Phone hacking scandal a major headache for Murdoch

Rupert Murdoch has always shown a remarkable ability to shrug off public relations problems with seemingly genuine indifference. This impressive skill is being tested as the mounting furor over illegal mobile phone hacking by Murdoch-employed journalists is turning into one of the biggest PR catastrophes he's ever faced.

The details of the scandal, first reported by the Guardian, are truly astonishing. England's hyper-aggressive dailies are never more bloodthirsty than when they smell a chance to embarrass one another, and rival journalists have been quick to splash the sordid details in their papers. According to reports, private investigators employed by the Sun and the News of the World used deceptive techniques, including one known as "blagging," to gain access to thousands of mobile phones owned by actors, athletes, politicians and other celebrities. The investigators were able to obtain addresses, criminal records, call logs, tax records, bank statements and other data that should have been protected by Britain's privacy laws. Some 31 journalists who have worked for the two papers are individually implicated.

In an attempt to keep all this from going public, Murdoch's company, News Corp., allegedly paid over $1.5 million in settlements with three victims on the condition that they keep silent. Thanks to the Guardian, however, that attempt has failed, and British law-enforcement authorities have opened an investigation into the hacking charges.

Murdoch claims he doesn't know anything about the settlements; perhaps a $1.5 million payment isn't the sort of thing that would get the chairman's attention at a $21 billion conglomerate. But that $1.5 million could multiply many times over by the time this is all finished. For reasons that are unclear, the Metropolitan Police initially declined to notify those whose phones were compromised. Now that the evidence is surfacing, it "may open the door to hundreds more legal actions by victims of News Corp.," reports the Guardian.

Regardless, the scandal could truncate the career of one rising News Corp. star. The editor of the Sun at the time of the alleged hacking was Rebekah Wade, who was recently promoted to CEO of News International, News Corp.'s U.K. newspaper arm. Wade's former deputy at the Sun, Andy Coulson, was forced to resign his job as editor of News of the World after one of his reporters was jailed for a similar phone-hacking incident. Will Wade step down if it emerges that she knew, or should have known, that journalists under her command broke the law? Or will Murdoch display his characteristic disregard for public opinion and keep her on?

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum