Murky Murdoch

To write about Rupert Murdoch, the Australian born media mogul and Chairman & CEO of Newscorp, in a business ethics blog seems somewhat tedious. Already in the first edition of our business ethics textbook nearly a decade ago we had a vignette on him and his conspicuous influence on governments and public opinion.

There is however now a good reason to take the subject up again. Murdoch and his British subsidiary News International have taken the old story to a new level (The Guardian maybe has the most comprehensive coverage on this).

Murdoch’s British tabloid ‘News of the World’ (NoW) has been in the headlines for a while for hacking into voicemail accounts of a number of celebrities. Actually the story is now lingering on since at least 2007. It only broke last week as to what the real extent of this scandal has grown into over the years: voicemail accounts, cell phones, bank accounts and legal files of some 4,000 individuals, 5,000 landline numbers and 4,000 mobile numbers may potentially have been hacked into not only by NoW, but also by other Murdoch papers such as The Sun or The Times. One of the things that gave the investigation extra spice was that among the targeted were many senior British politicians and – oh what sacrilege! – the Royal Family.

What really tipped over the debate is that NoW allegedly hacked into voicemail/cell phone accounts of abducted children, British Iraq war veterans or 7/7 victims. In the case of Milly Downing, a girl who was reported missing and ultimately turned out to be murdered, NoW not only hacked into her voicemail. They also deleted messages, which gave her parents the impression that she possibly might be alive – while the NoW ‘investigators’ already knew that this would be a false hope. At this stage allegations that NewsCorp has hacked into the phones of 9-11 victims are discussed in the media – which moves this scandal to a new level beyond just the UK.

First, it’s interesting how the ‘old’ story of media power over government plays out in this particular case. From Tony Blair on the one hand to David Cameron on the other – the intricate connections and the dependency of political leaders from Murdoch’s news empire has come to the fore once again. In Cameron’s case, the fact that he employed the already tainted NoW executive Andy Coulson as his communications officer has plunged his government into a crisis over those allegations. Ex UK Prime Minister Gordon Brown seemed to have stayed a bit cleaner here – one wonders if that is one of the reasons why the NoW published the health record of his then infant son.

No wonder then that a hard handed crackdown from the British government was somewhat difficult to assemble. It did not help that Scotland Yard, too, had obviously very cosy ties to Murdoch’s empire and for some time had the chief ‘hacker’of NewsCorp on their own payroll. The resignation of two senior officials this weekend just demonstrates how serious this has become. Yesterday’s reports on the death of Sean Hore, a whistleblower in the case asserting that Coulson knew about the hacking for years, just adds another layer of both tragedy and intrigue to what now looks the saga out of which crime fiction is made.

As an ironic aside, the entire scandal occurred in the first place because journalists were in fact doing actual journalistic work, which is: investigation. We have commented on the threat free media on the internet poses to this often costly side of news production by private news organisations. At the same time it appears that commercial pressure led to some rather ‘cost effective’ approaches into illegality to give way to sound journalistic work.

The ironic twist – and maybe the new angle - in all this seems to be that Rupert Murdoch and his family are now putting up at least the appearance of taking the scandal seriously just because they are a private company. Lets call it for a second the ‘commercial forces cleaning up the ethical misconducts of commercial media’-hypothesis. After all, more than anybody else the shareholders of News International now might ask serious questions about how events like this could happen which ultimately have – according to some accounts – reduced the value of the company by some 20%? And many alleged that Murdoch only threw himself into cleaning up the scandal to secure his bid for taking over the British TV station BSkyB.

It was interesting to watch Murdoch Senior and Junior appearing before the Parliamentary Committee in London today. The more both father and son tried to assert that they had no prior knowledge of the business practices, payments to lawyers, bribes to the police etc. – which makes sense in terms of litigation and other legal responsibilities – every shareholder must ask him-/herself about the corporate governance of Newscorp. If it is true that Chairman (Murdoch Sr.) and COO (Murdoch Jr.) had no knowledge of major operations what does this say about their fiduciary responsibilities to shareholders? Those investors who still trust the organisation will probably only do so because they know that informally the reality is maybe somewhat different.

Our somewhat reckless thesis here gets more fodder if we consider that the debate in the United States (which allegedly accounts for a third of Murdoch’s business) now focuses on whether News International (which owns Fox News or the The New York Post, among others) might be taken to court there because of the Foreign and Corrupt Practices Act. After all, one of the allegations in the UK consists of bribing Policemen to release private information to the NoW. No wonder, Murdoch Sr. now puts a serious face on cleaning up his organisation.

In a similar vein, it also cannot be overlooked how all the main global news organisations have zoomed in on this case. This is understandable for The Guardian or the BBC as domestic competitors, but also the New York Times, the Globe and Mail in Canada or pundits like Keith Olbermann now for weeks have the phone hacking scandal on top of their front pages or opening editorials. In a world of tough commercial competition in the news market it is only too understandable that the mishaps of Murdoch’s empire as a key competitor are a field day for those media players.

Will anything change? James Murdoch today announced in the hearing that his organisation is working on a new code of ethics. That much for solutions! – the sarcasm of this is certainly not lost on only the business ethics professor watching this. For us, the larger problem of Murdoch’s role in global politics is not that his organisations obviously resorted to shady practices in getting stories. It is still the fact that he personally wields enormous power over shaping public opinion. Blair, Cameron, or currently the ‘Tea Party’ movement in the US would be nowhere without his conglomerate backing them and providing a platform.

In this sense watching the Parliamentary Inquiry today was sad: as far as we can judge, the committee was staffed mostly by no-name backbenchers. No MP or politician of any stature (that is: with any strong future ambitions) would obviously dare to get into the way of Murdoch Sr. – who even in this ‘most humble hour’ of his career (as he put it today) could only barely disguise his contempt for them. Maybe those MPs should check on their cell phones or their kids’ health records or their tax returns – Rupert still has an army of ‘journalists’ out there who might return the favour one day in the future...

Picture by Surian Soosay. Reproduced under Creative Commons Licence.