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From AJR,   June/July 2011  issue

For Murdoch, a Shocking Reversal of Fortune   

Ten days that shook the mogul. Wed. July 13, 2011


By Rem Rieder
Rem Rieder (rrieder@ajr.umd.edu) is AJR's editor and senior vice president.      

It's a rapid, stunning collapse of Hollywood proportions, perfectly appropriate for the guy who owns 20th Century Fox.

The abrupt reversal of the fortunes of one Rupert Murdoch is truly head-spinning.

It's hard to remember that, just 10 days ago, the media mogul bestrode the world like an Aussie colossus. He was a powerful figure, widely feared by British politicians, a man used to getting what he wanted on both sides of the Atlantic, a man who shrugged off criticism from the elites he so avidly held in contempt.

Then, on July 4, the London newspaper the Guardian reported that in 2002 Murdoch's tabloid News of the World had hacked into the voicemail of a cellphone belonging to Milly Dowler, a missing 13-year-old who later was found murdered. The hackers had even deleted messages to free up space, giving the teenager's parents false hope that she was still alive and perhaps compromising the police investigation.

Suddenly a years-old phone-hacking scandal that the Brits had greeted with yawns hit home, big time. This wasn't just targeting celebrities and politicians, but ordinary people, in the sleaziest of ways. And a contretemps that Murdoch and his empire seemed to have weathered, like so many before it, has engulfed the media baron.

The palpable damage in less than two weeks is staggering:

--Under intense pressure, today he caved and jettisoned his effort to assume 100–percent control of British Sky Broadcasting, a lucrative satellite broadcasting company (Murdoch already owns 39 percent of it).

--Murdoch has closed the 2.7 million-circulation, 168-year-old News of the World, the paper that was his entrée into the U.K. media scene.

--A wide variety of other serious allegations has emerged, including bribing police for information, blackmailing law enforcement officials and obtaining private medical and banking information.

--The contagion has spread to other Murdoch London properties, the upmarket Sunday Times and the tabloid Sun.

--Murdoch, once an intimidating figure whom British public officials cultivated rather than challenged, has become a virtual piñata for them.

--The stock price of Murdoch's News Corp. has declined sharply in the U.S.

--Murdoch, his son James, who runs his British operations, and embattled Murdoch confidant Rebekah Brooks have been summoned to testify before Parliament.

--The sordid episode has triggered government investigations both into the scandal itself and the culture of British journalism.

--Tom Crone, the legal manager of News International, which owns Murdoch's London properties, is out.

And there's much more to come. There's a Watergate feel to the cascade of allegations. Shuttering News of the World, a spectacular attempt at damage control, did little to stem the flow, and neither will abandoning the BSkyB takeover attempt.

Besides the government probes, the Guardian, which has owned the phone hacking story, continues to pound away.

Meanwhile, there are signs that the scandal is spreading across the pond. The Daily Mirror reported that News of the World reporters may have tapped into the cellphones of 9/11 victims. The London newspaper reported that a then-New York City policeman says that the reporters told him they'd pay him for access to the victims' phone records.

"His presumption was that they wanted the information so they could hack into the relevant voicemails, just like it has been shown they have done in the UK," the paper said.

The report said the officer, now a private investigator, turned down the offer because he knew "how bad it would look."

Today, U.S. Sen. Jay Rockefeller (D-W. Va.) called on Congress to investigate whether Murdoch's U.S. news properties have engaged in the same kind of illicit behavior as his British ones. Murdoch owns Fox News Channel, the Wall Street Journal and the New York Post.

"The reported hacking by News Corporation newspapers against a range of individuals – including children – is offensive and a serious breach of journalistic ethics," Rockefeller said in a statement. "This raises serious questions about whether the company has broken U.S. law, and I encourage the appropriate agencies to investigate to ensure that Americans have not had their privacy violated. I am concerned that the admitted phone hacking in London by the News Corp. may have extended to 9/11 victims or other Americans. If they did, the consequences will be severe."

As the New York Times' David Carr tweeted today, "Anybody who pretends that they know where News Corp story is headed is bluffing. Way too large, dynamic and fast-moving to tell."