Monday, July 11, 2011

How Far Will Murdoch's Empire Fall?

I'm sure I'm like most people who thought the hacker scandal that occurred a few years ago would do nothing to deter the British tabloids. We already had the internal investigation which found the usual "rotten apples",the changes in editors and the inconclusive official investigations. The Murdoch empire in the U.K. had pretty much bought up both sides of the political landscape so one couldn't expect much more than new titillating details about private investigators going after celebrities and people opposed by the Murdochs.

But events have unravelled at such a fast pace that if you blinked today you probably missed several pieces of the new puzzles. For me, the last piece of news was that NYPD alleges that News of the World actually tried to bribe them for cellphone numbers of the victims of 9-11. Earlier in the day former British Prime Minister Gordon Brown alleged that investigators for the Murdoch newspapers obtained his financial information illegally,details from his lawyers about private business and the medical details of his son's illness. The problem here is that the allegations involved other Murdoch papers, including the prestigious Sunday Times. Then enter Prince Charles and Camilla and their allegations about hacking. Then we go to the security details around the royals having been bribed.

When you have the current Prime Minister suggest you should fire a key person in your empire and you provided him with his first press secretary, you've run out of room to hide. A whole dam has burst. Non-Murdoch papers have ended their own self-censorship to go after the new revelations with gusto. And our own media is actually trying to explain the situation in a way that it makes sense. However,our own media still is very protective of the American side of the Murdoch empire, saying that he's protected here because of our First Amendment and no one knows of any of the same allegations being made against the Wall Street Journal, the New York Post or Fox News.

But there are American ramifications. The CEO for Dow Jones and the Wall Street Journal is an import from the very same media outlets under investigation in the U.K. Shareholders filed suit in Delaware against Newscorp for mismanagement. And fascinating enough, Newscorps might find itself under investigation for the violation of the Foreign Corrupt Practices Act because it bribed people in the U.K. Legal scholars estimate that Newscorp might be liable to upwards to $100 million in fines. C.R.E.W has demanded an investigation into these practices by our Congress.

At stake in the U.K. is the bid by Rupert Murdoch for control of BSkyB, a lucrative pay television station. That bid has now been relegated to the Competitive Committee, which means that the deal will be delayed several months, even postponed indefinitely. Naturally, stock prices are in a freefall so analysts say Newscorps has lost $7 billion over the last few days.

Murdoch watchers have seen him get out of pickles before. He even came close to bankruptcy in the 1990s but still managed a tremendous comeback. After avoiding journalists while at a meeting of moguls in Aspen, Rupert flew to London to straighten out the mess. People say this is an internal family dispute at its heart. Family members had bristled at son James' management style and feel that it threatened the whole business. Some wag noted,"He's always decisive and always wrong."As it is, James faces a new investigation and possible criminal charges.

Rupert's native Australia has even begun investigations into the practices by his media outlets there. Usually I'm cynical about anything happening after all these disclosures. Every one retreats to their corners, quiets down, a few employees will be sanctioned and maybe jailed, and everything will start up as the new normal.

But this time the fact that the U.K.'s political establishment is not protecting Murdoch and is even encouraging deeper investigations is a change. Also the wide-range of allegations, which seems to grow by the hour, indicates this is a crisis with possibly more dimensions than Murdoch himself can manage.

I know Ruper Murdoch is a deeply polarizing figure but I have always found one thing endearing about him--he's said to be an almost idiot savant about printing presses--their history, capability and origins.

Where this finally goes,who can tell? It may simply be that Murdoch is now getting the tabloid treatment he so often gives others. I guess turnabout is fair play.

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