(Updates with Lachlan Murdoch visit in fifth paragraph.)
Feb. 18 (Bloomberg) -- Rupert Murdoch has taken seven months to recover from the “most humble day” of his life at the peak of a phone-hacking scandal in the U.K. to announce a new tabloid in a trademark defiant move by the 80-year-old.
News Corp.’s chief executive officer, whose U.K. operations have been inundated with lawsuits from hacking victims, police investigations and government inquiries into ethical and legal misdeeds, yesterday said he will start a Sunday edition of the Sun tabloid to replace the News of the World. He said an influential newspaper is the key to prevailing.
“Having a winning paper is the best answer to our critics,” Murdoch told Sun employees, according to a memo obtained by Bloomberg News. Staff had requested an audience with him after a second round of arrests a week ago into bribery sparked outrage among journalists at Britain’s best-selling daily newspaper.
Murdoch’s announcement may soothe anger in the newsroom after the company’s Management and Standards Committee, formed by News Corp. to assist police in their investigations of phone- hacking and bribery, handed over information to police. It may also spark more clashes with U.K. politicians, with Murdoch announcing the decision before legislators publish a report into why News Corp. executives didn’t stop illegal activities.
Yesterday, Murdoch said he will stay in London for the next several weeks to give his staff “unwavering support.” He spent two hours talking to journalists on the newsroom floor with his son Lachlan Murdoch, said a person familiar with the matter. James Murdoch didn’t fly to London this week with his father because he had other commitments, the person said.
“We will build on The Sun’s proud heritage by launching The Sun on Sunday very soon,” Murdoch said. “I am even more determined to see The Sun continue to fight for its readers and its beliefs.”
Murdoch has a track record of stubbornness. In 2007, when he was bidding for Dow Jones & Co. and the family-owned Wall Street Journal, he offered $60 a share, a 65 percent premium to the company’s stock price, cornering the Bancrofts into selling. The family, who had fought the takeover for three months with some members expressing concern about Murdoch’s influence on coverage, had controlled the paper for more than a century.
“This is very much like him,” said Edward Wasserman, a professor of Journalism Ethics at Washington & Lee University, said in an interview. “He decided he wants to fill up the hole in the market that he left. It also shows a certain amount of defiance, he’s not going to allow questions to be raised about the wisdom of News Corp.’s management.”
The News of the World was the best-selling Sunday paper in Britain when it was closed and its readers have dispersed to competing tabloids or stopped buying Sunday papers altogether. Advertisers would be glad to see the popular tabloid replaced, said Marc Mendoza, the head of the media-buying arm of advertising agency Havas SA.
“It would be a brave move,” Mendoza said in an interview. Murdoch is saying, “OK you’ve arrested these journalists, now we’re going to print seven days a week instead of six. Bring it on.”
While advertisers may welcome Murdoch’s plans, some lawmakers say his defiance won’t help him.
The closing of the News of the World was “just cynical,” said Chris Bryant, a lawmaker from the opposition Labour Party, who had sued the News or the World over phone-hacking. Tom Watson, the lawmaker who is helping prepare the report into News Corp. executives, said “this will not draw a line under the crisis faced by News Corp. in the U.K.”
Following the News of the World’s closure, Murdoch and his son James, the former head of the News International publishing unit and now deputy chief operating officer of News Corp., had to appear before Parliament to explain how much they knew.
In his testimony on July 19, Rupert Murdoch told lawmakers that this is “the most humble day of my life.” He added that he may have “lost sight” of the paper because it was “so small in the general frame of the company.”
The police investigation ultimately widened beyond the News of the World to News Corp.’s other U.K. titles including the Sun and the Times.
The U.K. lawmakers probing whether News Corp. covered up phone hacking are at least two months behind schedule with their report, as they debate how critical they can be of James Murdoch, two people with knowledge of the panel’s discussions said this week.
Trevor Kavanagh, associate Sun editor, called the arrests of journalists a “witch hunt” and said Sun journalists were treated like members of an “organized crime gang.” The MSC has interviewed employees and searched through e-mails and the use of private detectives, looking for signs of corruption.
Murdoch said yesterday that while the company would continue to aid investigations into the newsroom, he would protect reporters. The 10 Sun journalists suspended from their jobs following their arrests tied to the bribery investigation will be allowed to return and can continue to work unless they are charged with a crime, he said. News Corp. will also cover legal expenses for accused reporters until they are convicted.
“Everyone is innocent unless proven otherwise,” Murdoch told his journalists yesterday.
His comments show that Murdoch is confident he will prevail in the current conflict, says Niri Shan, a media lawyer at Taylor Wessing LLP in London who is not working for Murdoch.
“Murdoch might feel the best form of defense is attack,” Shan said in an interview. “There’s no reason why he can’t launch a newspaper with a different editorial team.”
--With assistance by Erik Larson, Tariq Panja and Robert Hutton in London. Editors: Simon Thiel, Kenneth Wong
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