News Corp board backs Murdoch after scandal

Thursday 11 August 2011 11.49
Rupert Murdoch - Wins boardroom backing despite hacking scandal
Rupert Murdoch - Wins boardroom backing despite hacking scandal

Rupert Murdoch won boardroom backing last night to remain at the helm of News Corp as he worked to shift attention from the phone-hacking scandal to his media giant's healthy bottom line.

'The job won't be open in the near future,' the 80-year-old media mogul quipped when asked during an earnings conference call whether the board was considering replacing him as head of the global operation.

'The board and I believe I should continue in my current role of chairman and CEO. But make no mistake, chief operating officer Chase Carey and I run this company as a team,' he added.

Along with boasting about its latest earnings figures and its prospects in the months ahead, News Corp raised its dividend for the first time in two years.

Although net income for the fourth fiscal quarter fell 22% to $683m, News Corp finished the year with profits amounting to $2.74 billion, a rise of 7.9% compared to 2010.

Fourth-quarter profit was eroded by a $254m loss attributed to faded social networking website MySpace, but the company still beat Wall Street expectations.

News Corp sold MySpace, the social network which it bought in 2005 for $580m, during the quarter for a paltry $35m, bringing the curtain down on Murdoch's tie-up with the one-time social networking star.

The quarter was also being compared to the same time last year, when 3D film sensation Avatar caused a windfall, according to company executives.

News Corp, which owns the Fox TV network and The Wall Street Journal in addition to a host of worldwide newspaper, Internet, broadcast and cable television interests, is grappling with the biggest crisis in its history.

A phone-hacking scandal in Britain has mushroomed into a full-blown public relations nightmare for the media and entertainment colossus. Murdoch said the company was 'co-operating with all investigations', indicating for the first time that the probe may be widening to other News Corp operations.

'While it has been a good quarter from a financial point of view, our company has faced challenges in recent weeks relating to our London tabloid, News of the World,' Murdoch said.

'We are acting decisively in the matter and will do whatever is necessary to prevent something like this from ever occurring again,' he said.

During the tumultuous quarter, News Corp closed the 168-year-old News of the World and abandoned its bid for full control of British pay television giant BSkyB. The quarter also saw the resignations of trusted Murdoch aides Rebekah Brooks, a former News of the World editor, and Les Hinton, chief executive of News Corp's Dow Jones unit, which publishes The Wall Street Journal.

Brooks was editor of the News of the World from 2000-2003, when reporters at the newspaper allegedly hacked the phone of murdered teenager Milly Dowler - the claim that sparked the crisis and led to the closure of the tabloid.

'I've run this company for more than 50 years; the kind of behavior that happened in that newsroom has no place in News Corp,' Murdoch said.

News Corp shares have lost more than 20% of their value since the first reports in early July that phone-hacking victims in Britain included the slain teenager Milly Dowler.

'It is important to note that there has been no material impact on our operations' Murdoch said of the scandal. 'Our global business is robust,' he stated.

Company executives said that abandoning the bid for BSkyB freed up $5 billion to buy back the corporation's 'woefully undervalued' stock. News Corp said that savings from selling money-losing MySpace were likely to be offset by the lack of revenue from News of the World.

The company planned no major acquisitions with its ample operating cash reserves, saying that it preferred 'to build rather than buy businesses'.