Why is Rupert Murdoch Stepping Down as Head of 21st Century Fox?
The first response to the confirmation that Rupert Murdoch is stepping down as executive chair of his massive entertainment corporation, 21st Century, should not really be “why is he leaving?”
After four years of relentless scandal emanating from his beloved and pivotal British publishing subsidiary, the real question is “how has the 84-year-old hung on for so long?”
A PHENOMENAL CORPORATE FIGHTBACK
Murdoch has survived a series of set backs and shocks that would have felled most chief executives. Not only was he dragged in front of a parliamentary committee and the Leveson Inquiry to explain himself: the phone hacking scandal forced News Corp to drop its billion dollar bid for the remaining shares of BSkyB, and the plan’s chief architect, James Murdoch, to resign all his UK directorships and leave the country.
The threat of criminal corporate charges then caused Murdoch to do what he had defied for years – and split the lucrative Pay-TV and entertainment assets from his newspaper and publishing interests.
The split was accelerated when the Metropolitan Police revealed in May 2012 they were investigating corporate criminal charges. It effectively isolated the profitable parts of the company and their valuable broadcasting licenses from lethal taint.
To avoid prosecution under US law under the Foreign Corrupt Practices Act, News Corp also dumped on the British police email evidence of Sun journalists paying public officials. Dozens of Murdoch’s senior journalists were arrested. Though not all those trials are completed, very few journalists have been convicted (mainly because the offences predate the Bribery Act now in force) while nearly all their sources – over 20 – have been gaoled.
Meanwhile Murdoch’s main UK lieutenant, Rebekah Brooks, also survived one of the longest running and most expensive trials in British history last year, and was found not guilty of knowledge of phone hacking while editor of News of the World. Her defence was vital. She was the last remaining firewall between the phone hacking scandal and the family.
Several billion dollars have been spent on legal claims for privacy intrusion, corporately defending those indicted, and restructuring.
But this now looks like a price worth paying.
Earlier this year, the Department of Justice said it was no longer investigating the company. And while the rump publishing business is still in trouble, the shares in the unfettered entertainment company, 21st Century Fox, have soared.
So, after a bruising epic battle (not to mention a painful third divorce from Wendi Deng) Murdoch seems to have survived the biggest threat of his 60 year media career.
So why step aside now?
THE OFFICIAL NARRATIVE
To some extent, there’s no better time to go having overseen the clean up after the hacking scandal. Murdoch has shown resilience, ingenuity and an ability to re-adjust without conceding to his critics.
As his Twitter remarks show, Murdoch is still actively engaged in discussing politics and defending his legacy as a great innovator and creative disrupter in media distribution. He cares about his reputation. He has survived the worst.
Some people will always hate Murdoch. But if he leaves now, he will be remembered for having survived and managed a way out of the phone hacking scandal, rather than capitulating to it.
There is also the question of Murdoch’s health. He would have to step down at some point, and a reported fall last year and head injury left him Twittermute for several weeks.
Mortality comes to media moguls like the rest of us.
However unresolved issues about Murdoch’s path to power suggest the phone hacking scandal may be just the tip of a bigger iceberg, which could yet cause more lasting reputational damage.
* The full Exaro tapes of Murdoch’s comments to his senior Sun staff have yet to be published (mainly held back because of legal issues about forthcoming trials).
* The allegation that an executive, former Met Commander Ray Adams, of Murdoch’s digital security company, NDS, had hacked the smart cards of rivals and flooded the market with clones is still unresolved.
* And related to both the ongoing Daniel Morgan Independent Panel Inquiry is tasked with looking at the connection between rogue private investigators, corrupt police officers and Fleet Street newsrooms.
WORSE THAN HACKING MILLY DOWLER?
The pattern of these alleged abuses over many years suggest a long term corporate culture. The fact that many of the figures involved outlived individual editors and executives, and in some cases reported direct to Murdoch himself, could mean that far from dying down, the scandal could erupt again in a year or so’s time and point more damningly to the chief executive himself.
Four years ago, at the Town Hall meeting just before News of the World was closed down, then News International CEO Rebekah Brooks told her sacked staff that something much worse than the hacking of Milly Dowler would emerge that would explain why the paper had to be shut down.
Many wondered at the time what could be worse than the revelation that the paper had hacked the phone of a murdered school girl?
There has been no explanation from Brooks since, but I am not alone in thinking the revelation the paper had employed murder suspects in various illegal activities for 20 years is one of the few things that could be worse.
Two months ago, I accompanied Alastair Morgan, who has fought for 28 years to get justice for his brother’s murder, to the News UK headquarters where he delivered a letter to Rupert Murdoch begging him to co-operate with the Daniel Morgan Panel Inquiry.
Graciously, Murdoch replied in a few days, promising to co-operate.