Last week, Rupert Murdoch resigned from the board of News International, the holding company of News Corp’s UK newspapers, as well as other subsidiary boards connected with News Corp in the UK and the U.S. News Corp explained the move as corporate housecleaning ahead of a restructure that will split the conglomerate into two distinct publishing and entertainment companies. Some watchers have been skeptical, suggesting this is a further step in putting distance between Murdoch and the UK print assets that have been embroiled in a phone-hacking and bribery scandal for more than a year. The taint was emphasized today when eight former employees of the now-shuttered News Of The World, including erstwhile News International chief exec Rebekah Brooks, were informed they would face criminal charges in relation to phone hacking. Other watchers see this as potentially setting the stage for a sale by News Corp of the UK papers which now include The Sunday Times and tabloid The Sun. If Murdoch no longer sits on the News International board, in other words, it makes it more plausible for a sale of that company to go through down the line. Still another view is that distancing himself from his beloved British press holdings is a means to clear the way for the acquisition of the long-coveted 61% stake in British satcaster BSkyB that News Corp does not already own.
Enders’ senior analyst Douglas McCabe tells me he’s “sort of sitting on the fence” as to the reasons behind Murdoch stepping down from the boards. “In the end, it is about a sensible restructuring and governance and it is necessary to go through these steps.” But, he adds, “I do also think it’s about reputation and Rupert drawing a line under the whole complex business in the UK.” Ken Doctor, media analyst for Outsell and Newsonomics, calls the move off the boards “both symbolic and real” but says, “At the same time, clearly the whole purpose of the split (of News Corp) is to remove the tainted assets from the entertainment corporation, and any way you can remove the Murdoch name from it doesn’t hurt it with the endgame being BSkyB in 2014.”
News Corp abandoned its $12B bid for the remaining 61% of BSkyB last year amid the first tidal wave of the phone-hacking scandal. Although Murdoch has recently said he’s more interested in spending his money in the U.S., conventional wisdom says he is unlikely to give up on BSkyB. Removing himself from the boards of the scandal-plagued UK print business paves the way for reps of the News Corp entertainment company, which would be the one to acquire the BSkyB stake, to say, “Yes, it’s true there were some issues, but we found those people responsible and worked with the law. The guilty have been punished and the separation is complete, so we’re a good citizen,” Doctor opines. He calls Murdoch “a long player” and suggests that his recent steps are “a small opening move on the chess board.”
It’s not as if there isn’t precedent within the Murdoch family and its businesses. Back in February, James Murdoch resigned as executive chairman of News International, it was said, to focus on pay-TV operations in New York. But when he later exited BSkyB’s chairman post he said, “I am aware that my role as Chairman could become a lightning rod for BSkyB and I believe that my resignation will help to ensure that there is no false conflation with events at a separate organization.” BSkyB is still under scrutiny from UK regulatory body Ofcom over whether News Corp is fit to hold a broadcast license — an investigation that also stems from the phone-hacking issues in the print division. The younger Murdoch remains a non-executive director at BSkyB, but in March, he severed ties with News Corp’s UK print operations.
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