Hapless former WSJ owners could yet sting Murdoch
By Rob Cox and Reynolds Holding
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
LONDON/NEW YORK — Add to Rupert Murdoch’s list of potential headaches a blast from the past: the Bancroft family. The media mogul’s UK newspaper scandal has upset some members of the family who haplessly gave in to News Corp’s $5 billion offer to buy Dow Jones in 2007. It’s hard to feel much sympathy. But the pact they forged to ensure the Wall Street Journal’s integrity gave a special committee powers that could embarrass Murdoch further.
True, News Corp potentially faces bigger legal problems in the United States. U.S. lawmakers called on Wednesday for bribery investigations, and a finding that the News of the World illegally paid Scotland Yard for information could mean fines under the U.S. Foreign Corrupt Practices Act. Under some circumstances, these can get huge: TKSJ, a multinational energy venture in Nigeria, settled for more than $1.2 billion last year.
If recent allegations of voicemail break-ins are proven, U.S. anti-hacking laws could also spell trouble. The laws can cover servers in foreign countries, so a defense that the break-ins occurred only in the UK wouldn’t necessarily work. And worst-case penalties stretch to 20 years in prison. The Federal Bureau of Investigation is looking into the phone-hacking allegations, too.
The Dow Jones special committee, chaired by Thomas Bray, doesn’t have that kind of clout, but could still matter. To date, the committee has been toothless. It expressed mere dismay when Marcus Brauchli was ushered out as Wall Street Journal managing editor shortly after News Corp’s takeover — although Brauchli resigned voluntarily, so the editorial agreement wasn’t explicitly breached.
This time could be different. To the Bancrofts’ credit, the agreement requires News Corp to preserve the integrity not just of Dow Jones, but of all the company’s “publications and newsgathering services.” Arguably, those principles have been violated at UK outlets.
And if the committee of five U.S. media grandees chooses, it can hire investigators, lawyers and accountants to conduct their own probe, with full access to News Corp’s books, records and people.
What’s not clear from the agreement are the remedies the committee could potentially extract. But it could enlist big-name outside help and make its findings public. That might inflict damage on News Corp’s reputation that shows up as big dollars as well as red faces.