James Murdoch isn’t going to succeed his father Rupert as CEO of News Corp — if you don’t believe that yet, then wait for November 10 when he’s due to testify again before the parliamentary committee investigating the News Of The World phone-hacking scandal. Media execs and close News Corp watchers tell me that James would have to perform a PR miracle to enhance his already tarnished reputation: He’s on the defensive after former NOTW legal affairs manager Tom Crone and editor Colin Myler testified in September that he knew more about the lawbreaking earlier than he has let on — raising the possibility that he was engaged in a cover-up. James’ testimony comes after institutional shareholders just made it clear that they don’t want him: Guardian columnist Dan Sabbagh called the News Corp Deputy COO “dead man walking” last week after 75% of voting shareholders aside from the Murdoch family, other directors, and Rupert’s ally Prince Alwaleed Bin Talal opposed James’ election to the board. Analysts and reporters will have a chance to raise more questions about the company’s governance Wednesday after News Corp reports its earnings for the quarter that ended in September.
A lot of people say James is in a similar predicament to the one that former Disney CEO Michael Eisner was in before he was forced out in 2005. Eisner initially fended off efforts by former board members Roy Disney and Stanley Gold to oust him from power. But their steady criticisms soured institutional investors to the point where Eisner’s presence hurt Disney’s stock and made it impossible to hang on.
The attacks against James will flow from the many investigations into the NOTW scandal. The company seems to think it can slide though the mess by sticking to an implausible story: James and other executives really believed until recently that former NOTW royals reporter Clive Goodman was the only staffer involved in hacking. That’s a big issue for James as lawmakers explore whether he was paying hush money in 2008 when a hacking victim who knew at least one other reporter had been involved received a grandiose out-of-court settlement on the condition that he keep quiet. But if James continues to insist that he didn’t know what was going on, he may face as many scoffs as News International chief Les Hinton did last week. He told Parliament that he thought he was telling the truth in September 2009 when he testified that he had seen had seen nothing that caused “suspicion” that any reporter besides Goodman was involved. By that time, Hinton had seen an email that indicated another reporter was receiving information from hacked calls, well as a 2007 letter from Goodman saying that phone hacking was widely discussed at news meetings. “I don’t think I’d regard Mr Goodman’s letter as evidence of anything,” Hinton said. MP Paul Farrelly joked that “a lot of people seemed to have kept you in the dark.”
Rupert continues to back James, but that could change. Their relationship “has frayed over the last few years, leaving both men at times not even on speaking terms,” The New York Times reported two weeks ago. If Rupert decides to stick by his son after next week, then it’s just a matter of time before the News Corp CEO runs into a situation where it will be expedient to appease investors by assuring them that James won’t inherit the company. News Corp shares could fall if the economy sours or its entertainment operations have some bad luck — and especially if it faces criminal charges for lawbreaking at the UK newspapers that took place while James was in charge.
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