Wednesday, January 08, 2014

Will Murdoch Succeed in Burying his Past?

It’s a new year for News Corp. But the recently rebranded media colossus can’t seem to shake off a 2013 hangover.

Rupert Murdoch is plotting his empire’s expansion — growth that could include purchases of Tribune Company newspapers and, reportedly, Time Inc. But will 2014 be the year that the media mogul, who’s skilled at reinventing himself and burying old mistakes, is finally held to account?


The News Corp phone-hacking scandal became front-page fodder in the summer of 2011, but its principal defendants went before British courts just last fall. In the months since the trial began, we‘ve learned more about the alleged “culture of corruption” that pervaded News Corp’s London operation, infecting many top executives. The outlook for former Murdoch colleagues Rebekah Brooks and Andy Coulson looks bleak.

Murdoch has distanced himself and his companies from these and other lead actors in the scandal — with the possible exception of his son James. And he just plunked down a multi-million-dollar sum for a 30-year lease on new headquarters at London Bridge, indicating his intent to stick around.


Meanwhile, the U.S. Department of Justice continues its investigation into possible News Corp violations of the Foreign Corrupt Practices Act. As an American company, News Corp is accountable to the Act, which holds that the DoJ can prosecute U.S. firms for crimes committed abroad. (Part of the unfolding investigation in the U.K. involves hundreds of thousands of dollars in bribes Murdoch executives allegedly paid to police.)

And yet Murdoch is reportedly negotiating a cash settlement with the DoJ — and avoiding a criminal conviction in the U.S. Among other outcomes, a guilty verdict would have exposed Murdoch’s News Corp spinoff 21st Century Fox to possible challenges of its many broadcast licenses. Now that possibility seems remote.


Late last year, the Federal Communications Commission revealed that it would no longer pursue former Chairman Julius Genachowski’s proposal to allow News Corp and other media companies to own major television and newspaper outlets in a single market.

Murdoch had been banking on the FCC’s gutting of newspaper-broadcast cross-ownership rules to snap up new properties in cities like Chicago and Los Angeles.

And yet his existing broadcast holdings continue to record remarkable profits. 21st Century Fox seems content to reap the high retransmission and advertising revenues from the many stations it already owns and operates in the largest markets.

These retransmission revenues have changed the profit equation for many media conglomerates. And 2012 broke all records for local broadcast earnings from political advertising. Murdoch’s local station managers are now licking their chops in anticipation of the political ad buys in the run up to the 2014 and 2016 elections.


In 2014, Murdoch may be forced to fire his son and chosen heir James — whose prospects have been tarred by the phone-hacking scandal. Murdoch may be hesitant to cede too much power to the next offspring in line, daughter Elisabeth. Her husband, the influential PR executive Matthew Freud, is persona non grata in Murdoch mansions, owing to his close ties to Rupert nemesis and former British Prime Minister Tony Blair.

That leaves son Lachlan, who left his father’s employment in frustration in 2005 and may be reluctant to return in full.

Still Murdoch, who turns 83 later this year, doesn’t seem ready or willing to pass the reins just yet. His board of directors last year quelled a protest from shareholders seeking the mogul’s resignation, adding that his long-term presence as chairman and CEO “ensures strong and consistent leadership.”

And the Murdochs are hardy stock. His mother, Dame Elisabeth Joy Murdoch, passed away a little more than a year ago, having lived to the ripe old age of 103.

As in the past, Murdoch has succeeded by leveraging his enormous media and financial power to get what he wants, and to insulate himself and his interests from outside threats.

His fortunes could turn in 2014. U.S. authorities could push him to answer for all that’s happened under his watch. But that fate seems increasingly unlikely for this consummate escape artist.

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