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James Murdoch ‘inextricably linked’ to phone hacking failures

James Murdoch’s name is “inextricably linked” to News International’s failure to deal properly with phone hacking, according to a shareholder group cited in today’s Daily Telegraph.

The group, PIRC, also believes the latest arrests of Sun journalists threaten News Corp’s shareholder value and expose flaws in its “organisational culture”.

The comments emerged in a note to PIRC’s members yesterday which stated that News Corp’s behaviour had exacerbated a bad situation.

“Its approach seems informed by a kind of ‘never retreat, never apologise’ mindset, as seen in its aggressive (and mendacious) attacks on politicians and rival papers when the allegations of widespread phone hacking first emerged in 2009,” it said.

PIRC has long been petitioning for James Murdoch to step down from the boards of News Corp, where he is chief operating officer, and BSkyB, where he is chairman.

The note said: “For investors it is at board level that reform may still be required. James Murdoch’s name… is inextricably linked to the company’s failure to deal with the hacking issue much earlier, with questions still outstanding over what he knew and when.”

Highlighting the fact that the weekend arrests of five Sun journalists had caused “divisions” within News International, PIRC said:

“The company has already issued a public defence of the paper and a commitment to its future but this is unlikely to steady nerves. No-one expects that these arrests will be the last.”

PIRC also referred to the high cost to News Corp of the legal bills. I reported on these yesterday in a posting headlined News Corp’s 0m phone hacking bill.

But this is not the full amount caused by hacking, of course. Costs related to the closure of the News of the World, such as severance payments and, most significantly, losses in ad and sales revenue, were in excess of a further 0m.

One other associated on-cost for News Corp has been its bn buy-back scheme (see here and here and here).

At the last count, on 9 February, News Corp had acquired just over 6% of its free float since July last year, and has reiterated its intention to complete the bn buy-back by June 30.

Sources: PIRC/Daily Telegraph/Reuters © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds