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Hacking Cost News Corp. $224M

Hacking Cost News Corp. $224M Justin Sullivan / Getty Images

Including $57 million in the fourth quarter of the fiscal year.

News Corp. revealed a net loss of close to $1.6 billion on Wednesday after months of losses due to the company’s phone-hacking scandals. During the fiscal year ending June 30, the corporation spent $224 million due to investigations into the hacking, including $57 million in the fourth quarter alone. The media conglomerate also said that its decision to split its publishing and entertainment divisions is "on course." Chief Operating Officer Chase Carey said that the company was "targeting to make its initial regulatory filings around the end of the calendar year."

Read it at Capital New York


Brooks Charged With Phone Hacking

Brooks Charged With Phone Hacking Sang Tan / AP Photo

Including Milly Dowler’s voicemail.

Former News of the World editor and News International chief Rebekah Brooks was formally charged Thursday with conspiring to hack into phones. Brooks is charged with three counts for her involvement in several incidents of phone hacking that took place over a six-year period. The most damning allegations link Brooks to the hacking of murdered teen Milly Dowler’s voicemail in the days after she disappeared in 2002. The formal charges are the latest of Brooks’ woes. She’s already been charged with obstructing the investigation into her role in the scandal plaguing Rupert Murdoch’s empire. Six other News of the World journalists have also been charged.

Read it at Associated Press


Fleet Street Charged

Rebekah Brooks and Andy Coulson were among eight former ‘News of the World’ journalists to be charged in the phone-hacking scandal. Peter Jukes on the momentous day for Britain’s tabloids.

Eight of Fleet Street’s most prominent tabloid journalists face multiple charges of phone hacking, the Crown Prosecution Service announced Tuesday, one year after the phone-hacking scandal erupted at Rupert Murdoch’s best-selling Sunday tabloid, News of the World.

Rebekah Brooks and Andy Coulson

Rebekah Brooks (left) and Andy Coulson. (Paul Hackett, Reuters / Landov ; Christopher Furlong / Getty Images))

The nineteen charges of phone interception relate to a number of high-profile figures, from celebrities such as Angelina Jolie and Brad Pitt, Jude Law and Sienna Miller, and Sir Paul McCartney to senior British politicians, such as the former deputy prime minister John Prescott and the former home secretary Charles Clarke. But the most emotive relates to the hacking of the phone of Milly Dowler, the 13-year-old schoolgirl who went missing in March 2002 and whose body was found six months later. The revelation that her phone had been hacked precipitated what Prime Minister David Cameron called a “firestorm” of scandal and led to the closure of the 168-year-old newspaper.

The most high profile of those charged include Rebekah Brooks, once a close confidante of the Murdoch family and a friend of the prime minister, who resigned as CEO of News International, News Corp.’s U.K. publishing arm, last summer. She is already facing three charges of perverting the course of justice in a court case that will begin in a few months. Brooks was the youngest editor of News of the World, from 2000 to 2003, when she was replaced by her deputy and friend Andy Coulson.

Mike Giglio on what's next for Rebekah Brooks.

Coulson was editor of the News of the World until January 2007, when he resigned in the wake of the trial of private detective Glenn Mulcaire and the tabloid’s royal editor, Clive Goodman. They had been found guilty of accessing the voicemails of staff at Clarence House, mainly aides to the royal princes. Months later, Coulson was recruited by the leader of the Conservative Party, David Cameron, and the shadow chancellor of the exchequer, George Osborne, to become head of communications for the opposition party. Coulson entered No. 10 Downing Street as Cameron’s chief press officer when the coalition government was formed in May 2010. Andy Coulson already faces charges of perjury in Scotland related to phone hacking.

Soon after the CPS announced its decision, Rebekah Brooks made the following statement through her lawyers:  “I am not guilty of these charges. I did not authorise, nor was I aware of, phone hacking under my editorship. I am distressed and angry that the CPS have reached this decision when they knew all the facts and were in a position to stop the case at this stage. The charge concerning Milly Dowler is particularly upsetting not only as it is untrue but also because I have spent my journalistic career campaigning for victims of crime. I will vigorously defend these allegations.”

While the high-profile forthcoming trials will continue to create misery both for Rupert Murdoch and David Cameron, the announcement is also momentous day for Britain’s tabloid press, as the six other charged represent some of the most famous names in Fleet Street.


Murdoch Scandal for Dummies

The media mogul’s stunning resignation from top posts at a handful of British newspapers has many scratching their heads—is it the end of an era? Matthew Zeitlin answers questions about Murdoch’s move.

Your eight biggest Rupert Murdoch questions answered:

What did Rupert Murdoch just do?

Rupert Murdoch, chairman and CEO of News Corp., resigned his directorships in three News Corp. subsidiary companies: NI Group Ltd., News Corp. Investments and Times Newspaper Holdings. These companies control News Corp.’s flagship British newspaper properties, The Sun, The Times, and The Sunday Times.

But what about his U.S. newspaper companies? Is he resigning from them, too?

As The Times (ahem, The New York Times) reported, “it was not immediately clear whether Mr. Murdoch’s American newspaper and publishing interests would be affected by the moves announced Saturday.” But Murdoch’s American businesses, including the newspapers, exist in a similar corporate structure. For example, Dow Jones and Co., which News Corp. purchased in 2007 for $5 billion, publishes The Wall Street Journal. Murdoch is both CEO and chairman of News Corp., the parent company, and chairman of the board of directors of Dow Jones.

But isn’t News Corp. splitting up anyway?

Yes, on June 28, News Corp. announced that it would be splitting into two companies and that Murdoch would chair both of them. One company would contain the newspaper and publishing businesses, while the other would have the media and entertainment interests. Murdoch would remain CEO only of the latter company, but will initially be chairman of both. The split is expected to take a year to become finalized. In a statement by News Corp., Murdoch’s resignations were described as “corporate house-cleaning exercise prior to the company split."

Why is News Corp. splitting up?


Murdoch’s Still a Newspaperman

After a year of scandal, the mogul stepped down from boards of several of his U.K. newspapers. Andrew Neil on why the spin doctors need to relax—Murdoch’s not getting out of the business.

Rupert Murdoch's decision to step down from several boards that nominally control his U.K. newspaper interests prompted excited minds on both sides of the Atlantic this weekend to speculate it was a precursor to the 81-year-old media magnate getting out of newspapers altogether. The speculators are wrong. 


Richard H. Cohen / Corbis (FILE)

For a start, the boards he's resigning from have no power and very rarely meet. They're boilerplate corporate structures masking the fact Murdoch is in complete control of his U.K. papers.  

The Times Newspaper board, for example, is supposed to oversee the London Times and The Sunday Times. I doubt it’s ever taken on an important decision in its life, unless prompted to by Murdoch. Ditto the News Group board, which oversees his London tabloids (make that tabloid, since News of the World was closed at the height of the hacking scandal, leaving only The Sun).

Now Murdoch is gone from both. But he will still hold sway over the newspapers under their toothless grip. He is also walking away from the News International board, the London corporate brolly for all his U.K. newspapers. That might seem more significant. But, again, it’s pretty much a corporate shell, and the CEO will still report directly to Murdoch in New York.

Murdoch spin doctors in the U.S. described the move as a “corporate house-cleaning exercise” prior to News Corp. being split into an entertainment company (including all the Fox brands) and a publishing company (which will encompass his U.S., U.K., and Australian newspapers). I’m inclined to believe them. After all, they even admitted the boards were of minor importance.

The entertainment and publishing divisions will become publicly quoted companies, and Murdoch will chair both. He will be CEO of the entertainment company only, but he hasn’t been CEO of his U.K. newspapers for two decades—and that hasn’t made his grip on them any less vicelike.

The fact is Murdoch will still be chairman of the largest newspaper group in the world after the split. His interest in Britain might be waning—especially now that he’s largely persona non grata among the London political elite after the hacking scandal—but the publishing company will include The Wall Street Journal, which he acquired only a few years ago and which is now the main reason he gets out of bed very early every morning. He’s not about to sell that any time soon.

I Quit

Murdoch’s Stunning Exit

The tycoon resigned his top posts at a handful of British newspapers. Peter Jukes on why it’s the end of an era for the U.K.—and how the move could insulate his U.S. holdings from scandal.

In a move that could bring to an end Rupert Murdoch’s 30-year dominance of the British press, the 81-year-old media mogul has resigned as director of The Sun, The Times, and The Sunday Times, and stepped down from the board of the News International Group, Times Newspaper Holdings, and News Corp. investments in the U.K.


Rupert Murdoch holds a copy of The Sun, as he leaves his London home, last February. (Ben Stansall / AFP-Getty Images (FILE))

The move was greeted by incredulity among most of Fleet Street and even some of Murdoch’s staunchest opponents. Though there had been a sense that ever since the resignation of his son James Murdoch from the chairmanship of the nation’s largest pay-TV operator, BSkyB, that the Murdochs were in slow retreat, the launch in February of a Sun on Sunday to replace the now shuttered News of the World had given many journalists reason to believe that Murdoch would not divest from the U.K.

However, that sentiment began to shift with the recent announcement of an impending split of the troubled News Corp. publishing interests from the lucrative entertainment, sports, and satellite business. Murdoch told interviewers earlier this month that he was happy now to invest in the U.S. rather than the U.K., and was planning to build a “digital hub” around The Wall Street Journal instead.

Previously, such a converged media, TV, and newspaper project had formed the basis for James Murdoch’s bid for succession. Project Rubicon—James’s strategic plan to relocate and converge the British newspaper titles with the BSkyB franchise as part of a $16 billion takeover—was abandoned nearly a year ago in the wake of the hacking scandal.

Mark Lewis, the campaigning lawyer who through years of protracted civil suits finally brought phone hacking to public attention, told The Daily Beast: “Although surprising, it was inevitable that the board of News Corp. would call a halt to the family control of the print media in the U.K. when that was harming the running of an international company ... It was time for a change,” Lewis said. “People are left having to clear up the mess made on his watch.”

Murdoch himself has yet to issue any public statement, though his Twitter account has been active with unrelated political conversation. An email sent to his British staff today maintains Murdoch "remains fully committed to our business as chairman."

There have been 70 arrests since the hacking scandal broke in July last year. Scotland Yard’s phone-hacking investigation, Operation Weeting, focused mainly on Murdoch’s bestselling Sunday tabloid News of the World, has nearly finished, and files are being handed over to prosecutors. A separate inquiry into corruption of public officials, which has resulted in more than a dozen arrests at the daily Sun, is only about halfway through. Meanwhile, the computer-hacking investigation, Operation Tuleta, is only really just underway. Well-placed sources in Westminster suggest the upmarket Sunday Times is a particular focus when it comes to email hacking, with the security services in Northern Ireland taking a particular interest.


Taking the News Out of News Corp.

Remember when Rupert Murdoch was the ‘last great newspaperman’? With the announcement that his company will split in two, the profitable part of News Corp. will be out of the news business—and that could mean there will no longer a Murdoch at the helm of the company, writes Peter Jukes.

Thursday’s confirmation by its chair and CEO, Rupert Murdoch, that News Corp. intends to spin off its 175 newspapers and publishing interests from its much more lucrative pay-TV, entertainment, and movie business, brings to a head two contradictions that have haunted Murdoch’s empire since the day—60 years ago—when he inherited the down-market Adelaide News from his father.

Rupert Murdoch testifies before the Leveson Inquiry in April 2012.

The first is implicit in the name of the $60 billion parent company. Murdoch created News Ltd. in Australia during the 1950s. The company grew massively in the 1970s with the creation of News International in Britain, which, by the late ’80s, was providing hundreds of millions of dollars in profit per year and financing the move to the U.S. (especially the purchase of the Metromedia group of TV stations, which became the basis of the Fox network) and the creation of News Corp.

“News” has apparently been the one consistent theme in the rise of the world’s second-biggest media conglomerate over the last half century. But a growing proportion of its income has come from movies, pay-TV, sports, cable, and satellite interests. In the last eight months of the fiscal year, only 10 percent of the company’s profits have come from publishing. As for the “news arm,” the profits are even more grim: holdings include the New York Post, The Wall Street Journal, The Australian and The Times, all of which make annual losses and always have.

The small news company will be worth somewhere between $2 billion and $5 billion, while the giant pay-TV, cable, and broadcasting arm will be worth around $50 billion. What will it be called? Entertainment Corp.?

For all the eulogies about Rupert Murdoch being the “last great newspaperman,” the truth is that the “man who owned the news” always had a canny eye for non-news values and outlets. In the early ’60s, Murdoch was buying in and out of Australian TV networks, just as his father had acquired radio stations before World War II. Murdoch’s move to Britain with the purchase of the now shuttered News of the World and The Sun in 1969 was accompanied by an abortive attempt to gain a controlling interest in the London Weekend Television, one of the prime commercial TV stations of the time. When acquiring the Times Newspaper Group, Murdoch bought up the satellite broadcaster that would become the basis of BSkyB.

The media mogul is thus one of the pioneers of the concept of “infotainment.” Back in 1983, when challenged about why his once prestigious Sunday Times had fallen for the hoax of some forged diaries of Adolf Hitler, Murdoch famously responded, “After all, we are in the entertainment business.”

With the news and the entertainment businesses about to be radically split from each other, another contradiction in the Murdoch project has been exposed. Just as he inherited a (small) part of Keith Murdoch’s extensive Australian newspaper interests in the ’50s, Rupert Murdoch has tried to engineer a dynastic succession at News Corp.


Brooks Faces the Judge

She once was the queen of Fleet Street, but Rebekah Brooks appeared in court Friday similar to the common criminals she used to splash on the front pages of the tabloids. Mike Giglio on Brooks’s day in court—and whether she could face any more charges.

Rebekah Brooks appeared in court in London this morning for the latest stage in what could be a long legal battle for the former British media star. Wearing a black dress and high heels and seated alongside her husband, racehorse trainer Charlie Brooks, and four of her associates, Brooks spoke only to confirm her name as prosecutors leveled charges of conspiring to pervert the course of justice—the only charges to be brought in relation to the phone-hacking scandal so far.

Brooks has been arrested and bailed in relation to the police investigations into phone hacking and alleged payments to police by journalists at News International, Rupert Murdoch’s British media arm, where Brooks was a senior executive. But the charges she faced Friday relate to two weeks between July 6 and July 19 of last year, when the phone-hacking scandal was at its height. During that time, Brooks and the other suspects allegedly conspired to conceal material from police officers with Operation Weeting, the ongoing investigation into hacking. Brooks is accused of conspiring to conceal material, including documents and computers, from Weeting investigators, as well as removing seven boxes of material from the News International archive.

Also appearing alongside Brooks and her husband were Cheryl Carter, Brooks’s former personal assistant; Paul Edwards, her chauffeur; Mark Hanna, News International’s head of security; and Daryl Jorsling, a security consultant. Brooks faces three separate charges, and the other defendants each face one. All six were released on bail until a hearing on Sept. 26, when they are expected to enter their pleas.

Perverting the course of justice is seen as a potentially more severe crime than phone hacking in Britain. It carries a maximum sentence of life imprisonment, though a recent legal analysis by the Guardian put the average sentence at 10 months.

Addressing the court Friday, Brooks’s lawyer, Hugo Keith, said the extensive media scrutiny of Brooks to date might have ruined her chances for a fair trial. “I am afraid there are certain sites, blogs and the like, where there has been some extremely offensive, unpleasant and prejudicial commentary,” he said, according to the Telegraph.

Former Chief Executive of News International Rebekah Brooks

Dan Kitwood / Getty Images

This echoed comments made by both Brooks and her husband after the charges against them were announced last month. Appearing with her husband, Brooks said she was “baffled by the decision to charge me,” calling the decision to charge her “weak and unjust.” She added, “I cannot express my anger enough that those close to me have unfairly been dragged into this.”

In his own remarks, Charlie Brooks was equally defiant, complaining that his wife was “the subject of a witch hunt” and that he and the others had been used as “scapegoats” to ratchet up pressure on her. “I have grave doubts that my wife will ever get a fair trial, given the volume of biased commentary which she has been subject to,” he said.


Brooks Could Face More Charges

Brooks Could Face More Charges Dan Kitwood / Getty Images

Appears in court.

Rebekah Brooks, former chief executive of Rupert Murdoch's News International, made her first appearance at the Southwark Crown Court on Friday to face three charges of conspiring to pervert the course of justice by alleged plotting to hide phone-hacking evidence from the police. But Brooks could face further charges over phone hacking itself, and she is expected to learn whether that will happen by the end of summer. Her husband, Charlie, faces one count of perverting the course of justice.

Read it at The Daily Beast


Cameron: Pols, Press ‘Too Close’

Cameron: Pols, Press ‘Too Close’ Lefteris Pitarakis / AP Photo

Gives testimony before media ethics committee.

British Prime Minister David Cameron said the relationship between
 politicians and the press has “gone wrong” and that they have become
 “too close.” In his testimony on Thursday before the Leveson Inquiry—the Parliamentary committee investigating media ethics in the wake of
 the hacking scandal at News Corp.—Cameron said he doesn't “believe the
 regulatory system works” and said that he’s “not trying to blame 
the whole thing on New Labour, but I think it’s been a developing 
story.” Cameron said he never “traded a policy” to receive
 favorable coverage.

Read it at Guardian

Cameron Under Fire

Cameron: We Got Too Close

At the Leveson Inquiry, the British prime minister said the relationship between
politicians and the press has ‘gone wrong.’ Peter Jukes on the text message from Rebekah Brooks to Cameron that made this uncomfortably clear.

In his long-awaited appearance before the Leveson Inquiry this morning in London, British Prime Minister David Cameron admitted that politicians had gotten too close to the press. That point was made uncomfortably clear in a text message he received from Rebekah Brooks when she was editor of Rupert Murdoch’s Sun, which was revealed during his testimony today. Sent in October 2009, just after the Sun had switched its support to Cameron’s Conservative Party, Brooks wrote: "Rooting for you tomorrow not just as a proud friend but because professionally we're in this together".


Lefteris Pitarakis / AP Photo

That line is already leading the news and—unless something more damning emerges—will dominate the headlines. It will undo all Cameron's emphatic assurances there was no “grand bargain” between the Murdoch empire and the Conservatives in the run-up to the last election. Together with the revelation of 1,400 meetings with the press while he was in oppositions—one per day—that only halved once Cameron was in office, the perception that the current prime minister has been obsessed with courting the media may be hard to dispel.

Cameron is a polished performer, but his appearance at the inquiry this morning was edgier than usual, his hands clasped before him on the desk as Robert Jay, the counsel to the inquiry, took him through an opening discussion about his attitude toward the media. Cameron has a background as a public affairs executive for one of Britain's largest commercial TV broadcasters, Carlton Communications, and he emphasized the primary importance of television over the printed press in political communications. In retrospect, this was not such a smart move.

British Prime Minister David Cameron testifies before the Leveson Inquiry.

Before the line of questioning had even arrived at this point, Cameron was refuting the allegation, made by former prime minister Gordon Brown, that there had been a quid pro quo of support for James Murdoch's commercial interests in News International’s controversial bid for the British broadcaster BSkyB in return for the media empire’s switch from supporting Brown’s Labour government to Cameron’s Tories. But Jay honed in on a series of meetings in the summer of 2009, when the Sun switched to supporting Cameron's bid to be next prime minister and Conservative policy towards the BBC and broadcasting regulation seemed to chime more with the demands famously made by Murdoch in a MacTaggart lecture in 2009. Cameron made a vigorous defense of his own independent policy-making—and angrily insisted he hadn't done any kind of deal. When Jay suggested there could be a “perception” of such a concordat, Cameron pushed back, saying that vague perceptions of “winks and nods” could easily decline into a "trial for witchcraft."

As so often in the past, however, it's not the much-rehearsed verbal performance that will dominate the headlines, but the unexpected written evidence that emerges through the Leveson Inquiry's Section 21 powers to subpoena materials. Today, the surprise source was News International, which holds a back-up of the texts sent by Brooks, its former CEO. The “in this together” text was sent by Brooks to Cameron just before he was to give a speech at the Conservative party conference. “I am so rooting for you tomorrow not just as a proud friend but because professionally we're definitely in this together!” Brooks wrote. Then she signed off, “Speech of your life? Yes he Cam!”

Cameron responded that the text indicated that, while he and Brooks were indeed “friends,” he and the Sun were “pushing the same agenda.”


Piers Morgan Under Fire

Piers Morgan Under Fire Jae C. Hong / AP Photo

While Rebekah Brooks gets new court date.

British investigators had former tabloid editor and current CNN host Piers Morgan’s emails and phone transcripts, reveals The Daily Beast in an investigation into previously unreleased documents. Calling the investigation “one of the most unnerving things in my life,” Morgan is revealed in the documents to be a man who is deeply concerned about his reputation and uncomfortable in the hot seat—and someone who takes his privacy very seriously. Meanwhile, former News International chief Rebekah Brooks, husband Charlie, and four others appeared in court briefly on Wednesday, where a judge ordered the defendants to sever communication with each other, except for husband and wife. They will appear in court again on June 22.

Read it at The Daily Beast


Major: ‘Excessive Degree of Chuminess’

Major: ‘Excessive Degree of Chuminess’ Dan Kitwood / Getty Images

Gives testimony at Leveson inquiry.

Former British prime minister Sir John Major testified Tuesday that he hoped the Leveson Inquiry into media ethics will result in "action that will lift the worst of the press standards of the best of the press," saying there is a "certain degree of chuminess" between the press and the government. Major, whose daughter-in-law, Emma Noble, issued a civil claim against News Corp. a few months ago, was infamous for several "sleaze" scandals during his seven years as prime minister. By the 1997 general election, he had lost the support of the British press, including The Sun. Major's testimony will be followed by Labour leader Ed Miliband.

Read it at Telegraph


Brown: Murdoch Misled Inquiry

Former P.M. Gordon Brown denies that he ‘declared war’ on Rupert Murdoch—but didn’t hold back any accusations against the media mogul. Peter Jukes reports on the Leveson Inquiry.

At the Leveson Inquiry former prime minister Gordon Brown implicitly accused two previous witnesses of lying on oath as he denied Rupert Murdoch’s assertion that he “declared war” on the media mogul’s empire and Rebekah Brooks’s testimony that he gave permission for his son’s medical condition to be published in The Sun.

Britain Phone Hacking

Former British prime minister Gordon Brown leaves the High Court with his wife, Sarah, after giving evidence at the Leveson Inquiry in London on Monday. (Tim Hales / AP Photo)

The inquiry, which has rapidly turned from an examination of the press into a trial of Britain’s political and media classes, and above all the relationship between the last five prime ministers and Murdoch, entered its potentially most dramatic week, with evidence from two former prime ministers and the current incumbent, David Cameron.

Today’s testimony, a rare public appearance by Brown since his election defeat in 2010, gave the former prime minister a platform to set the record straight.

Former Prime Minister Gordon Brown testified before the Leveson Inquiry Monday, where he vehemently denied granting permission for ‘The Sun’ to run a story about his son’s cystic fibrosis.

In the most emotionally charged part of his appearance, Brown “absolutely” denied he had given Brooks, then editor of The Sun, permission to reprint details of his son Fraser’s cystic fibrosis on the front page within days of it being diagnosed in 2006. Brown claimed he was presented with a “fait accompli” by Brooks, and that no parent would willingly divulge such confidential material about a child, especially since he was only 4 months old at the time, and other relatives—who could be directly affected by an inherited illness like this—had not been told.

During a parliamentary appearance last year during the height of the hacking scandal, Gordon Brown alleged his son’s medical records had been illegally accessed. The Sun denied this at the time, and under oath Brooks claimed that the information had come from a concerned member of the public, who also had a child with cystic fibrosis.

Brooks’s justification for publishing the story was that it raised public awareness of the disease and increased charitable donations to the Cystic Fibrosis Trust, though the chief executive of the charity has denied this, according to a Reuters report today.


News Corp. Could Face 500 Claims

News Corp. Could Face 500 Claims Peter Macdiarmid

100 settled and filed so far.

No matter how much we may want it to, News Corp. won’t be leaving the spotlight anytime soon. Lawyers for both Rupert Murdoch’s media company and victims of phone hacking said in court Friday that the company will likely face a total of 500 civil suits related to phone hacking, only about 110 of which have been filed or settled so far. The cost of battling the civil claims has put a significant drain on News Corp. since the hacking activity first came to light, and the company reported in early May that it had spent $167 million on legal fees related to the cases. Last year, News Corp. shut down the Fleet Street tabloid News of the World, and a police investigation into hacking activity at the paper continues.

Read it at The Wall Street Journal

Pols and Press 'Too Close'

British Prime Minister David Cameron testified before the Leveson Inquiry Thursday, saying politicians and the media have an ‘unhealthy’ relationship that lacks trust and high standards.