July 13 (Bloomberg) -- News Corp.'s Rupert Murdoch, who's
been asked to testify in front of U.K. lawmakers, is facing at
least six investigations stemming from a phone-hacking scandal
and his bid to buy all of British Sky Broadcasting Group Plc.
Murdoch may be in the spotlight on July 19 as he's called
to answer questions from the Parliament's committee on Culture,
Media and Sport about prior evidence that News Corp.'s British
newspaper unit, News International, had paid police to get
stories. The News Corp. Chief Executive Officer's son, James,
and the unit's CEO Rebekah Brooks were also summoned to testify.
News International said they will cooperate.
John Whittingdale, the committee's chairman, told Sky News
yesterday News International needs to answer questions about who
knew of the crimes and when.
'The police inquiry is the most important thing and will
lead to criminal charges against some people,' Whittingdale
said. 'Part of the problem with this saga is that everyday has
brought a new revelation. I've given up being surprised.'
Rupert Murdoch arrived in London on July 10 to deal with a
flurry of allegations that reporters at the now-defunct News of
the World tabloid hacked into hundreds of mobile-phone voice
mails, including those of murder and terror victims, and bribed
police for confidential information. The scandal prompted
Murdoch to close the 168-year old tabloid.
'They have misled parliament egregiously over time, they
have misled the country, they've misled their readers and it's
incumbent,' on parliament to get the facts, Tom Watson, a
member of the committee, told BBC Radio 4 yesterday. 'We will
be sitting next Tuesday and we expect them to be there.'
Police, Cameron
London's Metropolitan Police are investigating, and Prime
Minister David Cameron called for two other inquiries into why
an initial police phone-hacking probe failed, how widespread the
hacking was, and whether it also occurred at other newspapers.
The current police probe was opened in January after new
information surfaced as the result of civil lawsuits filed by
celebrities including actress Sienna Miller against the tabloid.
Police opened a second investigation last week into police
bribes. Meanwhile, communications regulator Ofcom and the U.K.
Competition Commission are reviewing the proposed BSkyB deal.
Two watchdog groups, Media Matters for America and Citizens
for Responsibility and Ethics have called for U.S. lawmakers to
investigate if journalists working for News Corp. hacked the
voice mails of Americans.
Consequences 'Severe'
Senator Jay Rockefeller, a Democrat from West Virginia,
called for U.S. agencies to investigate whether alleged phone
hacking at News Corp.'s U.K. newspapers targeted American
victims of the Sept. 11, 2001, terrorist attacks.
'I am concerned that the admitted phone hacking in London
by the News Corp. may have extended to 9/11 victims or other
Americans,' Rockefeller, said yesterday in a statement posted
on the website of the Senate Commerce, Science and
Transportation Committee, which he chairs. 'If they did, the
consequences will be severe.'
'One of the real challenges for the company will be
dealing with all of these inquiries running in parallel with
overlapping goals,' Nick Benwell, the head of the crime, fraud
and investigations group at Simmons & Simmons in London, said in
an interview yesterday. 'They'll be very keen to limit the
damage and keep it to a News of the World issue.'
Klein's Role
News International is assisting the Metropolitan Police in
their investigation, Brooks said in a July 8 memo to staff. Joel
Klein, who heads News Corp.'s education unit, is leading and
directing the company's overall handling of the matter, Brooks
said. Klein, the former chancellor of New York City schools, was
also the head of the U.S. Justice Department's antitrust
division.
Brooks said in the memo that News Corp. isn't conducting its
own investigation.
Miranda Higham, a spokeswoman for New York-based News
Corp., declined to comment on the scope and expense of the
probes or any distraction they may cause management. Murdoch,
his son and Brooks aren't required to appear at the
parliamentary hearing.
'Growing Scrutiny'
'They are damned if they do and damned if they don't,'
said Niri Shan, the head of media law at Taylor Wessing LLP.
'If they don't appear it looks like they have got something to
hide. If they do, whatever they say is going to lead to growing
scrutiny of the issue.'
Murdoch avoided an in-depth probe into the tactics of
reporters at the paper for years after its former royal
reporter, Clive Goodman, and private investigator Glenn Mulcaire
were jailed in 2007 for tapping phones of members of the royal
family. The police closed an investigation in December, citing a
lack of evidence.
Former prime minister Gordon Brown yesterday accused
Murdoch's newspapers of using criminals to get stories about him
while he was in office and said he was reduced to tears when the
Sun tabloid phoned him to say its reporters obtained his son's
medical records showing he was diagnosed with cystic fibrosis.
News Corp. said it didn't access the medical records of
Brown's son nor did it commission anyone to do so. The story
came from a member of the public whose family also experienced
cystic fibrosis, the company said in an e-mailed statement.
BSkyB Bid
The phone hacking revelations have overwhelmed the
company's BSkyB bid. News Corp. on July 11 rescinded its offer
to spin off Sky News as part of the BSkyB buyout, pushing U.K.
Culture Secretary Jeremy Hunt to refer the bid to the
Competition Commission for a review.
BSkyB shares declined 3.3 percent to 692 pence in London
trading yesterday, less than the 700 pence a share offered by
News Corp. for the 61 percent it doesn't already own.
Hunt said the latest review, which follows investigations
by Ofcom and the Office of Fair Trading, will focus on media
plurality, whether the deal would reduce the number of voices.
Ofcom, which has the power to revoke BSkyB's license, can still
hold up the deal as it considers whether News Corp. should own
BSkyB and said it's monitoring the police probe.
The regulator is likely to wait until the investigation
concludes before deciding whether News Corp. is 'fit and
proper' to own a U.K. broadcaster, said Chris Watson, a
telecommunications lawyer at CMS Cameron McKenna in London.
'In merger control issues, they ought to be quite
reluctant for approving the deal,' Watson said. The finality of
a decision 'requires you to be very hesitant.'
BSkyB Vote
Cameron joined other politicians pushing for News Corp. to
drop the BSkyB bid as the scandal widened and said he would
support the opposition Labour Party in a non-binding vote on the
issue today. On July 8, he called for a judge-led inquiry and a
second review that can begin this summer to 'look at how our
newspapers are regulated and make recommendations for the
future.'
Chris Goodall, a media analyst at London-based Enders
Analysis, said the volume of activity will be difficult for News
Corp. to manage.
'The people who would usually be running the business end
up spending a large fraction of their time working on the
regulatory and political stuff,' Goodall said. 'It's
continuous requests for data.'
To contact the editor responsible for this story:
Anthony Aarons at aaarons@bloomberg.net .