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News Corp: "Even the Office Cat Knew"



July 20, 2011 – Comments (2) | RELATED TICKERS: FOX

Board: Macro Economics

Author: Goofyhoofy

Until convincing evidence that higher ups at News Corp (much less) Rupert Murdoch knew of these acts were occurring and failed to stop them the attacks on Rupert Murdoch are just publicity stunts orchestrated by Murdoch's rivals.

News Corp paid $125,000,000 (that's correct, $125 million) to Insignia Systems for antitrust violations and anti-competitive practices. I am fairly certain Mr. Murdoch would have somehow heard of that particular problem.

They then were judged (court finding) to be liable for $300,000,000 in penalties to Valassis Systems on similar grounds, but Valassis dropped the suit after the finding because News Corp offered to pay $500,000,000 (yes, that's half a billion dollars if the suit disappeared and for consideration of "future ventures". Half a billion; I'm pretty sure Rupert would have heard something about that one, too.

Then there was the Floorgraphics suit, in which one of Rupert's advertising competitors swiftly lost its three largest accounts (national supermarket chains) and the reason was the hacking of Floorgraphics phones, traced back to an I.P. address at News Corp. That settlement, a mere $30 million, but even at that level I'll bet some Murdoch somewhere was informed about it.

How informed were they? The fellow who ran the division that suffered these suits was summarily dismissed, and...oh wait, he was promoted and now is Publisher of the New York Post, while he retains the leadership role in the advertising division. That's how the Murdoch's run their businesses.

You really think they didn't hear about "hacking"? One of the workers in the trenches at News of the World said, as his job was evaporating before his eyes, "Of course they knew. Everybody knew. The office cat knew."

Which brings us to...payoffs and hush money. James Murdoch personally approved a payment of 700,000£ to Gordon Taylor, a soccer union boss whose phones were hacked. The settlement required "non-disclosure", but as these things have come up in legal proceedings, oops, it's "disclosure time."

Max Clifford is a celebrity publicist in Britain, and a pretty big one. The Murdoch's paid him 1,000,000£ to his invasion of privacy, as they admitted (and obviously knew) that reporters from Murdoch papers were hacking Clifford's phones too.

We know that the newspapers hired private detectives, and that there were slush funds amounting to hundreds of thousands of dollars for whatever purposes TPTB thought likely to come up with more dirt. You think that mere reporters get to decide how to disperse hundreds of thousands of dollars any way they like? We know they repeatedly wined and dined the bigwigs at Scotland Yard, the top two officials there have resigned because of it.

For the record, shareholders have been just about last in the Murdoch train. News Corp, two weeks ago, stood below its price a decade ago, while Murdoch has gone on expensive binges buying (and overpaying) for newspapers, television channels, and the like. He has amassed great power and wealth for himself and his family, but his shareholders have done rather poorly.

After this is all over, shareholders are likely to be poorer yet, at least for a while. News Corp has a great collection of assets, but it will take a new management team to turn them into a company with a stock that people want to buy again.

2 Comments – Post Your Own

#1) On July 20, 2011 at 4:52 PM, NajdorfSicilian (99.83) wrote:

"Bernstein is an awkward choice for critic of phone hacking, because of the memorable moment in the Watergate investigation when, stymied in his investigation of the suspicious burglary, he turns to a source at the phone company to obtain what were supposed to be private telephone records.  Here is the relevant passage from pages 35 and 36 of All the President’s Men:

Bernstein had several sources in the Bell system. He was always reluctant to use them to get information about calls because of the ethical questions involved in breaching the confidentiality of a person’s telephone records. It was a problem he had never resolved in his mind. Why, as a reporter, was he entitled to have access to personal and financial records when such disclosure would outrage him if he were subjected to a similar inquiry by investigators?

Without dwelling on his problem, Bernstein called a telephone company source and asked for a list of Barker’s calls. That afternoon, his contact called back and confirmed that the calls listed in the Times had been made.  But, he added, he could not get a fuller listing because Barker’s phone records had been subpoenaed by the Miami district attorney.

Clearly for Bernstein the issue of privacy vs. the public’s interest in truth isn’t quite as clear-cut as some Murdoch critics might like.  In the crunch, when Bernstein was tempted, he agonized — but not for very long.

Aware of this potential hypocrisy problem, Bernstein buries a defensive paragraph in his Newsweek anti-Murdoch piece:

When Bob Woodward and I came up against difficult ethical questions, such as whether to approach grand jurors for information (which we did, and perhaps shouldn’t have), we sought executive editor Ben Bradlee’s counsel, and he in turn called in the company lawyers, who gave the go-ahead and outlined the legal issues in full. Publisher Katharine Graham was informed. Likewise, Bradlee was aware when I obtained private telephone and credit-card records of one of the Watergate figures.

Aha! So it’s OK to breach privacy if Ben Bradlee says it’s OK, but not if Andy Coulson says it’s OK. Got it. …

It’s also pretty clear from the above passage, and the passage in All the President’s Men, that company lawyers were not consulted before Bernstein “obtained private telephone and credit-card records.” It’s not even clear if Bradlee was informed before the fact. …"

~Mickey Kaus

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#2) On July 20, 2011 at 5:07 PM, FolacinTheAcidic (< 20) wrote:

Bernstein at least has a 'greater good' defense - he was investigating illegal activities.

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