A massive scandal is brewing around News of the World, a series of British
tabloid newspapers owned by News Corp. (NWS), much to the dismay of
the company's divisive majority owner and chief executive, Rupert Murdoch.
It has been alleged that Mr. Murdoch's news
organization, which also owns Fox News in the United States, may
have hired hackers to steal voicemails and text messages from victims of
murders and terrorist plots.
I. Investigators in Murder of Schoolgirl Thrown
by News Corp.'s Actions
The scandal has been growing since a few months back
when News of the World was accused of
hacking into celebrities and politicians' voice mailboxes to try to grab juicy
scoops. But over the last month things took a more serious turn as it was
revealed that terrorist victims were also targeted.
Hacking into the voicemail accounts of relatives
of victims of the bombings on three London subway trains and a double-decker
bus on July 7, 2005 is currently the subject of an ongoing police inquiry.
But the most scandalous intrusion may have been
the group's use of a cell phone belonging to Milly Dowler, a missing Surrey schoolgirl.
Led by News of the World employee Glenn Mulcaire, the organization hacked
into her phone. They then intercepted messages from distraught family
members and deleted them, to make room for new messages, hoping the new
messages would reveal details indicating that the girl was alive. The
activity confused investigators and gave family members false hope.
Mr. Mulcaire, who previously served prison time
for hacking the phones of members of England's Royal Family said
"relentless pressure" from News of the World's supervisors was
responsibility for the acts, commenting "there was a constant demand for
He offered an apology to family members of the
girl and "to anybody who was hurt or upset", but accused the media of
"vilification" that has led to harassment of his wife and children.
II. News Corp. Stands Behind Embattled Branch
and Its Chief
Rupert Murdoch has stood behind News of the World
chief Rebekah Brooks, commenting,
"Recent allegations of phone hacking and making payments to police with
respect to the News of the World are
deplorable and unacceptable."
"I have made clear that our company must
fully and proactively cooperate with the police in all investigations and that
is exactly what News International has been doing and will continue to do under
Rebekah Brooks’ leadership. We are committed to addressing these issues fully
and have taken a number of important steps to prevent them from happening
Ms. Brooks denies having knowledge that the hacking
was occurring. She writes in a
staff memo, "[We will] pursue the facts with vigor and integrity.
I am aware of the speculation about my position. Therefore it is important you
all know that as chief executive, I am determined to lead the company to ensure
we do the right thing and resolve these serious issues."
Tim Luckhurst, a journalism professor at the University
of Kent, told The New York Times that
News Corp. is unlikely to be able to sweep this one under the rug. He states,
"The Milly Dowler story has taken this from an issue for people who are
concerned about media ethics to one that is of broader concern to the general
public. News Corporation thought they could put a lid on this, and this has
blown the lid right off."
III. Britain's PM Attacked for Ties to News
Britain's Prime Minister and conservative party
leader David Cameron has been attacked for his support of News Corp. and News of the World.
Mr. Cameron enjoys close ties to both
organizations. He was a guest at Ms. Brooks’ marriage to her second
husband, Charlie Brooks, in 2009. And he's frequently attended social
functions with Mr. Murdoch.
Andy Coulson, a former News International (News of
the World) editor, was appointed by Mr. Cameron as director of communications.
He was forced to resign in January after the phone scandal broke, despite
denying having any knowledge of it during his time with News of the World.
BBC News, however, reports that documents
obtained indicate that Mr. Coulson authorized payments to the police in
exchange for information. The news network adds that News Corp.'s British
properties -- the Sun, The Times of London, and the News
of the World -- all threw their weight behind Mr. Cameron and the
conservative party, helping push for his election.
Coincidentally, Mr. Cameron initially resisted a
British federal probe into News Corp., even as the police investigation
struggled. Mr. Cameron tried to defend himself, stating, "We do need
to have an inquiry, possibly inquiries, into what has happened. We are no
longer talking here about politicians and celebrities, we are talking about
murder victims, potentially terrorist victims, having their phones hacked into.
It is absolutely disgusting, what has taken place, and I think everyone in this
House and indeed this country will be revolted by what they have heard and what
they have seen on their television screens."
He says that the delay in calling for an inquiry
was precautionary. He claims, "It seems to me there are two vital
issues we need to look into. The first is the original police inquiry and why
that didn’t get to the bottom of what has happened. "
"The second is about the behavior of
individual people and individual media organizations and a wider look into
media practices and ethics in this country. Clearly, we cannot start all that
sort of inquiry immediately because you must not jeopardize the police
investigation. But it may be possible to start some of that work earlier."
Mr. Cameron's newfound desire to investigate News
Corp. was not enough to placate his political rivals, though. Labour
Party parliamentarian David Milibrand comments that it was "catastrophic
error of judgment by [Mr. Cameron] bringing Andy Coulson into the heart of his
Downing Street machine."
He says that the British PM "has not shown
the leadership necessary" to handle the affair. He urges Ms. Brooks
to "consider her position" (resign).
IV. Financial Fallout for News Corp.
Even as the legal, political, and journalistic
fallout of the scandal continues to be weighed, it appears that the scandal
will also have a major impact on News Corp.'s bottom line.
Ford Motor Company (F) and other prominent
advertisers have pulled the plug on print and video spots with News Corp.'s
British properties. That backlash could hurt the bottom line of a
traditionally lucrative News Corp. property.
Further, the scandal has led Parliament to question
the authorization of a News Corp. takeover of British Sky Broadcasting, a pay TV
company in which it is already the largest shareholder. Mr. Cameron
continues to support the deal and insists that News Corp. has done nothing