has been at the Journal since before Murdoch bought the paper. Another reporter, also speaking anonymously, described an end to the era of pretending away the Murdoch taint: “This slightly naïve notion that nobody really knows that we’re part of News Corp., that what they do, what Fox News does, what Rupert Murdoch does, doesn’t affect us—when something like this happens, it forces people to recognize that it does.”

In covering the story, the Journal has walked a fine line. After running articles on page B1 and B3 on its first two days, the News of the World closure made the front page last Friday. The story was then relegated back inside—although Journal reporters Jessica Vascellaro and Russell Adams broke news Wednesday with a report that News Corp. was contemplating the sale of its remaining British newspapers. As the scandal has continued to explode anew each day, the Journal has, indeed, upped its game. Murdoch’s decision to revoke his bid for British Sky Broadcasting was fronted again Wednesday, and yesterday, the paper published the first extensive interview with Murdoch.

It hasn’t been an entirely smooth process, especially because Journal staffers are acutely aware of who among their ranks might be termed “AM” and “PM”: after Murdoch and pre-Murdoch. Gossip flows freely in a newsroom, and spreading through the Journal grapevine now is the tale of a contentious moment last week between No. 2 editor Gerard Baker—a Murdoch hire—and Bruce Orwall, a longtime bureau chief now in London. During a conference call to plan stories, the journalists were discussing Rebekah Brooks, the News of the World editor at the time of the hacking of the teen murder victim’s phone. Baker, murmuring a word of support for the vilified Brooks, noted that she had been on vacation when the offense occurred. Orwall shot back quickly: “The last I checked, cell phones still work in Italy.” Orwall declined to comment; Baker, through a spokesperson, did the same. Journal Editor-in-Chief Robert Thomson also declined to comment.

The Journal's competitors say the paper is performing admirably, under the circumstances. “We all know how tricky it is to cover your own company. I think the Journal has played it pretty much down the middle,” Bill Keller, the executive editor of The New York Times, emailed The Daily Beast. One Times reporter, who did not wish to be named discussing a competitor, agreed. “I think they’re doing the most they can with a very unpleasant and uncomfortable situation. No one ever wants to write about their boss,” he said. “And when you do, there’s always a degree of self-editing that goes on. Knowing that, it’s pretty impressive how they have been very tough on Murdoch and News Corp. at times.”

“It stinks. It makes our stomachs churn,” said one WSJ staffer.

Mitchell Stephens, a New York University journalism professor and author of A History of News, differed slightly. Reached Wednesday, he said the Journal’s coverage had been “slow on the uptake.” Worldwide, Stephens said, Murdoch publications have a history of failing when it comes to covering the boss.

Murdoch’s purchase of the Journal in 2007 was decried by many corners of the journalistic establishment. The Columbia Journalism Review called him a “scorpion.” Prize-winning staffers wrote letters of protest against the sale. But many actually welcomed Murdoch, making peace with his bid because it seemed to be, while distasteful, at least a safe passage through the financial straits facing print journalism. The Journal's then-owners, the dysfunctional Bancroft family, did not inspire confidence. And the then-76-year-old Australian mogul, a ruthless competitor in every respect, kept an uncharacteristically sentimental attachment to the business of newspapers.

By December 2008, his ownership of the Journal was seen in a new light: his investment had kept the paper afloat. In a Bloomberg Television report that aired in late June, one of Murdoch’s former foes admitted, “It’s nowhere near as awful as I thought it might be.”

Today, though, the phone-hacking episode seems to confirm the worst fears of the News Corp. doomsayers. Several Bancrofts this week said they regret selling.

Meanwhile, a Journal reporter described the newsroom mood this way: “People are in this very weird position of rooting for Rupert to pull through this. … Before, we were rooting for Rupert’s health. Now, it’s rooting for the scandal to not get so big that it envelops us.”

The crisis has some financial analysts predicting that Murdoch may be forced to spin off his newspapers into separate businesses. (Other analysts dismiss that option as remote.) Representing only a fraction of News. Corp.’s bottom line, Murdoch’s sleazier publications have an outsize effect on the company’s reputation—and shareholders have noticed, selling off some $7 billion in market value by June 12, according to Bloomberg. Across the corporate family tree, the staff of The Wall Street Journal must hold their noses and put it into print.