James Murdoch Boosts Odds of News Corp. Top Job at Hearing
July 20, 2011, 11:24 AM EDTBy Amy Thomson and Jonathan Browning
(Updates with report about Rupert Murdoch leaving London in 12th paragraph. For more coverage of News Corp., see EXT3<GO>.)
July 20 (Bloomberg) -- James Murdoch, appointed deputy chief operating officer of News Corp. in March, took control at a three-hour hearing on phone-hacking in a performance that may increase his chances of running the media company.
The 38-year-old repeatedly interrupted U.K. lawmakers yesterday when they posed questions to his 80-year-old father, Chairman and Chief Executive Officer Rupert Murdoch, about the company’s internal investigations and whether the executives had knowledge of phone-hacking and payments to police for information by employees at the News of the World tabloid.
“Clearly his father was delegating to him and obviously trusts him to take forward the management of the company,” said Claire Enders, founder and CEO of media researcher Enders Analysis in London, whose clients include the U.K. government.
As New York-based News Corp.’s most senior executive in Europe, James Murdoch came under pressure from the panel to explain settlements of at least 2 million pounds ($3.2 million) he authorized to victims of phone hacking. He said he wasn’t aware of the extent of the practice until the start of this year, when civil lawsuits brought new information to light.
While the alleged interception of voice mail took place before the younger Murdoch took charge of News International, the News Corp. unit that publishes the U.K. titles including the now defunct News of the World, he has come under pressure from politicians to take responsibility from the fallout.
‘Adjust Our Course’
James responded to criticism during the Culture, Media and Sport Committee hearing that News Corp. had systematically failed to acknowledge the extent of phone hacking by its journalists. He said he had acted immediately to turn over emails to the police and investigate the level of criminality within the company when shown new evidence in 2010.
“What I’ve done and what the company has tried to do is adjust our course and behave with propriety,” he told lawmakers.
James was appointed CEO of British Sky Broadcasting Group Plc, News Corp.’s U.K. satellite unit, in 2003 over accusations of nepotism. He was promoted in 2007 to run News Corp.’s television, newspaper and digital operations in Europe, Asia and the Middle East, while becoming non-executive chairman of BSkyB. In March, he took on the additional role of deputy chief operating officer at News Corp.
Responsibilities
“When I promoted him to take charge of much wider responsibilities, we had calls from many big shareholders saying it was a terrible thing to take him away,” Rupert Murdoch told lawmakers.
Before yesterday’s hearing, people with knowledge of the situation said that News Corp. was considering elevating Chief Operating Officer Chase Carey to CEO to succeed Rupert Murdoch. A move would depend in part on Murdoch’s performance during the session with lawmakers, said the people, who weren’t authorized to speak publicly.
Murdoch said yesterday he isn’t considering resigning over the scandal, blaming the fallout on more junior employees. Between them, the Murdochs apologized or expressed regret at least 10 times during the hearing.
Rupert Murdoch today left London, the BBC reported. News Corp. declined to comment on whether he was on board of a plane taking off from a London airport shown by the broadcaster, citing a company policy of not commenting on his movements.
Yesterday’s testimony highlighted the “young leader being eager and keen and the older leader being a little bit more slow, displaying that gravitas,” said Jeremy Adams, a partner at ECD Insight, a presentation coaching firm.
Shares Rise
News Corp. rose 5.1 percent to the equivalent of $16.36 in Sydney trading today. The stock has dropped 11 percent in Australia since July 4, when the U.K.’s Guardian newspaper reported that the News of the World hacked into the voicemail of kidnap and murder victim Milly Dowler.
“Nothing damaging for the company’s assets came out of the session,” said Tom Eagan, an analyst at Collins Stewart in New York who has a “buy” rating on News Corp. shares. “At this point, I don’t think there will be a change in power.”
Both Murdochs said they had no knowledge of the extent of intercepting voicemails or paying police for stories at the Sunday tabloid, the 168-year-old paper they closed on July 10 following a public outcry and political backlash. Allegations that murder and terrorism victims had their phones hacked also prompted the company to drop its 7.8 billion-pound ($12.5 billion) bid for all of BSkyB.
‘Surprised’
The inquisitors focused on legal payments made to the paper’s royal reporter, Clive Goodman, and a private investigator, Glenn Mulcaire, who went to jail for intercepting phone messages left for members of Prince Charles’s staff.
James Murdoch said he was “surprised” when he found out legal fees had been made to Goodman and Mulcaire after they had been convicted. He said he didn’t know who had signed off on the payments.
The younger Murdoch will still face questions over his level of responsibility, Enders said.
“Many of the questions that were asked are going to continue to be asked,” Enders said. “Both Rupert Murdoch and James Murdoch were allocating responsibility to officers that they appointed.”
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--With assistance from Alex Sherman in New York. Angus Whitley in Sydney. Editors: Simon Thiel, Kenneth Wong.
To contact the reporters on this story: Amy Thomson in London at athomson6@bloomberg.net; Jonathan Browning in London jbrowning9@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
