Murdoch Faces More Questions After Dow Jones CEO Resigns

Bikram Pandey
16 Jul, 2011
New York City

Les Hinton, Chief Executive of Dow Jones resigned after more details emerged about lapses of ethical journalism during his tenure at the UK publications. Hinton is likely to face several UK inquiries. Rupert Murdoch may become the target of long term shareholders if scandal keeps widening.

[R]11:40 AM New York – Les Hinton, Chief Executive of Dow Jones resigned after more details emerged about systemic journalistic failures during his tenure at the UK publications. Hinton is likely to face several UK and US inquiries. News Corp shareholders are asking more questions about the corporate governance at the company.[/R]

Les Hinton, Chief Executive of Dow Jones & Company and the publisher of The Wall Street Journal resigned as questions arose about the ethics of his conduct during his tenure at News International between 1995 and 2007.

He also misled at least two UK Parliament inquiries related to the phone-hacking scandal between 2003 and 2005.

The news of his possible departure was first highlighted yesterday by 123jump.com, nearly five hours before the resignation on Friday.

Hinton, 67 said in a statement said, “That I was ignorant of what apparently happened is irrelevant and in the circumstances I feel it is proper for me to resign from News Corp and apologize to those hurt by the actions of News of the World.”

Hinton’s Role at News International

Hinton came under intense scrutiny in the last two last two days for the role he played when he led News International, the UK division of the company that controlled The Times, Sunday Times and News of the World between 1995 and 2007.

Hinton at the time battled with the UK parliament committee and stressed that the company had conducted full investigation and was convinced that only one journalist was involved in what now has come to be known as phone-hacking scandal.

The News of the World has been accused of the phone hacking of several celebrities, crime victims and a 13-year old murdered girl and several fallen soldiers. The now shuttered tabloid is also the subject of an alleged police bribery practice.

He noted in his resignation letter to Rupert Murdoch, “In September 2009, I told the Committee there had never been any evidence delivered to me that suggested the conduct had spread beyond one journalist. If others had evidence that wrongdoing went further, I was not told about it.”

The subsequent unearthing of details in the last ten days by several private court cases and a report by the UK based Guardian has proved his assertion to the UK Parliament committee lacking veracity and half-truths.

Recently, Guardian reported that the company long held a practice of hacking phones of celebrities and crime and murder victims and phones of as many as 4,000 people may have been hacked.

At the time Hinton was also the head of the UK press industry ethics committee that laid the standards of journalism.

Hinton is likely to face multiple inquires in the UK and there are several unanswered questions about what he knew and the extent of the systemic lapse at all UK based newspapers he ran between 1995 and 2007.

Hinton during his UK tenure sparred several times with the UK lawmakers and during UK parliamentary inquiries took aggressive stands in defending often extreme and aggressive tactics to unearth personal details targeted by his journalists. His belligerent tone was rarely forgotten by several UK Parliament members.

Hinton at WSJ

For the last five years, several media critiques have raised questions about Hinton’s conduct and whether any of those tactics were ever applied at The Wall Street Journal.

The crown jewel of Rupert Murdoch’s media empire, The Wall Street Journal is not under any investigation and there is no evidence of the systemic failure in news gathering practices at the business daily.

But there are several questions still swirling around Hinton’s past that raise serious doubts about his management style at the Wall Street Journal.

Especially after his forceful denials in the past UK inquiries of alleged phone hacking practices and the alleged UK police bribery payments.

The Journal since the Murdoch’s takeover has been a forceful advocate of the war in the Middle East to satisfy the conservative branch of the Republican Party and the proponent of low corporate taxes in the editorial pages as preferred by its core advertisers.

The opinion pages of the Journal have become a platform for several extreme right wing leaders including Newt Gingrich, Sarah Palin and Michele Bachmann and free market zealots. The newspaper was the forceful advocate of self policing of the financial markets and banks in the last ten years and preferred smaller SEC budget.

The business daily was once the leading and scholarly print source of business news covering financial markets. But the daily has steadily lost its edge as it shifted its focus to right wing politics coverage since the arrival of latest foreign management.

The Wall Street Journal in the last five years has struggled to hold readership as the Internet becomes a dominant source of news for the younger demographics.

Under the publisher Hinton and editor Robert Thomson, both from abroad, the Journal focused on shorter articles with preliminary information and often lacking depth and increased the coverage of politics mostly promoting propaganda that reflected Murdoch’s conservative views.

Often it has been difficult to differentiate between news and opinions.

The Journal has been eerily quiet about the corporate governance issue at the News Corp which in the past would have been at the forefront of the coverage. As the scandal broke out and became front page news in the UK and gained traction in the US, the Journal and Fox News stayed on the sidelines.

In the past, such a big story would have been pursued with a vigor and depth that offer insights and ask tough questions.

Hinton is the second highest ranking executive in the News Corp to leave as more details emerge about the phone-hacking scandal at the News of World.

UK Parliament Inquiry

Rebekah Brooks, the chief executive officer of News International resigned after bowing to the sustained public and lawmakers’ pressure over the phone-hacking scandal that is pointing to deeper problems at the company.

Brooks, the former editor of the UK tabloid at the time the phone of a 13-year-old murdered schoolgirl was allegedly hacked has till yesterday not publicly apologized to the victims of the scandals and for permitting illegal practices under her watch.

News Corp appointed Tom Mockridge, current CEO of Sky Italia, to replace Brooks immediately.

The British Commons Culture, Media and Sport Committee confirmed that Rupert Murdoch, his son James Murdoch, and Brooks will appear before the Select Committee in Parliament on July 19 to give evidence on developments relating to the hacking.

What’s Next?

So far the scandal has been costly to News Corp and the company is likely to face more probing questions and financial ruin as inquiries gain momentum.

The alleged scandal forced News Corp. to withdraw its bid to acquire the remaining 60.1% stake that it does not own already in satellite broadcaster British Sky Broadcasting Group Plc.

Rupert Murdoch controlled News Corp is also looking to sell most of its print publications in the UK contrary to his denial yesterday at a press conference.

The swift change of events at News Corp has left several long term shareholders questioning if Rupert Murdoch is either too old or too controversial to run the company that has been at the forefront of several scandals in the last ten years.

There are also questions about corporate governance that investigators are likely to focus on in the U.S. and UK.

The U.S. Securities and Exchange Commission may investigate what was disclosed to board members and what if any actions were taken by the board to prevent illegal phone-hacking.

The SEC may also like to focus on bribery payments to the UK police as the U.S. companies are barred from engaging in corrupt practices in other countries.