Wednesday, July 20, 2011

Murdoch Musings

I continue to be intrigued by the ongoing flap over Rupert Murdoch's media empire. A few more or less random thoughts:

1. Murdoch claims that, prior to the recent explosion, he was unaware of the hacking at News of the World—despite the fact that two people had been arrested and, I gather, convicted in the case. How believable is the claim?

I don't know the answer, in part because I don't have much feel for how an organization that big is run, how much information makes it to the very top level, how much is handled further down. According to Murdoch, the paper represented only about 1% of his media holdings, I think measured by income, which makes the claim at least somewhat plausible.

2. How likely is it that the facts of what News of the World reporters had been doing, in particular facts that had become public prior to the recent flap, would have surprised Murdoch? 

My suspicion is that he would take it for granted (as I do) that reporters routinely skirt the edge of the law and not uncommonly break it in the course of doing the job they are hired to do. It would be surprising if they didn't bribe police officers, sometimes with cash, to tip them off on potential news stories. The police have the information, it is valuable to reporters, markets tend to move resources to those who most value them. It would be surprising if they didn't often take advantage of illegal but easy opportunities to obtain information—for instance by getting at poorly protected voice mail messages. Nobody in the U.S. seems to be very surprised to discover that police officers spend a good deal of  time in donut shops eating free donuts—and providing the shops with free crime prevention.

Obviously this question is related to the previous one. The less surprising what was going on was, the less the reason to report it up the corporate hierarchy to the top. Especially if the people at the top were unlikely to try to stop it and had good reasons to maintain deniability with regard to knowing about it.

And it isn't hard to believe that a cover-up by someone a couple of levels below Murdoch, in a position to get the police to fail to investigate the case more thoroughly, would have included  an internal as well as external cover-up. "Police say nothing that serious happened, a couple of our people pushed too far over the line, being taken care of."

3. How much of what was being done at the News of the World was being done at non-Murdoch papers? Presumably the Murdoch people have been looking for evidence, and if they found any we would have heard about it, or soon will. 

4. Perhaps the hardest things for Murdoch to have been ignorant of were the payouts to victims of hacking to settle their claims, some of which were quite substantial. But out of court settlements, including ones where the payer/potential defendant does not admit guilt and the details of the controversy are kept private, are legal and not that uncommon in civil cases. In criminal cases they are illegal, but hard to prevent if a case raises both civil and criminal issues. For an earlier and pretty high-profile example, consider the Michael Jackson abuse controversy, where, as best I recall, criminal charges got dropped after a civil settlement, presumably because the witnesses were no longer willing to testify.

5. Finally, the paranoid thought—was the pie in the face incident a set-up? It clearly benefited Murdoch, both because it made him the victim and because of his wife's dramatic response. Setting it up would be very risky, since discovery would be a catastrophe. But if the wife just happened to know someone she was sure she could trust to do it and keep his mouth shut ...  .

6. Other thoughts from readers?

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At 2:14 PM, July 20, 2011, Blogger Milhouse said...

You're right to assume that all sorts of illegalities are routine in the "profession" of journalism, and an old pressman of an old press family such as Murdoch would not be surprised to hear it; and nor would anybody else in the industry. The idea that journalists don't do such things is quaint. Indeed it used to be much worse; before the days of easily portable cameras, all newspapers employed thieves for the purpose of breaking into the homes of people in the news and stealing photographs. Ben Hecht's The Front Page is a historically accurate picture of what the business looked like in the early 20th century. So cries of outrage, especially by Murdoch's rivals, are uncalled for; and it's entirely plausible that Murdoch had no specific information about what was going on at this particular paper.

At 9:33 PM, July 20, 2011, Blogger David Friedman said...

Going back to the pie ... .

What if it was a setup, not by anyone on Murdoch's side but by an enterprising investor? He hires the pie thrower, buys stock in Murdoch's firm, pie is thrown, stock goes up, he sells.

The beauty of it is that he has no visible connection with the case, so unless his employee decides to go public is unlikely to ever get linked to it—unlike the situation if the plot was by Murdoch or his wife. On the other hand, I'm not sure the effect on the stock price was big enough to justify the project.

But it still makes a good story.

At 12:29 PM, July 21, 2011, Anonymous jrkrideau said...

"1. Murdoch claims that, prior to the recent explosion, he was unaware of the hacking at News of the World—despite the fact that two people had been arrested and, I gather, convicted in the case. How believable is the claim?"

Totally unbelieveable. We're talking hacking the phones of members of the Royal Family.

I've worked for some sizeable orgs and, if nothing else, there would be a daily briefing book covering activities that may affect the company's image, and for a private org, the share price.

It is a bit hard to believe that he was not briefed on something like hacking the Royals and a couple of arrests.

If nothing else, it would have been a bit embarrasing to have someone walk up to him at a party and say, "Rupert, old boy, I hear you've got a couple of NoW boys in the clink. What happened?"

Payouts are a bit more dubious in the hacking cases but we don't know just how large they were, overall, but probably pretty small on a NI basis.

At 11:53 PM, July 22, 2011, Anonymous SheetWise said...

Money changes hands in many ways, and I assume that's the origin of "consulting fees" which can be charged to operations, advertising, or content. "Digital services" and "programming" are other bit-buckets that can be used to charge just about anything, anywhere. There are many euphemisms used, although practitioners try to avoid terms that are publicly transparent, such as "escort services". When payoffs are hush-hush, it's more likely that one of the players children is going to receive a scholarship, or a family member will "discover" a commissioned position with pre-existing clients. Does any of this surprise you?

At 6:03 PM, July 23, 2011, Anonymous Andrew said...

Given that NWS is down 10% since the scandal broke, it would be rather negligent for Murdoch to NOT know about what was going on.


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