News Corp’s ethics cancer grows

By Felix Salmon
October 13, 2011
latest shenanigans at News Corp are particularly shocking because they took place at the Wall Street Journal -- the flagship publication which was meant to be insulated, at least in part, from Murdoch sleaziness.

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The latest shenanigans at News Corp are particularly shocking because they took place at the Wall Street Journal — the flagship publication which was meant to be insulated, at least in part, from Murdoch sleaziness. But this is really bad: the WSJ Europe was telling its advertisers that it had a circulation of 75,000 — but in fact fully 31,000 of those copies were bought for as little as 1 cent apiece by companies which never saw them, and pawned them off onto random students.

And when one of those companies decided that even 1 cent per copy was too much to pay, the WSJ decided to simply buy up the papers itself, with its own money.

Oh, and the WSJ also demolished the wall between editorial and advertising, promising — and delivering — editorial coverage to the companies it was doing business with.

There was a whistleblower, too, who wound up with the sack:

European human resources executive Carol Bosack emailed the whistleblower: “You are expected to keep details and your reaction or beliefs about the recent events confidential and not shared with anyone external or internal to the business. This matter is to be kept between us, Andrew [Langhoff], Internal Audit and Corporate Legal.” No action was apparently taken at that time on the whistleblower’s allegations. The whistleblower, who had worked for Dow Jones for 9 years, was made redundant in January.

Only after the Guardian started asking questions was Langhoff finally forced to resign.

Jack Shafer makes some very good points about all this — among them, that the suspect news stories were in “special sections” which nobody reads, and that the real scandal about the WSJE’s circulation was that even padded it only managed to reach 75,000. Rupert Murdoch is probably dying to kill off this paper as he did the News of the World; it surely loses him a fortune.

But the thing which jumps out at me is that News Corp is still keeping true to its strategy of covering up anything embarrassing until Nick Davies uncovers it, at which point an executive or two is thrown under the bus. As crisis management goes, it’s a disaster — and now it’s claimed the scalp of senior Dow Jones employee number two. (The first, of course, was Les Hinton.)

As a result, the rest of the world is simply going to assume the worst — that anything rumored or imagined is probably true and has just been successfully covered up for the time being. That’s really bad for News Corp. The only silver lining is that for the time being, all of the wrongdoing has been confined to the newspaper businesses. If anything gets uncovered at Fox or Sky or HarperCollins, it’s surely all over for Rupert — the culture of corruption will have been shown to have infected the entire organization. News Corp has kept things quiet until now, in those organizations. But how long can it continue to do so?

11 comments

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Don’t worry…thanks to FoxNews nobody outside the Tea Party trusts anything from a Rupert Murdoch owned media property anyway.

Posted by mfw13 | Report as abusive

If anything gets uncovered at Fox or Sky or Harper Collins, it’s surely all over for Rupert? For instance trying to control elections to assume power in the US government for Oil corporations ambitions or running non-stop President bashing TV shows, trying to end unions, the EPA or maybe his most heinous crime is the climate change denial that airs on Fox News Channels allowing the quality of our air to become more polluted and ultimately reeking havoc on our own generations of children, in short he’s as Evil as they come.

Posted by Kiraly | Report as abusive

I ceased to be shocked at what the Murdochs were capable of years ago: I now expect every mendacity and manipulation from the group. But the shareholders love him! Which is kind of an example of where our society needs some adjustment…

Posted by FifthDecade | Report as abusive

Magazines and newspapers using bulk discount sales for free/cheap giveaway to boost circulation is an old trick. There should be some finger-wagging here at the Audit Bureau of Circulation, which has changed its reporting procedures to make it easier for periodicals to lump these sorts of sales in with regular paid sales.

Posted by Moopheus | Report as abusive

It’s not just inflating circulation numbers by selling in discount, it’s that eventually they ended up buying the papers themselves when one of their co-conspirators wanted to bail out, then using dirty accounting to hide that fact they were buying their own papers.

I heard a rumor that MySpace is (was) dirty too. Not sure of the exact details, but something involving using the unit to basically loot cash from News Corp by having it acquire or purchase assets from front businesses controlled by the Murdoch family.

Posted by mrmcd | Report as abusive

A couple years ago, the NY Daily News had a series about supposedly sold NY Post copies that never really got distributed.
I also recall lots of NY Posts being given away on the street back then.
Don’t know if that’s connected.

Posted by RZ0 | Report as abusive

Some tut-tutting from someone working for a company that is paid by Kim Jeong Il to regurgitate propaganda for his genocidal, WMD proliferating, terror-sponsoring, drug trafficking regime. People in glass houses, huh…. Don’t you have some Hizbollah pictures to doctor or is that another division of your company?

Posted by Danny_Black | Report as abusive

Felix-in regards to your last paragraph, you and readers should focus on what will be coming out at anytime in new media, and in due time from the government regulators investigating the Murdoch empire’s rogue News America division. NY Times, Bloomberg and recently NY Mag have all profiled color here for those not familiar with the relativley obscure segment of News Corp–it is bundled within the Newspaper Group operating earnings segment for abbut the past 18 months now.

The News Corp contagion will engulf this property and those in the know within this industry predict this will be the final takedown act for Murdoch and News Corp in the form we know it to exist today. There will be some big buzz at the Oct 21 News Corp shareholder meeting, for sure.

Posted by mediahounddog | Report as abusive

It is NOT true that “all the wrongdoing has been confined to the newspaper business.” News Corp had to pay a $500 million legal settlement to Valassis Corporation recently for anticompetitive behavior in its Free Standing Insert business. Nobody pays any attention to this business, but it is a big money maker for News Corp.

The “culture of corruption” appears to have infected many parts of News Corp for many years…

Posted by PatrickWolff | Report as abusive

I see the recent poster PatrickWolff just posted color on this News Corp division’s early 2010 payout of $500 million settlement. That number is not only true but understated as the settlement also required News Corp to enter into a 10 year business deal of an undislcosed value but presumed to be hundreds of millions of dollars more over the 10 year period to Valassis.

Ditto on a settlement earlier this year of another $125 million cash portion to a company Insignia, with another 10 year business deal with no disclosed value, but presumed to be in the hundreds of millions of dollars of additional value to this company.

So you can see the News Corp risk that Felix Salmon points out in his story of what may come out with payment of this magnitude to stop courtroom trials at the time, here is the link to the recent Bloomberg story from a few weeks ago for the deep dive into color, or you can query the head that starts with the words News Corp Marketer Used Mafia Lessons….

(for those in the biz, notice how Bloomberg had to walk back the original head and soften–see the difference in the URL head vs the revised head in the story)

http://www.bloomberg.com/news/2011-09-27  /news-corp-marketer-used-mafia-lessons- to-instill-fear-respect.html

Posted by mediahounddog | Report as abusive

I think it’s fairly obvious to those who want to see it that Murdoch’s news empire is corrupt, and those who don’t want to see it will manage, once again, not to.

Posted by JayCM | Report as abusive