Wednesday, 17 October 2012

News Corp rejects separating top jobs


A majority of News Corp shareholders have voted against separating the roles of chairman and chief executive, both currently held by Rupert Murdoch.

Mr Murdoch's family owns about 12% of News Corp but, because of the dual class shareholding structure, has 40% of the voting shares in the company.
Two-thirds of votes cast, excluding the Murdoch family, wanted to separate the roles and have an independent chairman.
A resolution to change the shareholding structure was also rejected.

"There are plenty of media stocks to buy if they don't like this one," Mr Murdoch told the meeting.
"When you buy the stock, you know what the company is. If you don't like it, don't buy the stock."
Julie Tanner of the socially responsible Christian Brothers Investment Services proposed the resolution calling for an independent chairman.
"While Mr Murdoch claims that the interests of his family are in line with those of all shareholders, this vote proves that most independent shareholders would disagree," she said.
There was also support from about two-thirds of non-Murdoch votes for eliminating the distinction between voting and non-voting shares.

Corporate governance issues were raised after the phone-hacking scandal at News Corp's newspapers emerged last year.
"The failure of internal controls has had real and lasting repercussions," Julie Tanner said.
"It has shuttered a newspaper, launched criminal investigations, cancelled the BSkyB acquisition, eroded public trust and tarnished the company's reputation."

'Seized opportunity'
"This has been a difficult period in our company's 58-year history," Mr Murdoch told shareholders at the meeting in Los Angeles.
"We've acknowledged the serious wrongdoing that occurred in the United Kingdom," he said, adding that the company had "seized the opportunity to make amends" and to improve corporate compliance.

He said that the problems at its UK newspapers were not found in News Corp's other divisions.
Mr Murdoch also pointed out that News Corp's shares had risen 45% in the last 12 months.
News Corp has previously announced plans to split into two companies, separating its broadcasting and publishing businesses, with Mr Murdoch to chair both groups.

He told the meeting that the split would take time, and that there would be details on the executive leadership and board membership by the end of the year.

Tuesday, 16 October 2012

Phone hacking: Rebekah Brooks walked away 'with £7m pay-off'

Rebekah Brooks received a pay-off worth more than £7m following her resignation as News International chief executive last year, it emerged last night.

As part of her pay-off, the 44 year-old reportedly received cash, pension payments and an allowance for legal fees.
Sources also suggested she retained use of a chauffeur-driven car after she resigned following her more than 20 year career with NI.
It also included “substantial” clawback clauses, which entitle NI to recover some of the payment from the former newspaper editor in certain circumstances, the Financial Times reported.

The former head of Rupert Murdoch’s British newspaper operation, who is awaiting trial next year on multiple charges in relation to the phone hacking scandal, joined NI in 1989.
Formerly Rebekah Wade, she was the editor of two of Mr Murdoch's newspapers, the News of the World and then the Sun, before taking on executive roles in the tabloids' publisher, NI.

The Telegraph
By Andrew Hough

Monday, 15 October 2012

News Corp. Nominates Alvaro Uribe, Colombia President Involved In Wiretapping Scandal, To Board

By Roque Planas, The Huffington Post

News Corp. plans to welcome the newest member to its board of directors on Tuesday: the former president of Colombia, Alvaro Uribe.

For Rupert Murdoch's media conglomerate, still reeling from a phone hacking scandal, Uribe is an odd choice, many journalists and press advocates say. Under Uribe's command, Colombia's intelligence service became mired in an illegal wiretapping scandal. Several ex-intelligence agents and former aides to Uribe now face criminal charges or investigations from the public prosecutor’s office, which accuses them of illegally spying on Supreme Court justices, journalists and human rights activists. Uribe, a controversial conservative leader, himself lashed out at journalists he perceived as critical during his two-term presidency from 2002 to 2010.

“It’s ironic that someone who has such an adversarial relationship with the press would be elected to the board of a media company,” Carlos Lauria, senior Americas program coordinator of the Committee to Protect Journalists, told The Huffington Post. “His accusations endangered the lives of local reporters.”
News Corp. declined to comment on Uribe's appointment or his relationship with the press. The company did share a written statement submitted to the Securities and Exchange Commission in September, describing Uribe as a potential addition to the board with meaningful international political experience. News Corp. contacted a spokesperson for Uribe on behalf of The Huffington Post, who did not respond to requests for comment.

Uribe, a highly popular political figure, is credited with restoring security to Colombia by dealing a near-fatal blow to the FARC, Latin America’s longest-lasting insurgent group. Formed in 1964, the Marxist rebels aimed to overthrow the Colombian government. The tactics they adopted, such as kidnapping hostages for years at a time and using the drug trade to finance operations, have blackened the group's name. The United States classifies the FARC as a terrorist organization.
Uribe left office in 2010 with an approval rating of 80 percent, according to Gallup.
But Uribe also polarized the country. Approaching his goal of defeating the FARC with zeal that for some bordered on the messianic, Uribe publicly painted certain journalists, social activists and human rights defenders as collaborators with leftwing terrorism when they criticized his policies.
The environment Uribe created made covering the Colombian government's half-century-old conflict even more dangerous, says reporter Hollman Morris, an investigative journalist and 2011 Harvard Nieman Fellow. Morris and his brother Juan Pablo Morris took cameras into the Colombian countryside during the years under Uribe to document atrocities.
That work involved interviewing members of the FARC -- something that infuriated Uribe. In 2009, Uribe publicly accused Morris of using journalism to be a “permissive accomplice of terrorism." Morris had interviewed four hostages in FARC captivity.
Human Rights Watch and the Committee to Protect Journalists hammered Uribe in a statement, saying the baseless accusations endangered Morris’ life by opening him up to retaliatory violence.
“Every report we did, we knew we were going to be threatened,” Morris told The Huffington Post. “Uribe made us into enemies of the country.”
The former president repeatedly lobbed similar accusations at other journalists, activists and union leaders, according to Human Rights Watch. He has continued the pattern since leaving office.
In 2010, senior vice president and executive news director for Univision Daniel Coronell, then a columnist for Semana, a Colombian news magazine, sued Uribe for slander after being accused of ties to organized crime in a series of tweets. Coronell had penned a column implicating Uribe’s sons in shady business dealings (they denied wrongdoing).

In August, Uribe accused Washington Post correspondent Juan Forero of being a “great sympathizer of the FARC” who had “defamed” his administration with a report on the illegal actions of the Colombia’s intelligence service, the Department of Administrative Security (DAS).
The Committee to Project Journalists’ Lauria calls the intelligence service’s abuses one of the “worst threats to journalism” during the Uribe administration. The DAS was like the CIA, FBI and U.S. Secret Service rolled into one, answering directly to the president.
Semana reported in 2009 that the DAS had illegally wiretapped and spied upon Colombian Supreme Court justices, journalists and other government critics. Panicked DAS agents fearing for their jobs sold off classified material to guerrillas, drug traffickers and foreign governments when the incoming administration of President Juan Manuel Santos announced two years later that it would close the agency down, Semana reported.
But DAS didn’t just illegally tap journalists’ phones -- it also threatened them with death, according to Semana.
Semana obtained a DAS manual from the public prosecutor's office in 2009 reportedly outlining how to make a threatening phone call to Claudia Duque, an independent journalist who reported that the DAS had interfered with an investigation into the murder of Jaime Garzón -- a popular political humorist and television journalist comparable to Jon Stewart. Semana reported that Duque’s name, phone number and email appear on the top of the manual, which instructs the agent making the call not to stutter and to keep it under 49 seconds.
Duque received the call on Nov. 17, 2004, according to Semana.
“We tried to tell you in every way we could. Now not even armored cars or lousy police reports will help you. We have no choice but to go after what you most love," the DAS agent said, going on to say he would rape Duque’s 10-year-old girl, according to Semana. “Your daughter is going to suffer. We’re going to burn her alive. We’re going to scatter her fingers around the house.”
Uribe's relationship with the press makes him a potentially eyebrow-raising addition to the News Corp. board. The company’s reputation was gravely damaged last year when it was reported that its London tabloid News of the World had culled its scoops for years by illegally hacking the voicemails of celebrities, an underage murder victim and the relatives of soldiers killed in Iraq and Afghanistan. The revelation led to 50 arrests, torpedoed News Corp.’s $12 billion bid to take over British Sky Broadcasting and prompted criminal charges against eight of the defunct paper’s editors and journalists.
“It’s a funny thing for two people with illegal wiretaps in their recent past to be getting together,” Adam Isacson of the Washington Office on Latin America said in a telephone interview, referring to Uribe and Murdoch, News Corp.'s CEO. The Washington Office on Latin America is an advocacy organization that promotes human rights.
News Corp.'s board is asking its shareholders to elect Uribe to the board of directors at the group's annual meeting in Los Angeles on Tuesday. The move could again cast light on a board that some News Corp. shareholders wanted to sue, alleging it had failed to provide the oversight needed to stop the U.K. phone hacking scandal from occurring.

A spokesman for News Corp. declined to comment on Uribe’s nomination to the board, but forwarded a proxy statement the company shared with investors and the SEC on Sept. 4, which says:
Mr. Uribe brings to the Board strong leadership skills gained from his distinguished political career and service as President of Colombia. He offers the Board a valuable international perspective on political and governmental matters.
Uribe’s defenders point out that the Colombian courts haven’t charged him with wrongdoing in the DAS scandal, and no evidence demonstrates that Uribe gave direct orders to follow journalists, tap their telephones or threaten them with death.
“No smoking gun has emerged,” said Isacson of the Washington Office on Latin America. The DAS’s flagrant illegality may owe to a few overzealous leaders who overstepped their bounds in pursuit of the FARC, he added.

But for political scientist Claudia Lopez, whose research helped uncover links between Colombian Congress members and rightwing paramilitary groups, there’s no need for direct evidence.
“To me it seems like inverted logic,” Lopez told The Huffington Post. “The DAS is an institution that answers directly to the presidency. It should be assumed that Uribe was giving the orders.”
Lopez viewed Uribe’s nomination to the board of News Corp. as ironic, but drew a distinction between the media company and the DAS.
“News Corp., as far as I know, never threatened anyone with death,” Lopez said. “Institutions that answered directly to Alvaro Uribe did.”

Wednesday, 18 July 2012

Glenn Mulcaire forced to reveal who gave phone-hacking order

Investigator used by the News of the World told to reveal who told him to hack Max Clifford assistant's phone
Glenn Mulcaire, the private investigator used by the News of the World has been forced to reveal who ordered him to hack the phone of an assistant to PR Max Clifford in compliance with a supreme court order.

He was due to hand over the information in relation to the hacking of the phone of Nicola Phillips phone at 4pm on Wednesday.

But a high court judge, Mr Justice Vos ruled this information should only be handed to her barrister, her solicitor and to the Metropolitan police and could not be shared by other litigants who are suing News International over alleged phone hacking.

He will hold a separate one-day hearing to determine how widely the Mulcaire witness statement could be shared on 30 July, he said.

Lawyers acting for 50 phone-hacking victims argued at a case management conference hearing on Wednesday that this information could be critical to their claims.
Vos agreed there was some merit in their argument, but said he did not want to make "a knee-jerk decision" as he could "foresee there are difficult questions that affect his rights, his article 6 rights".
Article 6 of the European Convention on Human Rights relates to an individual's right to a fair trial.
Mulcaire, who was jailed in 2007 for charges in relation to hacking of phones of members of the royal household, had argued that disclosure could leave himself open further prosecution.

Lisa O’Carroll
The Guardian

Wednesday, 4 April 2012

Rupert Murdoch's phone-hacking scandal: A timeline

Murdoch built a media empire on newspapers, and now one — News of the World — could be his downfall. A chronography of when and how things went awry

published by THE WEEK

An electronic-eavesdropping scandal that started at Rupert Murdoch's Sunday tabloid News of the World is rapidly escalating into a full-fledged conflagration that threatens Murdoch, his global media empire, and the British government — and has already resulted in the arrest or resignation of several previously untouchable figures. How did allegations of listening in on the voicemails of the royal family snowball into a threat to one of the world's most powerful media titans? Here, a timeline of key events in the News Corp. phone-hacking scandal:

1843News of the World is first published, by John Browne Bell

1969Australian Rupert Murdoch buys the newspaper, his first toehold in Great Britain

1984Murdoch revamps News of the World from a broadsheet to a tabloid format

1989Rebekah Wade (she married horse trainer Charlie Brooks in 2009 and took his name) is hired at News of the World, as a secretary

2000Wade becomes editor of News of the World at age 32, making her Britain's youngest national newspaper editor

March 2002Milly Dowler, 13, disappears on a walk home in a London suburb. Days later, private investigator Glenn Mulcaire, working for News of the World, allegedly starts intercepting Dowler's cellphone voicemail messages, and erasing them to make room for more. The deletion of messages gives Dowler's family and the police false hope that Dowler is alive, until her remains are found in September 2002.

January 2003Wade becomes editor of sister News Corp. paper The Sun; her deputy since 2000, Andrew Coulson, becomes editor of News of the World
March 2003Wade tells a committee of the lower house of Parliament that News of the World has paid police officers for information; parent company News International says that is not common practice.

November 2005News of the World publishes a story on Prince William's knee injury, with confidential information that leads royal court officials to complain to police about intercepted voicemails. The police open an investigation.

August 8, 2006Mulcaire and News of the World royal-family editor Clive Goodman are arrested for phone-hacking

January 26, 2007Mulcaire and Goodman are jailed for six and four months, respectively. Coulson resigns as editor of News of the World, claiming "ultimate responsibility" for the hacking, but denying any knowledge of it.
May 2007News International lawyers conclude there is "no evidence" Coulson knew about Goodman's illegal activities. Coulson is hired as communications director for the Conservative Party and its leader, David Cameron.
December 2007James Murdoch, son of Rupert, becomes chief executive of News Corp.'s European and Asian operations

June 2009Rebekah Wade is named CEO of News International, effective in September. She marries Charlie Brooks; then–Prime Minister Gordon Brown (Labour) and current Prime Minister David Cameron (Tory) attend the wedding.
July 2009The Guardian reports that several News of the World journalists had intercepted the voicemails of celebrities and politicians, with the knowledge of senior staff, and that its parent company had paid more than $1.6 million to settle phone-hacking cases that could have unearthed evidence of broader hacking at the paper. Scotland Yard says it isn't reopening the case.

February 2010The House of Commons Culture, Media, and Sports Committee issues a scathing report saying it's "inconceivable" that News of the World managers didn't know about the "near industrial scale" phone-hacking at the tabloid.
May 2010Cameron becomes prime minister, and hires Coulson as his media chief.
September 2010The New York Times publishes a report, based on information from several former News of the World reporters and editors, that Coulson knew about and regularly discussed phone-hacking during his tenure; the Times article is also critical of Scotland Yard's efforts to investigate the hacking.

January 21, 2011Coulson resigns as Cameron's communications chief.
January 26, 2011Scotland Yard opens a new investigation of News of the World phone-hacking, citing new evidence.
April 2011Recently fired News of the World senior editor Ian Edmondson, chief reporter Neville Thurlbeck, and senior journalist James Weatherup are arrested on phone-hacking charges. The tabloid acknowledges its role in hacking from 2004 to 2006, apologizes, and sets up a compensation system for unidentified victims.
June 23, 2011Levi Bellfield is convicted of the murder of Milly Dowler, after a tabloid-saturated trial. Police arrest freelance journalist Terenia Taras.
July 4, 2011The scandal starts in earnest, after The Guardian reports the hacking and erasing of Milly Dowler's voicemail messages.
July 5, 2011The list of alleged targets of News of the World hacking grows to include victims of the July 7, 2005, terrorist attack in London. The BBC reports that News International had turned over evidence that Coulson apparently signed off on paying police for information.
July 6, 2011The Daily Telegraph reports that News of the World had hacked the phones of families of soldiers killed in Iraq and Afghanistan. Cameron says he is "revolted" by the allegations.
July 7, 2011News International Chairman James Murdoch announces that News of the World is closing after a final July 10 edition.
July 8, 2011Coulson is arrested, and Goodman is arrested again, this time for bribing police officers.
July 10, 2011The last News of the World hits newsstands. Rupert Murdoch arrives in Britain to take charge of the mushrooming scandal, telling reporters that Rebekah Brooks is his "top priority."
July 11, 2011The scandal spreads to other Murdoch papers, including The Sun and Sunday Times, as Gordon Brown accuses the papers of illegally obtaining his personal financial records and the medical records of his 4-year-old son with cystic fibrosis.
July 13, 2011Rupert Murdoch withdraws his long-sought bid for TV powerhouse British Sky Broadcasting, which days earlier was widely considered a done deal. News Corp. will retain its 39 percent stake in the company.
July 14, 2011Murdoch, his son James, and Rebekah Brooks agree to testify before a parliamentary committee on July 19. The FBI opens an inquiry into allegations that News of the World tried to intercept the phone records of victims of the Sept. 11, 2001, terrorist attacks on New York. Former News of the World executive editor Neil Wallis is arrested.
July 15, 2011Brooks resigns as News International CEO. Her predecessor, Les Hinton, resigns as chairman of Murdoch's Dow Jones and publisher of The Wall Street Journal.
July 17, 2011Brooks is arrested. Metropolitan Police Commissioner Sir Paul Stephenson, the highest-ranking U.K. police official, steps down, following the police-bribery allegations and revelations that he had hired Neil Wallis as a communications consultant.
July 18, 2011Metropolitan Police assistant commissioner John Yates, who made the decision not to reopen the phone-hacking investigation in 2009, resigns. Bloomberg reports that News Corp. directors are considering replacing Rupert Murdoch as CEO with chief operating officer Chase Carey.
July 19, 2011Rupert and James Murdoch deny any knowledge of the hacking before a skeptical parliamentary committee; Wendi Murdoch saves husband Rupert from a shaving-cream pie in the face with a swift, brutal counterattack against the thrower. Brooks testifies separately, issuing similar denials. News Corp.'s stock rises.
July 28, 2011
New evidence surfaces suggesting that News of the World hacked the voicemail of Sara Payne, whose daughter Sarah was abducted and murdered in July 2000. Payne had worked closely with the newspaper trying to pass tougher child protection laws, and the paper's editors had issued her the phone that was allegedly hacked. This is "the final indignity for the paper's former editor, Rebekah Brooks, who claimed to be a 'dear friend' of Payne's," says Jonathan Harwood at Britain's The First Post. Separately, a judicial inquiry is opened to determine if the country needs to update its laws regulating the media.
August 2, 2011
British police arrest their 11th suspect in the News of the World investigation. Journalist Stuart Kuttner, 71, is charged with conspiracy to intercept communications and corruption. In his former role as managing editor of the paper, Kuttner authorized all payments in the editorial budget, including any made to private investigators like Mulcaire. Separately, Jonathan May-Bowles, the British comedian who hit Murdoch with the shaving-cream pie, is sentenced to six weeks in jail for the attack.
August 10, 2011
Greg Miskiw, a former News of the World editor, is the 12th person arrested in the investigation. (He is quickly released on bail.) Murdoch vows to do "whatever is necessary" to prevent another scandal from upsetting his empire. And despite the bad press, News Corp.'s earnings for the April-to-June quarter top expectations.
October 21-24, 2011Murdoch fends off shareholder anger and revolt at News Corp's annual meeting. Sons James and Lachlan are re-elected to the News Corp. board, with more than a third of voting shareholders opposed.
November 3, 2011Scotland Yard says that 5,795 people likely had their phones hacked by News of the World.
November 4, 2011Police reportedly arrest a Sun reporter, Jamie Pyatt, in connection with the investigation of police bribery, Operation Elveden.
November 14, 2011Prime Minister Cameron opens a wide-ranging inquiry into the "culture, practices, and ethics of the press," headed by Lord Justice Levenson, an appellate court judge. Phone-hacking victims will testify.

February 11, 2012Police arrest five senior staff members at The Sun, along with three other people, in connection with Operation Elveden, bringing the police-bribery arrests to at least 20.
February 26, 2012Rupert Murdoch launches The Sun on Sunday to replace News of the World. He's accompanied by son Lachlan, in a sign that James Murdoch may be out as News Corp. heir apparent. The inaugural edition sells 3.26 million copies.
February 29, 2012James Murdoch steps down as chairman of News International, keeping his position as deputy chief operating officer at News Corp., focused on international TV operations.
March 13, 2012Rebekah Brooks is arrested for a second time, along with husband Charlie Brooks, News International security chief Mark Hanna, and three others, all charged with conspiracy to pervert the course of justice in connection with the phone-hacking investigation, Operation Weeting. Five of the suspects, including Brooks, are released on bail.
April 3, 2012
James Murdoch resigns as chairman of BSkyB, the British satellite broadcaster partially owned by News Corp. The position was his "last major executive role in the British media," says John F. Burns at The New York Times.

Sources: AFP, BBC (2), BloombergCNN (2), First Post, Guardian (2) (3) (4), Huffington Post (2), Los Angeles Times, MSNBC, New York Times (2), PoliticoReuters (2), Telegraph (2), Wikipedia (2), The Wrap

Friday, 3 February 2012

The Wall Street Journal Europe Publisher Andrew Langhoff orders partial destruction of print archive

From The Wall Street Journal Europe History

Andrew Langhoff Scandal
"In 2008 The Wall Street Journal Europe moved headquarters from Brussels to London, after 25 years of residence in the capital of Europe, after its parent company Dow Jones & Company was purchased by Rupert Murdochs News Corp. The newly appointed Wall Street Journal Europe Publisher/Managing Director Mr. Andrew Langhoff ordered the partial destruction of the print archive to facilitate the move from Brussels to London. A group of interns found the pictures published in this blog in the garbage cans outside the Wall Street Journal offices on the street in Brussels. This blog was created to save the historic pictures of The Wall Street Journal Europe and to find out who was portrayed in the pictures. If you recognize people in the pictures feel free to post their names or to add some comments."

Saturday, 15 October 2011

Who’s to blame for prostituting the integrity of the WSJ and TechCrunch? The internet

At first sight, there may not seem much connection between AOL’s recent dismissal of Michael Arrington, founder of TechCrunch, and a spectacular scam at the Wall Street Journal, which this week brought down its European publisher Andrew Langhoff.
Don’t be deceived. There is every connection. Not in detail, but in principle. Both executives were fired because they had prostituted editorial integrity.
It’s fairly evident that neither deliberately set out to do so. Rather, they were attempting to apply imaginative (and increasingly desperate) commercial solutions to a problem endemic in the news information business. Namely, the pernicious effect of the internet – the ‘free news’ junkies’ hourly fix – on traditional advertising revenue.

Arrington had to go because his cavalier attitude to conflict of interest put him on a collision course with Arianna Huffington, editor-in-chief at AOL – who was rightly concerned about the impact of his heretical gospel on the rest of AOL’s news assets (chiefly the Huffington Post).
Although TechCrunch, which AOL acquired for $30m last year, is a respected news source, as a free blog it was badly underfunded by the low-yield advertising which was the only traditional alternative to subscription revenue. Arrington’s solution was to set up CrunchFund, a venture capitalist fund specialising in new technology companies. Which aspiring tech company would not trade exclusive stories with TechCrunch in the hope of coming into contact with untold Wall Street riches? Investors, on the other hand, soon came to recognise TechCrunch for what it was: an invaluable source of investment-grade information.
The problem was what happened next. Should TechCrunch journalists, to all outward appearances acting without fear or favour, be obliged to soft-pedal any clients who signed up to Arrington’s fund? The new funding paradigm soon became a very old-fashioned conflict of interest.

The WSJ/Langhoff affair also breached journalistic ethics, but in a rather different way. Officially, Langhoff was fired because he had signed a deal with Dutch consulting firm Executive Learning Partnership which resulted in a series of special reports considered in breach of the WSJ’s ‘unimpeachable’ standards of editorial integrity. In fact, this was only the half of it, according to The Guardian. Apart from trading too much prominence and name-checking, Langhoff also seems to have struck an interesting side-deal with ELP’s sponsorship money (ie, advertising revenue). ELP was to channel money (including, at a later stage, some of the WSJ’s own money) into buying a large number of heavily discounted copies of the European edition of – the WSJ. This action is not illegal nor, strictly speaking, does it break the Audit Bureau of Circulations’ rules (Why not? we should ask indignantly). But it is designed to deceive. Inflated ABC figures give advertisers the impression that the WSJ is a stronger media vehicle than it actually is, which helps to harden rates.

While denying some of The Guardian’s more “malign interpretations”, News Corp – which owns the WSJ through Dow Jones – has nevertheless conceded that Langhoff had to go because he had allowed WSJ to enter into “a broad business agreement” which could “give the impression that news coverage can be influenced by commercial relationships.”
If respected operators like WSJ and TechCrunch are getting up to such tricks, where does the rot stop? The answer may not be very comforting for the integrity of news values in general.

Stuart Smith
go to stuartsmithsblog

Friday, 14 October 2011

WSJ confirms side deals in paid circulation boost at Journal’s Europe edition

The Wall Street Journal
The Wall Street Journal follows the Guardian’s story about a circulation scheme at the Journal’s sister paper in Europe with its own story confirming many of the details first reported by its competitor. The Guardian’s Nick Davies wrote that the Wall Street Journal Europe “had been channelling money through European companies in order to secretly buy thousands of copies of its own paper at a knock-down rate.” The Journal describes an “alleged deal to boost the reported circulation numbers of The Wall Street Journal Europe, in which the paper sold bulk copies to a consulting firm and simultaneously directed money to the firm for separate services.”
Side deals
A Dutch company called Executive Learning Partnership agreed to buy heavily discounted newspapers as part of a sponsorship arrangement with The Wall Street Journal Europe. In addition to the sponsorship, the Journal in Europe also set up a variety of “side deals” with ELP when the company said it was unhappy about the arrangement, the Journal reports.

The Journal quotes ELP partner Nick Van Heck, who says that the company did provide services in exchange for the payments from the Europe Journal. The Guardian reported on the side deals as well, but reported that when ELP threatened to end its sponsorship — which would cause circulation to drop — that Wall Street Journal Europe publisher Andrew Langhoff “set up a complex scheme to channel money to ELP to pay for the papers it had agreed to buy – effectively buying the papers with the Journal’s own cash.”
The Journal confirms the Guardian’s reporting that the Europe Journal routed the money to ELP through other companies:

Mr. Van Heck said the billing arrangement was unusual. ELP was asked to “send invoices to different organizations and not to The Wall Street Journal Europe,” which he found surprising.

Dow Jones said Wednesday that “the manner in which they [ELP] were paid was admittedly complex but nevertheless legitimate.” But the Journal quotes someone at one of the pass-through companies as saying, “I also received from The Wall Street Journal assurances that this would not be made public.”

While Dow Jones has said that it terminated the relationship with ELP because it was uncomfortable with the appearance of impropriety, ELP says it’s the one that ended the relationship.

Special coverage
While the Guardian reported, based on documents it has reviewed, that The Wall Street Journal Europe also agreed to provide “a minimum of three special reports” featuring ELP, the Journal story describes it as a “pledge of possible editorial coverage.” The Journal quotes an ELP statement stating that the company was never promised editorial coverage and that publisher Langhoff emphasized editorial integrity.

The Journal reported earlier that Langhoff had “personally pressured” reporters for stories about ELP; the Europe Journal published two stories featuring the company. Langhoff resigned Tuesday, for what Dow Jones described as a “perceived breach of editorial integrity.”

Counting discounted copies
The Journal notes that providing free or discounted copies of newspapers and magazines is not new. Last fall, the U.S. Audit Bureau of Circulation started to count heavily discounted copies sold to sponsors as “verified” rather than “paid.” “But the ABC in the U.K. continues to classify bulk sales as paid circulation; for The Wall Street Journal Europe, such deals account for a little over 46,000 of its 74,800 average circulation per issue.”

In rebutting the Guardian’s story, Dow Jones said in a statement to Poynter, “The Guardian mischaracterizes a former employee as a ‘whistleblower.’ In fact, that employee was first investigated by the company because of concerns around his business dealings.”
The Journal reports that the side deals with ELP were negotiated with Langhoff, The Wall Street Journal Europe publisher who resigned Tuesday, and a circulation employee named Gert Van Mol. Van Mol told the Journal that Dow Jones only started to investigate him after he complained about Langhoff’s dealings and the ELP relationship.
The Journal reports that the internal investigation “didn’t identify the problems with the editorial component of the ELP deal that led to Mr. Langhoff’s resignation. … Those problems only came to light last week, months after Mr. Van Mol began emailing complaints to Dow Jones executives. That’s when the paper re-examined the situation.”

The Journal doesn’t explain how the issue came to light; the Guardian reports that its inquiries led to Langhoff’s resignation.

Crisis management: “News Corp. is still keeping true to its strategy of covering up anything embarrassing until Nick Davies uncovers it, at which point an executive or two is thrown under the bus,” writes Felix Salmon. “As a result, the rest of the world is simply going to assume the worst — that anything rumored or imagined is probably true and has just been successfully covered up for the time being.” (Reuters)

Part of the business: Jack Shafer notes that the stories in question appeared in a special section, and that many newspapers publish themed sections filled with “soft or backgrounderish copy … So great is the publisher’s appetite for special sections that if The New York Times could persuade Eukanuba, Purina, and Hartz Ultraguard Plus Rid Worm tablets to take out gigantic ads, it would gladly print a ‘Your Dog’s Retirement’ section.” (Reuters)

PR coup: Ryan Chittum looks through archives and can’t find any instance of ELP being cited in a news story besides the two in The Wall Street Journal Europe. (Columbia Journalism Review)

Poynter. by Steve Myers

WSJ Europe disputes circulation scam report

(Reuters) - The publisher of the Wall Street Journal Europe was forced to resign over a scam used by the paper to boost its circulation, the Guardian reported, citing documents and e-mails it said it had obtained.The Journal responded by saying the report on Wednesday was "replete with untruths and malign interpretations".

WSJ Europe parent Dow Jones had said the previous day that Andrew Langhoff had quit over ethical issues raised by the paper's commercial relationship with Dutch consulting firm Executive Learning Partnership (ELP).
It did not disclose the nature of the relationship.

Rupert Murdoch's News Corp, parent of Dow Jones, has been fighting accusations of ethical missteps related to phone hacking at its now defunct News of the World newspaper in London.
Much of the reporting on the phone-hacking scandal has been led by the Guardian.

On Wednesday, it reported that the WSJ Europe had been channelling money through European companies to secretly buy thousands of copies of its own paper for as little as 5 cents per copy.

This had the effect of inflating its circulation and misleading advertisers about the Journal's true circulation, the Guardian said.

Both the Guardian and WSJ Europe said the UK Audit Bureau of Circulation had signed off on the program.
The partnership also involved a contract in which the Journal promised to publish articles that promoted ELP's activities, the Guardian said.

"The Guardian's inflammatory characterization of WSJE's former ELP circulation program is replete with untruths and malign interpretations," the Journal said in an e-mailed statement. "Andrew Langhoff resigned because of a perceived breach of editorial integrity, not because of circulation programs, whose copies were certified by the ABC UK."

The Guardian said that a former employee, who was not identified, was a whistleblower who helped to reveal the circulation-boosting effort. The whistleblower's position was made redundant in January after he raised concerns about the circulation circulation-boosting effort, the Guardian said.
"In fact, that employee was first investigated by the company because of concerns around his business dealings," the Journal said in its statement.

The Guardian said former Dow Jones Chief Executive Les Hinton, a close ally of Murdoch, had been aware of the circulation effort. A Dow Jones spokeswoman declined to comment on Hinton's involvement.
In an article on its website on Tuesday, the Journal said an internal investigation had found that Langhoff had personally pressured two reporters into writing articles featuring ELP.
The agreement between the paper's circulation department and the Dutch firm, now expired, was not disclosed to readers of the articles, the Journal said in a note attached to the articles on its website.
ELP did not respond to e-mailed requests for comment.
"There is -- and should be -- an inviolable boundary between our commercial relationships and the content we produce," Langhoff said in an internal memo on Tuesday.
"The perception that this boundary was crossed via a broad agreement between the WSJE Circulation department and a company called Executive Learning Partnership has been of great concern to me," he said.
The phone-hacking allegations, which have led to a number of arrests, have prompted critics to demand the resignation of Murdoch and other executives, including his son James.
News Corp has fiercely defended Murdoch and other directors saying it "vehemently disagrees" with critics of the company's practices.
Dow Jones competes with Thomson Reuters Corp.

(Reporting by Yinka Adegoke and Jennifer Saba; Editing by Ted Kerr)

Thursday, 13 October 2011

The Wall Street Journal Europe's Circulation Scandal

When I first saw this story, about how the Wall Street Journal Europe had been “massaging” its circulation figures I thought it was all more of the same, a storm in a tea cup. For various papers are always sniping at various other papers about their audited circulation figures. To understand why you need to understand something about the economics of the whole newsprint (ie, newspapers and magazines) game.

The cover price is pretty much irrelevant to the main economics of the whole business. It, roughly you understand, the revenue from that cover price, pays for the paper, the printing and the distribution of the pieces of paper. The newsboy delivering it to your house, the trucks that get it to the newstand, the margins the newstand makes on selling it to you.

The actual journalism inside, the writing, is paid for by the advertising that the magazine or paper is running. In fact, to understand the money flows of the business it’s best to think of the journalism as the stuff that’s just there to get you to look at the ads. Good journalism brings more people to see more ads, that’s all.

In this business, how much you can charge for an ad depends upon what your circulation is and there are various different companies that measure this in different countries. There are also grey areas out there. What actually counts as paid circulation?

For example, if a student gets a subsidised subscription (as The Times used to offer) is this the same as a full price subscription for ad purposes? Or how about the Daily Mail which used to have a deal with British Airways, every passenger got a copy of the paper? Or a copy of USA Today if you’re a guest of certain hotel chains?

You can see that at the margins there can be some discussion: what actually counts as a “sale” and thus what counts in the circulation numbers and thus influences the prices the paper can charge for ads?

As I say, when I first saw this story in The Guardian I thought it was just this sort of backbiting. One of those irregular verbs perhaps: We offer deals to subscribers, you enhance your circulation, they lie about the numbers.

So I’m indebted to Felix Salmon for pointing out the truth at the heart of the matter:

“But this is really bad: the WSJ Europe was telling its advertisers that it had a circulation of 75,000 — but in fact fully 31,000 of those copies were bought for as little as 1 cent apiece by companies which never saw them, and pawned them off onto random students."

Ah, no, that is very different. It also helps to explain something I found a little odd a couple of months back when I did a piece for them. Compared to the UK papers their pay, for opinion pieces that is, isn’t all that high. We came to an entirely satisfactory agreement which is just fine, but this story about their circulation helps explain why they tend to offer a little less than papers that are selling a million copies or more.

Tim Worstall, Contributor, Forbes

Tuesday, 11 October 2011

Andrew Langhoff - Publisher of WSJ Europe Resigns After Ethics Inquiry

LONDON—Dow Jones & Co.'s top European executive resigned Tuesday following an internal investigation into two articles published in The Wall Street Journal Europe that featured a company with a contractual link to the paper's circulation department.

Andrew Langhoff, managing director of Dow Jones & Co. in Europe, Africa and the Middle East, and publisher of The Wall Street Journal Europe, stepped down after an internal probe showed two articles in the paper's Special Reports section had been prompted by an agreement the circulation department struck with Executive Learning Partnership, or ELP, a Netherlands-based consulting firm.
"That relationship, overseen by a now-former employee, is no longer in place," Mr. Langhoff said in an internal email to employees. "Because the agreement could leave the impression that news coverage can be influenced by commercial relationships, as publisher with executive oversight, I believe that my resignation is now the most honorable course," Mr. Langhoff said.

Dow Jones is a unit of News Corp., which owns all editions of The Wall Street Journal.
According to people familiar with the matter, an internal investigation at Dow Jones showed that Mr. Langhoff personally pressured two reporters into writing articles featuring ELP.

The Wall Street Journal Europe has appended disclaimers to two articles featuring ELP that ran in the paper's Special Reports section on Oct. 14, 2010, and Mar. 14, 2011. The disclaimer says the "impetus" for the stories was an agreement between The Wall Street Journal Europe's circulation department and ELP. It says "the reporting and writing were solely the responsibility of the News Department" and were not subject to review by the paper's circulation department or the firm. "However, any action that creates an impression that news coverage can be influenced by commercial interests is a breach of the ethical standards of Dow Jones & Co.," the disclaimer says.

"I always understood that editorial had complete discretion and independence in writing these two articles," Mr. Langhoff said when asked to comment.

Between May 2009 and April 2011, ELP was a lead sponsor of the "Future Leadership Institute," an initiative of The Wall Street Journal Europe's circulation department, Nick Van Heck, a partner at ELP, said in an interview Tuesday.

Both Mr. Van Heck and a spokeswoman for Dow Jones & Co. declined to comment on the specifics of the contract. According to a person familiar with the matter, the agreement was a bulk-circulation deal in which discounted papers were sold to ELP for distribution to students and others, boosting the Journal's circulation in Europe.

People familiar with the matter said the contract included language suggesting ELP could receive some coverage in the pages of The Wall Street Journal Europe. A paragraph in the agreement gave the paper's news department final control over any article, including the possibility that no story at all would appear, one of the people said.

"It was made very clear to us that the editorial freedom, or the editorial independence, was not being infringed by this," Mr. Van Heck said. He said if executives from ELP were interviewed or included in the paper, that was the editorial staff's choice. Mr. Van Heck says ELP terminated the relationship earlier this year.

Still, last fall, Mr. Langhoff personally, and through people who worked with him, pressed for an article featuring ELP to fulfill the contractual obligation, people familiar with the matter said. A Special Reports reporter alerted the paper's then-editor, Patience Wheatcroft, who people familiar with the matter say reviewed the contractual language about editorial control. The article went forward and was published.
Ms. Wheatcroft left The Wall Street Journal Europe in late 2010 to join the U.K. House of Lords. She declined to commentTuesday.

The following spring, Mr. Langhoff and others pressed for ELP to again be featured in an article, according to people familiar with the matter. The reporter didn't flag the assignment because he believed the practice was established policy, people familiar with the matter said.
The issue came to light after a former Dow Jones circulation employee in Europe lodged complaints about Mr. Langhoff and the ELP contract, people familiar with the matter said. An internal investigation was launched, leading top editors in New York to discover the editorial component of the deal and the two stories produced, according to the people familiar with the situation.

The Wall Street Journal Europe has a circulation of about 73,250. The paper runs themed Special Reports regularly.

New York-based News Corp. has been reeling from a scandal at News of the World, its now-closed British tabloid that intercepted voice-mail messages in pursuit of scoops and allegedly paid bribes to police.

Mr. Langhoff is the second top Dow Jones executive to depart in recent months. Les Hinton, chief executive of Dow Jones and before that executive chairman of News Corp.'s U.K. newspaper unit, resigned in July amid the backlash over the voice-mail hacking scandal at a now-closed tabloid. Mr. Hinton said he didn't know about the phone hacking but resigned because it occurred on his watch. Mr. Hinton is scheduled to appear before a parliamentary committee via video link Oct. 24.

Dow Jones said it will begin a search for Mr. Langhoff's successor. Kelly Leach, senior vice president and head of strategy for the company, will oversee Europe, the Middle East and Africa in the interim.
"Andrew has played a number of important roles at Dow Jones since 2003 and has been instrumental in successfully growing our businesses in Europe over the past several years," Todd Larsen, president of Dow Jones, said in a statement. Mr. Larsen said Mr. Langhoff built a strong team and left the paper with strong momentum in Europe.

The Wall Street Journal, by Paul Sonne at and Bruce Orwall at

Publisher of Wall Street Journal Europe Andrew Langhoff steps down after 3 years in post

Wall Street Journal Europe publisher resigns

Dow Jones & Co. said Tuesday its top Europe executive has resigned, after a commercial deal between The Wall Street Journal Europe and another company raised questions about the paper's editorial standards
Dow Jones, which owns the newspaper, said that its publisher, Andrew Langhoff, chose to step down because "Dow Jones has zero tolerance for even the appearance of a breach of ethical standards."
Langhoff, who had held the post for three years, was also managing director of Dow Jones in Europe, Africa and the Middle East.

The firm said the resignation followed a business agreement between the circulation department of The Wall Street Journal Europe and a Netherlands-based consultancy called Executive Learning Partnership.
The deal "could give the impression that news coverage can be influenced by commercial relationships," Dow Jones said in a statement.

The paper no longer has a relationship with the consultancy, and it will print a "reader clarification" on two of the paper's articles related to the deal, Dow Jones said. The contents of the articles, which appeared in the paper's Special Reports section, were not immediately clear.

In an internal memo, Langhoff told his colleagues that he was greatly concerned that the deal gave the impression that a boundary between editorial content and the paper's commercial ties had been crossed.

Dow Jones is a subsidiary of Rupert Murdoch's media conglomerate News Corp., which has been mired in a phone-hacking scandal involving its British newspapers.

Dow Jones said it will begin searching for a successor for Langhoff, and that senior vice president and head of strategy Kelly Leach will oversee European operations in the meantime.

By SYLVIA HUI | Associated Press

Murdoch man quits in ethics row

Senior Wall Street Journal executive accuses paper of blurring lines between news and advertising

The Wall Street Journal Europe – owned by Rupert Murdoch's News Corporation – was mired in controversy yesterday as its publisher quit over fears the newspaper had "crossed the boundary" between editorial content and advertising.

Andrew Langhoff sent a memo to colleagues at Dow Jones – which produces The Wall Street Journal – saying: "I wanted to let you know myself that I have decided to resign." He added that it was "the most honourable course". The move comes at a time when the "culture, practices and ethics of the press" in the UK and of News Corporation have come under close scrutiny by Lord Justice Leveson.
Mr Langhoff said: "There is – and should be – an inviolable boundary between our commercial relationships and the content we produce.

"The perception that this boundary was crossed via a broad agreement between The Wall Street Journal Europe's circulation department and a company called Executive Learning Partnership has been of great concern to me."

The newspaper said no longer has a deal with Executive Learning Partnership and the employee who had overseen the account is no longer with the company. But Mr Langhoff said: "Because the agreement could leave the impression that news coverage can be influenced by commercial relationships...I believe that my resignation is now the most honourable course."

Dow Jones confirmed his departure but declined to confirm why. Todd Larsen, Dow Jones president, said Mr Langhoff had been "instrumental in successfully growing our business in Europe." Mr Langhoff had intended to stay in his role until the end of the year. He told colleagues: "While my time with you will thus be somewhat foreshortened, I have every confidence that you will accomplish all that we had set out to do and more.

"I have great regard for The Wall Street Journal Europe and the people who work here. You represent the highest standards of excellence, journalism and ethics."

In 2008 Mr Langhoff was appointed to head Dow Jones' consumer business in Europe, the Middle East and Africa, as well as to oversee The Wall Street Journal Europe after his previous role as US publisher of another part of Dow Jones, the Ottaway Newspaper Group. Dow Jones was bought by News Corp for £3.2bn in 2007.

Lord Leveson's inquiry, announced by Prime Minister David Cameron in July, has the remit to particularly scrutinise another part of News Corporation's business. It will focus on the improper conduct within its European arm News International, especially the News of the World, which was subsequently shut down.
Sir Harold Evans, the former editor of The Sunday Times, resigned a year after Mr Murdoch bought the newspapers in 1981 complaining about editorial independence.

He wrote earlier this year that the company's newspapers "blatantly used news columns to plug their proprietor's satellite programmes".

The Independent by Nick Clark

WSJ Europe publisher quits in ethics flap

The publisher of the Wall Street Journal's European edition has quit over ethical issues raised by the newspaper's relationship with a Dutch consultancy.

The resignation of Andrew Langhoff comes as News Corp, the paper's parent company, fights accusations of misbehavior in a UK telephone hacking scandal.

The nature of the relationship was unclear, but News Corp's Dow Jones unit said on Tuesday that the issue related to two articles involving the Dutch firm, the Executive Learning Partnership (ELP).

The agreement between the paper and the firm, now expired, was not disclosed to readers of the articles, the Journal said in a note attached to the articles on its website.

''The impetus for writing the article was the agreement, but the reporting and writing were solely the responsibility of the News Department with no input or review prior to publication by the Circulation Department or ELP,'' the note said.

''However, any action that creates an impression that news coverage can be influenced by commercial interests is a breach of the ethical standards of Dow Jones & Co,'' it said.
Langhoff resigned because the publisher ''has the ultimate responsibility for this matter,'' Dow Jones said in a separate statement.

The Journal, in an article on its website on Tuesday, said an internal investigation had found that Langhoff personally pressured two reporters into writing articles featuring ELP.
Dow Jones has been fighting accusations of ethical violations tied to phone hacking at its News of the World newspaper in London. Those allegations, which have led to a number of arrests, have prompted critics to demand the resignation of Chairman and Chief Executive Rupert Murdoch and other executives, including his son James.

One of the Wall Street Journal Europe articles, which ran in October 2010, is called A New Leaf: Beyond personal use, businesses are waking up to the possibilities of social media.
The article relies on a poll conducted by ELP and features interviews with two ELP executives, including Rien van Lent, identified by the Journal as ELP's chief executive.

ELP's website says van Lent worked for Dow Jones as publisher of the Wall Street Journal Europe and head of Dow Jones's European newspaper, Internet and conference activities. He then joined Amsterdam's Telegraaf Media Group in 2006, before News Corp bought Dow Jones.
He and another ELP official did not respond to email messages seeking comment.
Another article, which ran in March 2011, is headlined Investing in women: Men still dominate boardrooms, but more women at the top could boost returns.
The article is a question-and-answer interview with an ELP partner.

A Dow Jones spokeswoman declined to comment on whether Langhoff was aware of or blessed the arrangement, when and why the arrangement ended, or how the ethics issue reached the attention of Dow Jones and News Corp officials.

Langhoff, who became publisher of WSJ Europe in January 2009, based in London, also was the chief executive of Ottaway, a Dow Jones unit that publishes several local U.S. newspapers. He did not return an email message seeking comment.

Dow Jones competes with Thomson Reuters.

- Reuters

Sunday, 9 October 2011

News Corp investors urged to be cautious over re-election of Murdochs

Glass Lewis, an influential shareholder adviser, adds its voice to those recommending a shakeup of the News Corp board.

The campaign to unseat members of the Murdoch family from their positions as directors of News Corporation may have spread to the US with cautionary advice about them from an influential adviser.
Glass Lewis, which advises institutions holding $15tn (£9.6tn) worth of investments, has recommended that investors vote against the re-election of Rupert Murdoch's two sons, James and Lachlan, at the News Corp annual meeting next week in protest at the phone-hacking scandal.
A report from Glass Lewis advises investors to "carefully consider the nature of the relationship each director has with the company and with its controlling shareholder, the Murdoch family, in order to establish a board with proper independence levels and strong oversight".
The move follows advice in Britain from the Local Authority Pension Fund Forum that Rupert and James should step down. The institutional shareholder advisory service, Pirc, has called for a shakeup.
The Australian Council of Superannuation Investors said last month that the News Corp board structure "does not reflect good corporate governance" and called for six directors to stand down.
Glass Lewis is also recommending shareholders carefully consider the re-election of Natalie Bancroft, David DeVoe, Andrew Knight and Arthur Suskind as well as the Murdoch sons on the grounds that they are not sufficiently independent.

Concerns about personnel on the board have existed for many years but the phone-hacking scandal unearthed by the Guardian and which led to the closure of the News of the World newspaper in Britain has been seen as a symptom of wider problems at the company.

A corporate governance specialist who asked not to be named said the move by Glass Lewis could trigger other influential organisations such as Institutional Shareholder Services (ISS) to come out against News Corp directors. The California Public Employees' Retirement System (Calpers), the largest US public pension fund and a leading campaigner on corporate governance issues, has yet to comment, but in summer it launched an attack on the dual-class structure that gives the Murdoch family almost 40% of the voting rights in the company despite owning only 12% of the equity. Calpers described this as "a corruption of the governance system".

News Corp declined to comment last night on the growing row before its 21 October annual general meeting but the Murdochs know their voting strength makes it difficult for investors to unseat the family members or other directors who have close ties with them.
The Murdochs have been under fire since July when it emerged that the News of the World had illegally targeted the missing schoolgirl Milly Dowler and her family in March 2002, interfering with police inquiries into her disappearance.

An inquiry was launched by Scotland Yard and soon led to the resignation of the then editor of the paper, Rebekah Brooks, who was more recently Rupert Murdoch's chief executive in the UK. The police investigation continues, and last week Lord Justice Leveson began a government-backed review of press behaviour and ethics.

The Guardian, by

Saturday, 8 October 2011

About Rupert Murdoch

In an era of media empires, Rupert Murdoch, the Australian-born chairman and controlling shareholder of News Corporation, is perhaps the preeminent global media magnate. News Corp., which owns Fox News, The Wall Street Journal, The New York Post and the 20th Century Fox film studio, among many other assets, is one of the world’s largest media conglomerates.
In the worlds of politics as well as media, Mr. Murdoch has clearly been one of the most influential figures of our time, and nowhere more so than in Britain, where he made his mark as a newspapering revolutionary.
But Mr. Murdoch came under an unprecedented level of attack in July 2011, when a long-simmering investigation into phone-hacking by reporters at The News of the World, a British Murdoch property, exploded into a wide-ranging scandal. The firestorm was triggered by the revelation that the paper had deleted voice mail messages from the cellphone of a 13-year-old girl who was abducted and murdered in 2002, a move that had added to vain hopes that she was still alive.
Within two weeks, Mr. Murdoch had closed down The News of the World, seen two former editors of the paper arrested, accepted the resignation of Les Hinton, one of his closest associates, and abandoned what would have been the biggest deal of his career, the $12 billion takeover of Britain's biggest pay television company, British Sky Broadcasting. He had also borne the brunt of an outpouring of fury from the public and Parliament, as politicians of all parties who had long chafed under the need to win his support lashed out.
On July 19, Mr. Murdoch was questioned by a Parliamentary committee, where he began his testimony by saying, "This is the most humble day of my life." Mr. Murdoch spent much of his time insisting that he was deeply sorry over the revelations of widespread unethical practices at his British newspapers, that he knew little or nothing about them and that he had not tried to cover them up. The following day, a second parliamentary panel investigating the phone hacking scandal accused the Murdoch empire of “deliberate attempts” to thwart its investigations.
While defending his company against the myriad accusations accompanying the scandal, Mr. Murdoch insisted on August 10 that he had the backing of News Corporation’s board and would stay on as its chief executive for the foreseeable future. Meanwhile, News Corporation reported a drop in fourth-quarter profit but a robust gain for the fiscal year.

A Scandal Explodes  
The furor over the extent of the alleged hacking by News of the World journalists broadened dramatically with reports of the hacking of the cellphone of Milly Dowler, the  13-year-old girl murder victim. The messages had been deleted by News of the World journalists to make room for new messages, a step that confused and agonized the police and members of her family, who took it as a sign that she might be alive.
Scotland Yard detectives were also investigating whether the hacking by News of the World extended to the voicemail accounts of relatives of victims of the bombings of three London subway trains and a double-decker bus in 2005, and relatives of fallen soldiers in Iraq and Afghanistan, and that it had paid police bribes amounting to tens of thousands of dollars for information. A member of Parliament raised allegations that nine years previously News of the World had participated in efforts to disrupt a murder investigation.
The Murdoch family announced on July 7 that it would shut down News of the World, in a move that seemed calculated to help protect the BSkyB deal. Following the arrest of Andy Coulson, a former senior aide to Prime Minister David Cameron and editor of News of the World, Mr. Cameron announced two separate inquiries into the hacking revelations, saying “no stone will be left unturned.”
Neither a series of arrests nor Mr. Cameron’s vow to rein in the press seemed to contain the fast-spreading scandal. On July 10, Ed Miliband, the Labour leader, announced his intention to force a Commons vote on the BSkyB bid, saying that he regretted having to take the step but believed that Mr. Cameron had left no other option because of his refusal to move to halt the takeover.
Former Prime Minister Gordon Brown brought new and alarming charges to the scandal, accusing The Sunday Times — one of the most prestigious newspapers in Mr. Murdoch’s group  — of employing “known criminals” to gather personal information on his bank account, legal files and tax affairs. Mr. Brown said he had been harrassed by Murdoch newspapers over more than 10 years, first as chancellor of the exchequer and later as prime minister.
On July 13, News Corporation dropped its bid for British Sky Broadcasting. The deal, which had drawn fierce opposition from rivals in Britain, could have given Mr. Murdoch the ability to create an all-you-can-eat media smorgasbord, potentially packaging things from news to films to books to television sports and delivering it to BSkyB’s 10 million British customers via satellite, broadband connections or other means.
In response to requests from members of Congress and to at least one news report, the Federal Bureau of Investigation in New York opened a preliminary inquiry into allegations that News Corporation journalists sought to gain access to the phone records of victims of the Sept. 11 attacks.
On July 15, after days of mounting pressure from politicians and investors, Rebekah Brooks announced her resignation, in yet another stunning blow to Mr. Murdoch’s once all-powerful empire. It was a day of stepped-up damage control by Mr. Murdoch, who released a copy of an apologetic note to be published in all British newspapers that weekend, and also visited the family of Milly Dowler, offering an apology for the actions of his employees.
Later in the day, Les Hinton, one of Mr. Murdoch's closest deputies for decades, resigned from his posts as chief executive of Dow Jones and publisher of The Wall Street Journal, the crown jewel of Mr. Murdoch's American media empire, amid a growing outcry over the practices of the company's British newspapers. Mr. Hinton had been the executive chairman of News International, the umbrella company for those papers, from 1995 until 2007, the period when the most egregious known examples of voice mail hacking by News International employees took place.
On July 17, Ms. Brooks was arrested in connection with the policy inquiry.
Mr. Murdoch's July 19 appearance before the the select committee on culture, media and sport did not seem to have come close to answering many of the questions he faced about phone hacking in the British outpost of his media empire in 2002.

Building an Empire
After building a chain of newspaper and magazine properties in Australia in the 1950s and '60s, Mr. Murdoch expanded first to the United Kingdom and then the United States, where The New York Post has been the embodiment of his hard-charging tabloid style and conservative views.
From newspapers, he moved into the world of television, founding the Fox network, the first to break the decades-old dominance of the Big 3 networks over prime time, and the Fox News Network, movies and the Internet. In 2005, News Corporation bought the company that owned for $580 million, a price that seemed stunning at the time.
But one of Mr. Murdoch's biggest coups was the wresting of control of Dow Jones and Company — and its chief prize, The Wall Street Journal — from the hands of the Bancroft family in the summer of 2007. The family had long been dead set against a sale, specifically and particularly to Mr. Murdoch, whom many of them openly disdained. But, choosing a moment when the company's stock price had been steadily sagging, he made a $5 billion bid, representing a premium of roughly two-thirds of its trading price at the time. The move at once cleared the field of potential competitors and broke the ranks of the Bancroft heirs. After weeks of wrenching arguments, the family agreed to the deal essentially on Mr. Murdoch's terms.
In 2008 and 2009, the juggernaut that had been News Corporation faltered as the deepening recession cut deeply into advertising revenues — particularly at his beloved newspapers, including the Journal.
In June 2010, his company took significant steps toward charging readers for online content with the announcement that it had acquired an electronic reading platform called Skiff and had made an investment in a company that was developing pay models for newspapers and magazines.
Skiff is a company that the Hearst Corporation established in 2009 to develop an online store and an e-reader for publications. The News Corporation indicated that it was not buying the hardware plans; instead, it was interested in Skiff's ability to deliver compelling rich media layouts for newspapers and magazines on the Web.
The News Corporation, joining other media companies in reaping the benefits of a rebounding advertising market, announced in January 2011 that it had more than doubled its net income in the quarter that ended Dec. 31, 2010. The company reported net income of $642 million compared with $254 million in the period a year earlier.

The Daily
In February 2011, Mr. Murdoch unveiled The Daily, a news app that he hopes will put his News Corporation front and center in the digital newsstand of the near future. The Daily, an all-purpose publication designed solely for iPads and other tablet computers will cost 99 cents per week, or $40 per year.
For Mr. Murdoch and the News Corporation, The Daily represents something far grander and more ambitious than a new business undertaking: it is an opportunity to try to reinvent the business model for news publishing. Mr. Murdoch has emerged as one of the loudest voices on the media scene proclaiming that the future of online media would be build on paid content — that information did not want to be free.
Apple, the maker of the iPad, has given Mr. Murdoch something the entire publishing industry has been clamoring for: the digital equivalent of a recurring magazine subscription that will automatically re-bill to a customer’s credit card.
With few exceptions — one being News Corporation’s Wall Street Journal — Apple has not allowed media companies to sell more than one issue at a time through its App Store. Other publishers, which have been pressuring Apple to allow them to sell subscriptions through the App Store, are hoping The Daily is a turning point for how news applications are sold and distributed to consumers.

My Space
In June 2011, News Corporation sold the troubled social media Web site, MySpace, which it bought in 2005 for $580 million. MySpace was sold to the advertising targeting firm Specific Media for roughly $35 million.
The News Corporation had been trying since 2010 to rid itself of the unprofitable unit, which was a casualty of changing tastes.
The sale closed a complex chapter in the history of the Internet and of the News Corporation, which was widely envied by other media companies when it acquired MySpace. At that time, MySpace was the world’s fastest-growing social network, with 20 million unique visitors each month in the United States. That figure soon soared to 70 million, but the network could not keep pace with Facebook.

Murdoch in America
In recent years, Mr. Murdoch has become more of a political force than ever in the United States. Fox News has added viewers and influence since the election of President Obama, becoming an enthusiastic promoter of the Tea Party Movement and other conservative candidates.
Mr. Murdoch’s News Corporation played a larger and more directly partisan role in the 2010 elections than it is known to have played in any previous American campaign. The company gave $1 million to the U.S. Chamber of Commerce, which largely worked to elect Republicans, and its News America division gave $1 million to the Republican Governors Association.
The disclosure of the donations drew swift condemnation from Democrats and liberal groups, which cited it as more evidence that Mr. Murdoch was pursuing a political agenda. Mr. Murdoch’s more prominent involvement in American politics comes at a time when campaign finance rules have effectively been loosened in ways that require less disclosure of donations.
News Corporation officials stated that its donations are entirely separate from its news operations and are instead related to its broader corporate interests.
But the News Corporation’s donations to the U.S. Chamber and the Republican Governors Association were different for their heft and the nature of the groups, which can accept unlimited, unregulated donations to pursue hardball political campaigns.

Murdoch's Influence in Britain
Since he began building his media empire, Mr. Murdoch has been a figure of towering political importance, credited by many British politicians with the power to make and unmake governments as well as influence government policies that affect the fortunes of his newspaper and television interests.
Mr. Murdoch has used his clout to try to curb the powers of media regulatory bodies and expand his control of BSkyB. But he has also voiced strong opinions on matters of wider significance, like British politicians’ flirtation with the idea of abandoning the pound for the euro, an idea Mr. Murdoch vehemently opposed.
His decision to switch his British newspapers’ support to Mr. Cameron and the Conservatives in 2010 after backing Labour in three elections, many political analysts say, made a crucial difference in returning the Conservatives to power.
Similarly, when he dumped the Conservatives in favor of Labour in 1997, many say, he helped create the wave that kept Mr. Blair in office for the next decade.
That influence, unmatched by any other figure outside of politics, has been damaged by the phone-hacking scandal that erupted over News of the World.
The company’s decision to close News of the World will not end the scrutiny of the newspaper’s practices by the police, courts and Parliament and by a public panel of inquiry that Mr. Cameron has promised to appoint.
Together, these investigations seem likely to make for an inquisition that could run for years, causing further erosion in the credibility of the Murdoch brand and costing News International millions of dollars in potential legal settlements.

The New York Times

Friday, 7 October 2011

Kelly Hoppen accepts £60,000 hacking settlement from NOTW

News International offers 'unreserved apology' to interior designer at the High Court

Kelly Hoppen, the stepmother of the actress Sienna Miller, yesterday settled her phone hacking claim against the News of the World by accepting £60,000 in damages and hundreds of thousands of pounds in legal costs.

The celebrity interior designer became one of the most high-profile litigants in the voicemail interception scandal after she claimed that her phone was targeted by a reporter from the now-defunct Sunday tabloid as recently as last year – long after the paper insisted any such malpractice had been stamped out.
At the High Court in London, lawyers for Rupert Murdoch's News International offered an "unreserved apology" to Ms Hoppen after her voicemails were accessed between 2004 and 2006 by the private investigator Glenn Mulcaire.

But the company said it had not admitted liability for the alleged later hacking of the 52-year-old's phone by the NOTW features writer Dan Evans between June 2009 and March 2010. The court was told Mr Evans had instead given "permanent undertakings" which had been accepted by Ms Hoppen.
In a hearing earlier this year, Mr Justice Vos, the judge presiding over the burgeoning number of civil hacking claims, was told that Mr Evans had accidentally dialled Ms Hoppen's mobile phone, including her direct dial voicemail number, because of "sticky keys" on his own handset and there had been no attempt to access her messages. The journalist, who was suspended while the allegations were investigated, lost his job in July along with more than 200 colleagues when the decision was taken to close the paper.
In a statement read in open court, Mark Thomson, the solicitor representing the designer, said: "The claimant considers that she is fully vindicated in respect of her claim."

The lawsuit brought by Ms Hoppen had been chosen as one of six "lead" cases due to be heard in January which would decide the level of settlements due to the victims of Mr Mulcaire and unnamed journalists on the newspaper who commissioned him.

It will now be replaced by a claim brought by the Chelsea star Ashley Cole, who is one of 60 celebrities, public figures and victims of crime who have filed damages claims for alleged hacking of their voicemails. A deadline set by Mr Vos for claims to be considered alongside the test cases brought an influx of additional new claimants last week, including Shaun Russell, whose wife and daughter were murdered by the hammer killer Michael Stone, and 7/7 hero Paul Dadge.

The court heard that Scotland Yard had now informed 452 people that they appeared in documents seized from Mr Mulcaire on which he noted the names of his targets and their personal details. More than 4,000 people are thought to feature in the 11,000 pages of material taken from private investigator's south London home in 2006.

The increasing scale of the litigation faced by News International is now expected to grossly exceed the £20m it had set aside to settle civil claims. The family of the murdered schoolgirl Milly Dowler are close to finalising a £3m out-of-court settlement which is likely to have a knock-on effect on claims by other victims of crime.

The court heard that Ms Hoppen had been the subject of "numerous" articles in the NOTW between 2004 and 2006 which contained "intrusive and private" information.

It was alleged that the interior designer, whose clients have included the Beckhams and the chef Gary Rhodes, was targeted as a part of a "scheme" to regularly eavesdrop on the phone messages of individuals from showbusiness, politics and sport. Earlier this year, Ms Miller settled her phone hacking claim for £100,000.

Michael Silverleaf QC, for the paper, said it was making a "sincere and unreserved apology" to Ms Hoppen.
In a separate development, a pre-trial hearing before Mr Justice Vos heard that The Sun was facing a claim from the actor Jude Law that it had its own, separate arrangement with Mr Mulcaire to target his mobile phone.

The actor, who is Ms Miller's former fiancé, is suing The Sun over four articles published in 2005 and 2006. David Sherborne QC, for Mr Law, told the court that it was alleged the paper had an arrangement with the private investigator which was "almost identical to but quite separate from" the one operated by the NOTW.

Who's taken a payoff – and what they've got
News International's payout to Kelly Hoppen is the same figure awarded to Max Mosley, the former head of the FIA, Formula 1's governing body. He successfully sued the News of the World for breach of privacy, took his case to court in 2008, and won. The scale of damages was at the time a record for a privacy claim in a UK court.

In May this year the actress Sienna Miller settled her phone hacking claim with Rupert Murdoch's tabloid. Avoiding court, Ms Miller was paid £100,000. Because of the persistent invasions of her private life, her case was believed to hold the potential for an even bigger payout. The sum was similar to the NI settlement with the actress Leslie Ash and her husband Lee Chapman. Although not disclosed, the pair are believed to have received just over £100,000.

The former footballer Andy Gray had his phone hacked and in June this year accepted out-of-court damages of £20,000.

Others, like the former MP George Galloway, claim they have been offered "substantial sums of money" to settle and have refused. However, two high-profile settlements had, until recently, been the peak payouts in the scandal.

The publicist Max Clifford is believed to have received £1m to keep his case out of court. And the footballers' union boss Gordon Taylor was given £725,000 and substantial costs to sign a "confidentiality" deal that kept the scale of the hacking culture hidden for years.

However last month's £3m payout by the Murdoch media empire to the parents of the murdered schoolgirl Milly Dowler set a new benchmark in the hacking scandal. Lawyers confirmed yesterday that 65 claims are still to be dealt with, and 452 other victims are waiting in what could be a long – and for NI a very expensive – queue.

The Independent, by Cahal Milmo and James Cusick

Wednesday, 5 October 2011

Buffett challenges Murdoch on tax returns

NEW YORK (CNNMoney) -- Warren Buffett has a message for Rupert Murdoch and the Wall Street Journal: "Sure, I'll release my tax returns, if you do too."

Last week, the Wall Street Journal published an editorial that asked Buffett to disclose his tax returns. The piece, "Mr. Buffett's Tax Secrets," took issue with Buffett's plan to hike taxes on some of the super-rich.
The Journal's conservative editorial board doesn't think that's a great idea, saying that Buffett should instead "educate the public" by letting "everyone else in on his secrets of tax avoidance by releasing his tax returns."
Asked about the editorial on Tuesday at Fortune's Most Powerful Women Summit, Buffett said he was willing to release his tax returns, on one condition:
"I think it might be a terrific idea if they would just ask their boss, Rupert Murdoch, and he and I will meet at Fortune, and we'll both give you our tax returns and you can publish them," Buffett said.
"I'm ready tomorrow morning," he added. (Read full transcript of interview)

Representatives from News Corp. (NWSA, Fortune 500), the parent company of the Wall Street Journal, did not immediately respond to requests for comment.

Buffett has become a political lightning rod in recent weeks after the Berkshire Hathaway (BRKA, Fortune 500) chairman let the White House attach his name to a tax proposal.

The "Buffett Rule" is a guideline -- that Buffett himself came up with -- designed to ensure that those making more than $1 million do not pay a lower overall tax rate than those who earn substantially less money.

For most people, wages make up a majority of their income, so when they get a raise their average tax rate may go up.

But millionaires -- and in Buffett's case, billionaires -- typically have several sources of income, some of which are taxed at lower rates, if at all.

As a result, Buffett says he enjoys a lower tax rate than his secretary. Correcting that discrepancy is the aim of the Buffett Rule.

Buffett's words twisted on taxes

And that secretary? The Journal wants to see her return as well.
"We wouldn't want to violate their individual privacy, but since Mr. Buffett is using [his employees] to make a political point, perhaps he'd be willing to disclose the most important lines on their returns without disclosing their names," the op-ed said.
Buffett didn't go quite that far, making no requests to see the tax returns of Murdoch staffers.
Buffett says he paid $6,938,744 in federal taxes last year -- only 17.4% of his taxable income.
Meanwhile, Murdoch was given a substantial raise recently, despite the hacking scandals that rocked his media empire. His total compensation jumped 47% to $33.3 million in the latest fiscal year, according to regulatory report News Corp. released in September.