Tabloid Scandal Widens. Murdoch Empire Engulfed with New Allegations
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Rupert Murdoch, Rebekah Brooks_Murdoch Empire Engulfed with Fresh Allegations

Rupert Murdoch, Rebekah Brooks_Murdoch Empire Engulfed with Fresh Allegations

UK Royals, Politicians Compromised?

What started off as a typical tabloid tale about media having compromised security issues and having ended up in scandal, seems to have grown in mammoth proportions with fresh allegations emerging regarding the possibility that News Corp. reporters might have illegally accessed  messages of Prince Charles and his wife, Camilla, as well as former British Prime Minister Gordon Brown.

The new charges include journalists from a couple of Murdoch’s other newspapers having illegally obtained information from Gordon Brown’s bank records as well as his 4-year old son’s medical files.

According to further reports by the BBC, other News Corporation reporters tried to buy the personal phone numbers of members of Britain’s royal family, leading to media suspicions that the phone hacking scandal might even have extended to the Queen.

While the phone hacking and bribery scandal that erupted last week could possibly have been slowly quelled after Rupert and James Murdoch announced the closing of the News of the World tabloid, these new charges, if they prove to be true, are likely to wreck havoc across the entire Murdoch Empire.

News Corp. is the world's second-largest media conglomerate as of 2010 in terms of revenue, and includes the popular U.S – based Fox network. With total holdings worth $33 billion, the other businesses within the Murdoch empire are film studio 20th Century Fox, publishing giant HarperCollinsThe Wall Street Journal and the New York Post.

Other Newspapers Accused

When outrage broke out last week regarding reporters from Murdoch’s News of the World tabloid, having hacked into phone messages of British teen Milly Dowler who was later found murdered, many market experts voiced their opinion regarding the closing down of News of the World being Murdoch’s sacrificial lamb towards salvaging the much more lucrative $12billion BSkyB deal.

Others thought the shutdown might end up being a rebranding exercise, and News of the World would soon be re-constituted in some form. Even others were of the opinion that now News International – News Corporation’s British subsidiary – would up the circulation of its other papers, which include The Sun, The Sunday Times and The Times.

This might not be possible after all, with investigations by news media including the Independent, Channel 4, the Guardian and the BBC, suggesting that journalists from some of News International’s more prestigious papers, i.e., The Sunday Times and the Sun, targeted former British Prime Minister Gordon Brown’s personal details.

Public furore has especially escalated over reports that the Sun had illegally obtained and made public medical details concerning Brown’s 4-year old son Fraser’s cystic fibrosis.

Chief executive of News International, Rebekah Brooks, was the editor of the Sun at the time of the Gordon Brown incident, and, incidentally the editor of the News of the World at the time of the Milly Dowler phone hacks.

And despite Ed Miliband, leader of the Labour Party, having publicly asked for Brooks’ resignation, Murdoch has publicly firmly stood by Brooks’, even as he closed down News of the World.

Effect on the BSkyB Deal

News Corp. currently owns 39% stake in the British Sky Broadcasting (BSkyB), United Kingdom’s largest pay-TV broadcaster with over 10 million subscribers.

Murdoch had earlier put forth a $12 billion bid to further expand his holdings here, and to take full ownership of BSkyB.

Following the unraveling of the phone hacks and bribery scandals related to the Murdoch empire, that seem to be growing wider and murkier with each passing day, Culture Secretary Jeremy Hunt, who had given preliminary approval to the BSkyB bid, announced that he planned to ask Ofcom, the communications regulator, whether News Corp. is "fit and proper" to hold a broadcasting license.

Saying that the allegations and ensuing scandal had severely damaged Britain’s long-standing tradition of quality journalism, Hunt said, "These allegations are stomach-churning and everyone is shaken… New information has come out in the last week. Things have changed in the last week, and these things have shocked everyone."

A broadcasting license would be denied to Murdoch if Ofcom decides that News Corp is not fit to hold such a permit.

Market Speculations

After these fresh reports of other News International papers having obtained information illegally, Michael Wolff, Murdoch’s biographer, has stated having heard strong speculation that News Corp may sell or spin off News International.

The scale and repercussions of the scandal are apparent from the estimated $4.7 billion decrease in the News Corp conglomerate’s market value over the past week alone; this despite News Corp's British newspapers accounting for just over $500 million in revenue, or 5% of the company's revenue.

image courtesy reuters

5 Comments

  • The Comeuppance of Rupert Murdoch: BSkyB bid dead, Brooks Arrested | Industry Leaders Magazine says:

    […] Besides the Milly Dowler phone hacking charges, accusations have also been made against Brooks-led News of the World hacking into personal details of members of UK’s royal family as well as ex-Prime Minister Gordon Brown. […]

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  • Babu says:

    Ive been woneidrng about how the newspaper division, which I recall Murdoch saying comprised 200 titles, sits in News Corp. You can find the annual reports Seems that newspapers are one of seven divisions and make up about 19% of revenue. If you take the four electronic divisions, they make up 65% of revenue.Newspapers are only about 13% of profits, before impairments, which exceeded profits in 2009. Not sure what the story was there & probably write-downs of asset value.

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    […] months of deeply rough and sore scrutiny, James Murdoch, the executive chairman of News International, resigned as head of his father’s scandal-ridden […]

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    […] in opinion polls, on the government that was lead by the previous  Labour Prime Minister Mr. Gordon Brown for the fixing of rates by the traders of the Bank. Questions are rising whether or not the […]

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