Bloomberg News

News Corp. Probes Its U.K. Newspapers After Hacking Scandal

October 11, 2011

(Updates with Les Hinton testimony in seventh paragraph.)

Oct. 11 (Bloomberg) -- News Corp., which closed its U.K. News of the World tabloid this year following a phone-hacking scandal, said its Management and Standard Committee is investigating the company’s three other British newspapers.

The company hired law firm Linklaters LLP to advise it on the investigation, New York-based News Corp. said in a U.S. regulatory filing today.

News Corp. had been vague about the committee’s duties, saying in August that while the group is authorized to conduct investigations, its primary objective is to facilitate outside inquiries by police and politicians. The company also said the body wouldn’t investigate what happened at the News of the World. News Corp. has said that it would hold a review of journalistic standards at its U.K. newspapers following the hacking scandal.

The committee was formed in July after the company closed the News of the World tabloid following revelations that reporters had hacked into the voicemail of murdered schoolgirl Milly Dowler for stories. A police investigation into phone hacking has led to at least 16 arrests, among them Andy Coulson, Prime Minister David Cameron’s former communications chief and an ex-News of the World editor.

“News Corporation has already taken decisive actions to hold people accountable and will take all prudent steps designed to prevent something like this from ever occurring again,” the company said in the statement.

Open Questions

News Corp. spokeswoman Miranda Higham today declined to comment further. The company’s British titles, published under the News International unit, are the Sun, the Times and the Sunday Times.

Les Hinton, former executive chairman of News International, will be questioned by the U.K. House of Commons Culture, Media and Sport Committee on Oct. 24 as part of its investigation into the scandal, the panel said today. Hinton will appear via video-link.

James Murdoch, deputy operating chief of News Corp., appeared in July before the same committee to explain how much he knew about phone hacking at News of the World. He was recalled to answer further questions later this year. James Murdoch said repeatedly that he didn’t know of widespread hacking, testimony that has been challenged by former executives at the U.K. newspaper unit.

Shareholder Pressure

News Corp. also said today that calls by proxy advisory firm Institutional Shareholder Services for the ouster of 13 out of 15 board members following the scandal are “misguided.” The compensation of Chief Executive Officer Rupert Murdoch is “aligned with performance,” it said.

News Corp. has suffered financial consequences from the phone-hacking scandal that reflect a lack of oversight, said ISS, which advises more than 1,700 investors on corporate governance issues. It recommended investors vote against Rupert Murdoch, his sons James and Lachlan, and 10 other directors.

The executive members of the committee include William Lewis, News International’s former general manager and Simon Greenberg, News International’s former corporate affairs director. Jeff Palker, a third member, also serves as News Corp.’s general counsel for Europe and Asia.

Anthony Grabiner, a veteran commercial lawyer and a member of the U.K. parliament’s House of Lords, was hired as an independent overseer of the project. He reports to Joel Klein, a News Corp. board member. Klein discusses the committee’s findings with Rod Eddington, the lead director, twice weekly, the company said in the filing.

News Corp. rose 68 cents, or 4.2 percent, to $16.93 in New York trading yesterday. The stock gained 16 percent this year.

--Editors: Simon Thiel, Robert Valpuesta.

To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong kwong11@bloomberg.net


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