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News Corp: The reckoning

July 13, 2011

Keith Rupert Murdoch has seen eighty summers, but few will have had interludes as hot and uncomfortable as this one.

Not that he seems worried – snatched pictures show a grinning figure in a range of bizarre ‘Sod you, I’m an old man’ hats, as he’s chauffeured around London sweeping up after some of his calamitous and, allegedly, corrupt managers.

When you’re old, you’ve seen it all before and you have more money than God, it must really take something to get your juices going. I think somewhere, not far from the surface, there’s a part of him that likes the drama of a crisis, the idea only he can sort it out. But he must also know it is a temporary buzz and there will be a reckoning and it is going to hit him where it hurts. And that doesn’t (just) mean the pocket book.

The charge sheet for News International is long and the punishments for its parent News Corporation and its Chairman & Chief Executive are going to hurt:

He has had to close the News of the World. No big deal in worldwide corporation terms, but definitely hurtful to a natural newspaper man. And the scandal that brought it down is an unwelcome gift that keeps on giving – there will be years of Government inquiries and Civil and Criminal legal action.

But worse, his loyalty to the embattled newspaper CEO Rebekah Brooks has ruined his credibility as a manager.

Even worse, if he is only defending her as a human shield for his son James, it won’t work.

Much worse, even if regulators in the UK and the US don’t try and ‘retrofit’ Fit and Proper Person tests for his various and vital broadcast licences (which they won’t), the markets are already making up their minds. News Corp must fall in line with ‘proper’ Corporate Governance or it will be abandoned. Rupert Murdoch has got away with running a public company as a private fiefdom for decades and now the City, Wall St and, most important, other News Corp shareholders have had enough.

The truth is they had had enough years ago but, as with nervy UK and US politicians, they dare not strike while Murdoch was in his pomp. Now he’s wounded, they cannot wait to attack. That’s the trouble with being a thorough bully to everyone on the way up; you can’t be surprised if they form a line to give you a kicking on the way down.

More hurtful to Murdoch than closing the first paper he acquired outside Australia, or even backing out of the Sky bid – something he got into, by the way, partly because he rightly believes he built the business and was unlucky to lose control in the first place – will be the dawning realisation that News Corp will not fulfil the destiny he foresaw, and has worked for decades to achieve. Sooner or later News Corp will cease to be The Murdoch Empire.

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