Murdoch confirms possible break-up of News Corp
Joseph O'Halloran ©RapidTVNews | 27-06-2012
In what may be a seismic move for the TV industry, Rupert Murdoch has revealed that the phone-hacking scandal that has engulfed News Corp may lead to the break-up of the company.
Making a very terse and perfunctory official statement, News Corp confirmed rumours that have circulated for the past 24 hours that it was considering a restructure of its assets. Indeed, the company merely said: “News Corporation confirmed today that it is considering a restructuring to separate its business into two distinct publicly-traded companies.”
The two distinct publicly-traded companies will almost certainly be the entertainment parts of the firm — including the vastly profitable TV businesses — and newspapers from which the phone-hacking scandal originated and which has seen one News Corp title already closed down.
Breaking up the company has been regarded by many as a fitting punishment for the behaviour of the Murdoch-led news titles in the UK who in addition to phone-hacking have been accused of bribing UK police officers in return for exclusives regarding celebrities.
In September 2011 News Corp shareholders brought charges against the media giant's senior management and board of directors. The charges were filed by shareholders including Amal****ted Bank, trustee for various LongView investment funds, the New Orleans Employees' Retirement System, and Central Laborers Pension Fund who complained of repeated failures to correct illegal conduct that has severely battered the company's reputation and market value. In particular, the action outlined what it calls a “litany of misconduct” at company's US subsidiaries including computer-hacking, privacy breaches, and anticompetitive behaviour. Moreover, the shareholders alleged that the News Corp board refused to curb serial wrongdoing at multiple divisions.
Scrambling to react to the pressure, and in a pre-emptive move to protect the firm's reputation before the publication of a damning report by the UK Parliament’s Culture Media and Sport Select Committee what took place in the News International publishing businesses which he was in charge of, in April 2012, the once heir apparent to Rupert Murdoch’s media empire, James Murdoch, resigned as chairman of BSkyB, 39% owned by News Corp. News Corp’s attempts to buy the remaining shares in the cash-generating pay-TV behemoth was the effective trigger for the revelation of the phone-hacking.
Some leading analysts have commented that the News Corp board could still fulfil its ambitions regarding BSkyB by sidelining the Murdoch family from the TV and entertainment side of the business, thus removing at a stroke any regulatory obstacles related to media plurality prohibiting the transaction.
However, reports in leading US financial titles have suggested that the Murdoch family would be likely to retain control of the newly split companies, something that would not bring full ownership of BSkyB back into play, UK-based regulatory experts have confirmed.