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INS519
Rupert Murdoch and News
Corp:
The Phone Hacking Scandal
04/2014-5947
This case was written by Robert J. Crawford under the
supervision of N. Craig Smith, INSEAD Chaired Professor of
Ethics and Social Responsibility. It is intended to be used as a
basis for class discussion rather than to illustrate either
effective or ineffective handling of an administrative situation.
Additional material about INSEAD case studies (e.g., videos,
spreadsheets, links) can be accessed at
cases.insead.edu.

Copyright © 2014 INSEAD
COPIES MAY NOT BE MADE WITHOUT PERMISSION. NO
PART OF THIS PUBLICATION MAY BE COPIED, STORED,
TRANSMITTED, REPRODUCED OR DISTRIBUTED
IN ANY FORM OR MEDIUM WHATSOEVER WITHOUT THE
PERMISSION OF THE COPYRIGHT OWNER.
For the exclusive use of C. Luong, 2016.
This document is authorized for use only by Catherine Hang
Luong in Business & Professional Ethics-1-1 taught by Devine,
California State University - East Bay from March 2016 to
September 2016.
Copyright © INSEAD 1
Every second working for Murdoch is a second spent thinking
about what
Murdoch wants. He inhabits you.
Michael Wolff1
On July 19, 2011, Rupert Murdoch and his son James came to
testify before a committee of
the British Parliament. It promised to be a contentious hearing.
They were there to explain
how their tabloid newspaper, News of the World, had engaged
in phone hacking over a
number of years. Beyond celebrities and the royal family, the
Guardian newspaper had
discovered that Murdoch’s reporters had intercepted the

voicemail messages of a kidnap-
murder victim, Milly Dowler, and had even deleted recordings
from her cell phone. The
deletions, it was alleged, gave Dowler’s family “false hope”
that she might still be alive.
Perhaps even worse, allegations of police bribery, in the form of
regular payoffs in exchange
for information, were emerging, along with suspicions about
“political deals” with Britain’s
top politicians.2
Having shut down News of the World a few days before, the
Murdochs appeared contrite. “I
would just like to say one sentence,” Rupert Murdoch said.
“This is the most humble day of
my life.”3
The allegations about Murdoch’s tabloids were not new. In
2006, it had become clear that
News of the World stories on the royal family could only have
been obtained from access to
personal phone messages. In one case, a royal aide’s voicemail
had been hacked 433 times.
Detectives from Scotland Yard had traced the responsibility to
reporter Clive Goodman and a
private investigator, Glenn Mulcaire. Editors had expressed
“shock”, and after an internal
investigation had denounced Goodman as a “rogue reporter”,
whose use of Mulcaire was
irregular. As a result, both were sent to prison and the matter
was dropped – in spite of the
fact that Goodman wrote to News International, the UK
publishing arm of Murdoch’s global
news empire, indicating that hacking was routine and
widespread.4

At the hearing, Murdoch went on to deny personal responsibility
for the hacking practice. “I
feel that people I trusted…let me down and I think they behaved
disgracefully,” he said. “And
it's time for them to pay.” He concluded: “Frankly, I'm the best
person to clean this up.” For
his part, James Murdoch also claimed to have known nothing
about the hacking.5
Soon after the hearing, Rupert Murdoch created an internal
investigation group, the
Management and Standards Committee (MSC), that he pledged
would cooperate fully with
the police with complete transparency. The MSC would be
mandated to sift through 300
1 Michael Wolff, The Man Who Owns the News, The Bodley
Head, 2008, p. 251.
2 Pierre Thomas, http://abcnews.go.com/Politics/murdoch-
scandal-feds-investigate-extent-hacking-
bribes/story?id=14109832#.T9W5jHy8ta8.
3 Mohammed Abbas and Kate Holton,
http://news.nationalpost.com/2011/07/19/this-is-the-most-
humble-
day-of-my-life-murdoch-tells-u-k-parliament.
4 David Allen Green, “The Story of Mr Goodman and Justice
Gross”, New Statesman, 5 Sept, 2011.
5 As cited in http://www.npr.org/blogs/thetwo-
way/2011/07/19/138503742/live-murdoch-others-testify-on-u-
k-tabloid-scandal.

September 2016.
million items of evidence – emails, phone records, receipts, and
the like – a process that
promised to take years to complete.6
Background
Rupert Murdoch inherited control of his father’s media holdings
– all in his native Australia –
in 1952, at the age of 21. He had just graduated from Oxford
University, where he was known
as something of an anti-establishment rebel, even a Marxist. At
that time, the newspaper
business resembled “feudal fiefdoms”, largely family-owned
interests that were passed down
from father to son, complete with devoted “servants” who acted
like courtiers in a princely
court.
Murdoch moved to consolidate his holdings into a family trust
corporation, News Limited.
After a string of acquisitions, he distinguished himself as a
shrewd and aggressive operator,
willing to crush all opposition in a highly profitable winner-
take-all competition. His
management style was immediately apparent: an unshakeable

self-confidence, a sense of
entitlement, and a complete disregard for the opinions of others.
He appeared distant, as if he
operated on a different plane from everyone else, seeking
neither approval nor
acknowledgement.7
When Murdoch entered the industry, it was on the cusp of
fundamental change. First, from
the long-term security of family-owned firms, the industry was
gradually opening itself to
mergers and acquisitions, which accelerated in the 1980s with
financial deregulation and a
sudden influx of capital. Second, in search of “synergies”,
emerging media corporations
increasingly crossed the traditional borders of the industry in an
effort to integrate print, film,
television, radio, and later the internet. This could also entail
vertical integration of
programming, production, broadcast, and distribution channels.
Third, the industry was going
global, vastly expanding the reach of media companies to
audiences all over the world. The
result was an unprecedented concentration of ownership in
global media conglomerates.8
The initial core of Murdoch’s business was tabloids, that is,
smaller format newspapers that
considered themselves as much entertainment as a public news
service. Sensational crime
stories, celebrity gossip and public scandals represented their
traditional fare rather than
policy analyses or investigative reporting. The goal was to sell
copies and advertising in any
way he could. Circulation, Murdoch knew, translated directly
into the ability to borrow more,

enabling him to acquire additional titles. Moving to the right
politically, he openly despised
“the elites”, in particular independent, intellectual journalists
with a sense of mission; in their
place he sought less educated “craftsmen” of stories who would
follow his dictates.
By 1968, after he had built a mid-size tabloid empire, Murdoch
moved to London and turned
his attention to international publishing, acquiring newspapers
outside of Australia as well as
book publishers and magazines. Not only would this
diversification hugely expand his reach,
but it kept his employees off-balance, forcing them to follow his
abrupt changes of direction.
6 Georgina Prodhan and Kate Holton, “Inside Rupert
Murdoch’s UK newspaper clean-up operation,”
Reuters, Feb. 2, 2012.
7 Wolff, op. cit., pp. 69-73, p. 83 and pp. 112-113.
8 David Croteau and William Hoynes, The Business of Media,
Pine Forge Press, 2006, p. 77 and p. 140.
September 2016.

The more fundamental the reinvention, the greater his control. It
was a pattern of
organizational upheaval that he was to repeat every 10 years.9
One of his first tabloid purchases in the UK was News of the
World, from the Carr family who
had owned it for more than 100 years. In spite of his promise to
keep the editor and certain
family members on, Murdoch fired them at the first opportunity.
This generated great
controversy around him, though he seemed unaware of or
uninterested in accusations that he
was an “uppity” colonial who would never belong to the
establishment in London, an
“unnatural character”, and the “antithesis of British manners
and virtue”.
But it was his purchase and turnaround of The Sun in 1969 that
transformed him into a major
media figure in Britain. Ignoring accusations that he was
exploiting lurid content, in particular
about the royals, Murdoch appeared to revel in provocative
gestures. In the early 1970s, he
also began to purchase print media in the USA, including the
San Antonio Express-News, the
New York Post, New York magazine, and eventually
HarperCollins publishing. Typical of his
trial and error methods, he failed in his attempt to create a
national American tabloid (the
National Star) to compete with the National Enquirer. He moved
his family to New York in
1974.10
Murdoch established News Corp in 1979, a global media
holding company for News Limited.

It was publicly listed, though only 30% of its shares enjoyed
voting power. The Murdoch
family owned 12% of the company stock, all of it in the voting
block. In practical terms,
Murdoch and the family trust controlled 39% of the voting
stock, while Saudi Prince
Alwaleed bin Talal owned an additional 7%. This ownership
structure enabled Rupert
Murdoch to serve as New Corp’s chairman and CEO, effectively
dominating the board, which
had a reputation of weakness. He appointed or approved its
members, set the agenda, and
controlled virtually all information going in and coming out.11
The managers of News Corp tended to be promoted from within,
with the promise of
spending their entire careers as Murdoch employees. With a few
notable exceptions, outsiders
were distrusted. Staff worked in a culture of hyper-competition,
and an atmosphere that
expected them to do whatever it took to satisfy the demands of
Murdoch’s editorial teams, no
matter how “degrading” or “improper”.12 According to Wolff,
lateral moves by Murdoch
employees into other media groups was virtually unheard of –
not only was their journalistic
integrity questioned by potential employers, but they were
disdained by the profession as
intellectually second rate. The creation of News Corp marked
the beginning of a new phase of
Murdoch’s diversification strategy: the establishment of a
multi-platform conglomerate that
combined content creation with distribution.13
9 Wolff, op. cit., pp. 293-4 and p. 46.

10 Wolff, op. cit., pp. 131-4 and pp. 147-8.
11 Dominic Rushe, “News Corp: Rupert Murdoch faces
showdown with shareholders,” the guardian, 21 Oct.,
2011. See also Chris McDonald, “Rupert Murdoch and
Corporate Governance,” businessethicsblog.com,
July 14, 2011.
12 Don Van Atta, Jo Becker, and Graham Becker, “Tabloid
Hack Attack on Royal, and Beyond,” New York
Times Magazine, Sept. 1, 2010.
13 Wolff, op. cit., p. 245 and p. 293.
September 2016.
The Times
One part of Murdoch’s 1980s reinvention was his purchase of
The Times and the Sunday
Times.14 As one of the most revered newspapers in history, a
source of “unimpeachable
integrity” and balanced reporting, its proprietor was
traditionally viewed as a world-class
media player. Unfortunately, The Times was haemorrhaging
money without, its owners

feared, the prospect of returning to profitability any time soon.
With low circulation and a
cantankerous printing union that capriciously ordered strikes
and disruption of the workplace,
it seemed doomed to a slow decline. After a long period of
frustration, the proprietor decided
to dispose of the property in a fire sale.
Murdoch was ready. However, the deal appeared to violate the
anti-monopoly provisions of
the Fair Trading Act. From the 1990 merger of Sky (which
Murdoch had bought in 1988)
with British Satellite Broadcasting, News Corp owned a 50%
stake in a television
conglomerate. If News Corp purchased The Times, News Corp’s
ownership stake in television
would be legally limited to 20%.15
To overcome this, Murdoch approached Prime Minister
Margaret Thatcher. In exchange for a
set of guarantees – freedom from editorial control and
instruction by the proprietor, the right
to fix the annual budget, and an independent board of directors
– Thatcher allowed the deal to
proceed, instructing the ministers in charge of the Fair Trading
Act’s enforcement to allow the
sale. Though impossible to prove or disprove, it was alleged
that Murdoch also offered
Thatcher the unconditional political support of his media
outlets.16
According to Harold Evans, the newly appointed editor of The
Times, Murdoch began their
professional relationship with extraordinary attention to detail,
from layout instructions (e.g.,
moving the position of the crossword) to questioning the

validity of an opinion from a Nobel
Prize winner. One of Murdoch’s early accomplishments was to
end the conflict with the
union, in effect transferring responsibility for printing to a
state-of-the-art factory away from
Fleet Street, the traditional home of UK newspapers, to
Wapping in East London. Senior
union workers, who insisted on the continued use of archaic
production methods, were fired.17
While this may have saved the paper, it remained an
unprofitable venture for Murdoch.
Running a deficit in the millions every year, its survival would
depend on subsidies from his
other ventures.18
Though Murdoch’s attention to The Times was sporadic, it was
overwhelming when he
happened to be there. Soon, experienced journalists started to
quit. Robert Fisk, The Times’
correspondent in the Middle East, discovered that his stories –
particularly those critical of the
behaviour of the Israeli Army in the 1982 war in Lebanon – did
not always make it into the
paper. After nearly 20 years of trust in his editors, Fisk decided
to resign and take a position at
The Independent. “I did not believe,” he wrote, “that [Murdoch]
became involved in
individual newspaper stories – though this would happen – but
rather that his ownership
14 While the Times of London and the Sunday Times are
separate entities, for purposes of simplification they
will be referred to here as the Times unless otherwise noted.
News International, established in 1981,
managed the Murdoch’s newspapers in the UK.

15 Harold Evans, Good Times, Bad Times, Bedford Square
Books, 1983, pp. xxi-xxix.
16 Evans, op. cit., p. 534.
17 Evans, op. cit., p. 367 and p. 383.
18 Wolff, op. cit., p. 176.
September 2016.
spread a culture of obedience and compliance throughout the
paper, a feeling that Murdoch’s
views – what Murdoch wanted – were ‘known’.”19
After a period of jockeying for position, Evans began to feel
under relentless pressure from
Murdoch to conform, to transform The Times into an “organ of
Thatcherism”. Not only was
this a violation of the guarantees of editorial independence, but
the office became a hotbed of
betrayal and intrigue. Spurred by fears of massive layoffs and
personal ambition, certain staff
members, according to Evans, began reporting to Murdoch
behind his back.
Murdoch may also have spread rumours and accusations about
Evans. For example, though

unable to obtain an annual budget, Evans was continually
criticized as a poor financial
manager. The independent directors also proved unable to
intervene in the day-to-day
harassment. “If I fought and beat Murdoch,” Evans wrote, “I
would have to endure an endless
assault…a thousand humiliations, challenged on every
paperclip. My energies would be
absorbed not in journalism but internal politics…I feared for my
own character and self-
respect. I had seen what happened to others, the courtiers
apprehensive of his arrival, hoping
for a boyish grin, fearing the scowl, demeaning and coarsening
themselves.”
At the end of the first year of his tenure, Evans was forced to
resign. His replacement, Charles
Douglas-Home, proved more amenable to Murdoch, who
constantly demanded proof of
loyalty. He was “Murdochified”.20
From Print to Hollywood and Beyond
The other leg of Murdoch’s reinvention strategy involved the
acquisition and integration of
entertainment media, in particular television. First, in the mid-
1980s, Murdoch bought 20th
Century Fox and then the Metromedia group of regional
television stations, which instantly
catapulted him into the top ranks of commercial broadcasting.
This formed the basis for the
Fox Network, which became the only successful bid to create a
fourth national television
network in the US. To satisfy Federal Communications
Commission (FCC) legal
requirements for ownership of television stations in the US,

Murdoch became a naturalized
American citizen in 1985. Second, Murdoch continued to invest
in broadcast media in
Europe, China, India, Australia, and countless other ventures.
Third, he began to invest
heavily in satellite companies, creating a path-breaking
alternative to cable distribution.
Though many of these ventures failed, this move consolidated
Murdoch’s position as one of
the world’s leading media moguls: he controlled both content
and distribution, both of them
rich sources of turnover. By the late 1990s, Murdoch’s
television satellite systems could reach
more than three quarters of the world’s population.21 (See
Exhibit 1 for a partial listing of
holdings).
As Murdoch turned 60, the question of succession began to
weigh on News Corp. Insisting
that his children be given senior management roles, Murdoch
then acted as “mentor and
strategist” of their careers. Two of them, Elizabeth and Lachlan,
were fast-tracked into top
positions. Though Murdoch insisted that they – as owners – had
the right to wield power
19 As cited in Robert Fisk, The Great War for Civilization,
Harper Perennial, 2006, p. 331.
20 As cited in Evans, op. cit., p. 503.
21 Croteau and Hoynes, op. cit., pp. 139-140.

September 2016.
within the company and merited membership of the board, the
combination of opposition by
Murdoch’s courtiers and his persistent demands tended to
alienate them. Lachlan, for
example, faced constant, belittling treatment from his father.
“In every meeting,” Wolff
wrote, “the father was the impatient, domineering, fussing
presence. He couldn’t stop calling
attention to himself and away from his son.” Not surprisingly,
both Elizabeth and Lachlan
eventually resigned.
It was only later that James, then his youngest son, took over
News International, which was
responsible for News Corp’s newspaper publishing in the UK,
as well as becoming Executive
VP in Europe in charge of BSkyB. Murdoch was impressed by
his aggressive self-confidence,
although many senior managers at News Corp remained
unconvinced of his aptitude for the
jobs.22
By 2010, News Corp had reached a level of dazzling
complexity. For example, to obtain TV
Guide, Murdoch purchased Triangle Publishing for $3 billion;
he also contemplated acquiring
the New York Times and eventually bought the Dow Jones
Company (and the Wall Street

Journal) in 2007. He made a bid for, and failed to obtain,
Warner film studios in Hollywood.
To manage his empire, he became a mercurial traveller, popping
up unexpectedly to check up
on his companies worldwide, and their 50,000 employees.
According to Wolff, while wildly
successful in terms of profit and politico-cultural impact, the
entire operation remained ad
hoc, very “seat of the pants”. His strategy was the product of a
restlessly wandering mind that
was forever looking for visionary opportunities – all of which
should fit integrally into his
network of media holdings. There was no master plan, just the
intuition to act when the time
was right.23
There were, of course, many costly failures. For example, on
the advice of his third wife,
Murdoch had acquired MySpace, the internet networking site,
for $580 million in 2005, only
to have it rendered obsolete by Facebook the next year.
Undaunted, Murdoch admitted that he
had “screwed up MySpace in every possible way” and simply
moved on to the next thing.24
Scandal
In April 2006, the front-page headline of The Sun announced:
“Harry Buried Face in Margo’s
Mega-Boobs. Stripper Jiggled…Prince Giggled.” Follow-up
articles in News of the World
detailed the “distress” of Prince Harry’s girlfriend. The sources
of the articles – under
investigation by Scotland Yard for almost six months – turned
out to be phone messages

hacked by the reporter Clive Goodman and a private
investigator, Glenn Mulcaire. The two of
them, it seemed, had discovered the pin numbers not only of
senior aides to Britain’s royal
family, but of the young princes as well. Scotland Yard also
found evidence that they had
hacked hundreds of other messages from celebrities, athletes
and politicians.
22 Wolff, op. cit., p. 363 for quote; see also pp. 92-113.
23 Wolff, op. cit., p. 293.
24 Emma Barnett,
http://www.telegraph.co.uk/technology/myspace/9012510/Murd
och-we-screwed-up-
MySpace-in-every-way-possible.html
September 2016.
While there was evidence that the practice was widespread and
perhaps even routine at the
tabloid, Scotland Yard concentrated its investigation on
Goodman and Mulcaire. A number of
Murdoch’s tabloid reporters, including Sharon Marshall,
publicly admitted that hacking was

commonplace. It was, Marshall said, “an industry-wide thing”
that she witnessed every day at
News of the World. For his part, its Managing Editor, Bill
Akass, denounced “unsubstantiated
claims” that anyone else there had hacked phones. He went on
to claim that “rigorous
safeguards” were in place to prevent that.25
By January 2007, the top editor of News of the World, Andy
Coulson, had resigned, only to be
hired soon thereafter as director of communications by the
leader of the Conservative Party,
David Cameron. Goodman and Mulcaire were imprisoned for
four and six months
respectively. After that, the matter disappeared for a time.
Stuart Kuttner, the new Managing
Editor of News of the World, insisted that the episode
represented a single mishap, the result
of actions by an overly ambitious “rogue reporter” and flawed
individual, driven by the
“hyper-competitive” atmosphere.
However, scores of hacking victims began to bring lawsuits
against News of the World. In
return for confidentiality, they received generous cash
compensation on condition of silence.
One of them, soccer star Gordon Taylor, accepted a payment of
£700,000 sometime in 2009.
As the costs mounted, News Corp stockowners began to protest,
bringing the issue to the
attention of the British Parliament. Its members, feeling misled
by the claims of Coulson and
others, reopened the investigation into News Corp in 2009.26
Meanwhile, reporters at the Guardian and then the New York
Times began their own in-depth

investigations. On July 5, 2011, the Guardian published a
devastating story about Milly
Dowler, a 13-year old murder victim whose phone had been
hacked after her abduction. In
addition, payoffs of more than £100,000 to police and
politicians were also alleged, eventually
initiating a judicial public inquiry, the Leveson Inquiry, into the
culture, ethics and practices
of the British press. According to one source: “It involves
regular cash payments totalling tens
of thousands of pounds a year to public officials; some of them
were effectively on a retainer
to provide information.”27
The backlash was immediate and brutal, prompting Murdoch to
act. First, he closed down
News of the World. He apologized to Dowler’s family and
offered them a cash settlement. On
July 11, Rupert and James Murdoch were called to testify before
a parliamentary committee,
where they denied knowledge of the extent of the practice and
blamed their subordinates.28
Hours after Prince bin Talal Alsaud told the BBC that he
thought the chairman of News
International, Rebekah Brooks, should step down, she resigned
on 15 July. Over the course of
these events, many News Corp employees and associates were
arrested29 (see Exhibit 2).
25 Van Atta, Becker, and Becker, loc. cit.
26 Geoffrey Wheatcroft, “What Rupert Hath Wrought!” New
York Review of Books, June 21, 2012.
27 Andrew Edgecliff-Johnson, “Investigators suspect ‘serious
criminality’ at News Corp,” Financial Times,

Feb. 15, 2012.
28 Wheatcroft, loc. cit.
29 Ben Dowell, “Rebekah Brooks resigns over phone-hacking
scandal”, The Guardian, 15 July 2011.
September 2016.
The MSC and Aftermath
To “root out the causes of wrongdoing”, Rupert Murdoch
created the Management and
Standards Committee (MSC). It was an internal investigation
unit with a staff of up to 100
personnel, many of them legal experts, computer programmers
and forensic advisors. The
MSC was given 300 million documents to examine, including
emails, expense forms, and
phone records; many of them were ‘recovered’ from deleted or
corrupted files, others were
paper documents. Given the amount of information involved,
members of the MSC carried
out searches on key words, which, critics charged, could easily
lead to mistakes and
omissions. Murdoch directed the MSC to cooperate fully with
criminal and civil
investigations in a transparent manner, and to establish

“stringent standards” of behaviour to
ensure that similar practices would not arise at The Sun and The
Times.
While many critics expressed doubt about the effectiveness of
the MSC, documents that it
turned over to police investigators led to the arrest of five News
International journalists.30 In
March, 2012, Rebecca Brooks and several others were arrested
for covering up the hacking
practice. Observers predicted that they would testify against the
Murdochs in exchange for a
plea bargain.31 When “secret” iPhone accounts of News
International executives were
discovered in June, 2012, the MSC passed on all information to
both the police and the
Leveson Inquiry.32
For their part, Sun journalists saw themselves as victims of the
MSC probe, denouncing it as a
“witch hunt” to undermine their legitimate search for
information sources. Any revelations,
they alleged, would compromise their sources and hence violate
their code of ethics. The
payments, some argued, were for lunches and other normal
activities. This poisoned the
atmosphere at The Sun to such an extent that News International
felt obliged to tighten
security arrangements for the MSC.33
At the same time, the pressure on the Murdochs continued to
grow. In his capacity as
executive chairman of News International, James Murdoch had
testified under oath in July
2011 that he did not know the extent of hacking and payments.
However, in December of that

year, an email message surfaced that flatly contradicted his
testimony in the form of a legal
warning regarding the extent of the hacking, expressed in
explosive language, sent to him by
attorney Tom Crone. In response, James Murdoch maintained
that he had opened the email,
but, because it had arrived on the weekend and he was taking
care of his children, he did not
read it all the way through. He did not, he claimed, recall any of
the specifics.34 However, in
testimony, former News of the World editor Colin Myer and
Crone refuted James Murdoch’s
position. “Myself and Mr Crone,” Myer said, “went to see
James Murdoch and told him
where we were with the situation…James Murdoch was advised
of the situation.”35 James
30 Georgina Prodhan and Kate Holton, “Insight: Inside Rupert
Murdoch’s UK newspaper clean-up operation,”
Reuters, Feb. 2, 2012.
31 Cahil Milmo and Martin Hickman, “Rebekah Brooks and
husband arrested over hacking cover-up”, The
Independent, 14 MARCH 2012.
32 James Cusick, “Police study Murdoch’s ‘secret’ iPhone
account,” Independent, June 18, 2012.
33 Mark Hosenball, “Murdoch internal watchdog seeks
improved security,” Reuters, Mar 15, 2012. See also
Tim Bradshaw, Andrew Edgecliff-Johnson and Jim Packard,
“Sun journalists vent anger at corruption
probe,” Financial Times, Feb 13, 2012.
34 Ben Fenton, “Murdoch saw ‘damning email’ on hacking”,
Financial Times, Dec. 14, 2011.

35 David Leigh, “Murdoch’s big cover-up,” The Sydney
Morning Herald, Dec 16, 2011.
September 2016.
Murdoch’s resignation as chairman of News International on
February 29, 2012, and of
BSkyB on April 3, shifted the principal focus of the inquiries
directly onto his father.36
The most important impact on Murdoch’s business interests was
his £8 billion bid for BSkyB,
through which he had hoped to add a crucial building block in
his strategy to become a major
player in the global media industry – enabling his empire to
compete with media
conglomerates as well as internet giants such as Google and
Apple.37 Taking into account the
outcry over the hacking allegations, Members of Parliament
were apparently preparing a
unanimous motion to call for a withdrawal of the bid.
Politicians were also interested in
tightening media regulations in the UK, in particular to bar
those convicted of certain crimes,
such as illegal hacking.38

After moving to New York without a defined position for some
months, James Murdoch was
reappointed to the BSkyB board on 1 November 2012.39
At the end of November, Lord Justice Brian Leveson delivered a
2,000-page report on the
state of British journalism. After 16 months of inquiry,
including interviews with and
testimony by more than 300 witnesses, the final report examined
the relations of the British
press with the public, the police and politicians. Leveson was
scathing in his criticism. “There
have been far too many times when, chasing the story, parts of
the press have acted as if its
own code, which it wrote, simply did not exist…[the British
press occasionally] wreaked
havoc with the lives of innocent people whose rights and
liberties have been disdained,” he
wrote. He also explicitly referenced News of the World, which
he criticized as deficient
beyond the actions of Mulcaire and Goodman. “Others must
have been involved,” he
concluded.40
Leveson’s final report offered a blueprint to strengthen the self-
regulation of the British press.
Elements of the proposal included:
� Self-regulation with voluntary membership in a new body to
oversee the press.
� An arbitration system in which to resolve libel and
defamation claims available
exclusively to members; non-members would have to resolve
these claims in the
courts, risking delays and higher penalties.

� Statutory recognition of the new body, as supported by
parliamentary legislation.
� An independent board, appointed in a fair and transparent
manner, to be
predominantly composed of members not in the press or
government.
36 Dan Sabbagh, “James Murdoch resigns as News
International chairman”, The Guardian, 29 Feb., 2012. See
also, “James Murdoch resigns as BSkyB chairman”, BBC, Apr.
3, 2012.
37 James Quinn, “What James and Rupert Murdoch really
wanted to do with BSkyB”, Daily Telegraph, Apr.
28, 2012.
38 Patrick Wintour, Dan Sabbagh, and Nicholas Watt, “Rupert
Murdoch gives up BSkyB takeover bid”, The
Guardian, July 14, 2012.
39 Georg Szalai, “James Murdoch Re-Elected to BSkyB
Board,” Hollywood Reporter, Nov. 1, 2012.
40 As cited in Robert Budden, “Regulation or a Threat to Press
Freedom?” The Financial Times, 29 Nov.,
2012. See also, http://en.wikipedia.org/wiki/Leveson_Inquiry.
September 2016.

� Enforcement powers that include the ability to impose fines
of £1 million.41
Rupert Murdoch continued to face legal challenges on several
fronts. First, News Corp
continued to settle suits with hacking victims. Though there
were 800 suspected victims, at
the time of James Murdoch’s resignation News Corp had settled
with only about 40 of them;
the total of those settlements had surpassed $200 million.42
Second, he was the object of a
scathing report from a House of Commons Select Committee.
According to the report,
Murdoch showed “wilful blindness” over the phone hacking,
proving himself “not fit” to run
an international company. Though without legal consequences,
certain observers argued that
the report was a sign that Murdoch’s days as News Corp’s CEO
and Chairman “were
numbered”.43
Third, the extent of the “closeness” or “influence” that Murdoch
exerted on the British
political class was under investigation by the police in
Operation Weeting and Operation
Elveden. For example, ties between Murdoch and Prime
Minister David Cameron received
intense scrutiny. Among other things, Cameron was revealed to
be “personal friends” with
Rebecca Brooks. The second arrest of Brooks in March 2012,

added charges of conspiracy to
pervert the cause of justice, which involved “inappropriate
payments to police and other
officials. For example, Brooks was charged with supplying
£100,000 to an official in the
Department of Defence over a period of six years.44
In spite of Murdoch’s denials of political influence, several
former prime ministers testified
that they clearly remembered receiving policy recommendations
from him, sometimes under
threat. Finally, because the Foreign Corrupt Practices Act
barred US citizens from bribing
officials outside the United States, the US Department of
Justice opened an investigation into
News Corp’s practices, which could potentially result in
criminal indictments.45
41 Budden, loc. cit.
42 Sarah Lyall and Ravi Somaiya, “Murdoch Settles Suits by
Dozens of Victims of Hacking”, The New York
Times, Jan. 19, 2012.
43 Andrew Edgecliff-Johnson, “MPs cast global shadow on
News Corp,” Financial Times, May 1, 2012.
44 Robert Buddin, “Coulsen and Brooks accused of
conspiracy”, Financial Times, 20 Nov., 2012.
45 Martin Hickman, “Leveson Inquiry: Rupert Murdoch did try
to dictate government policy on EU, says John
Major”, The Belfast Telegraph, 13 June, 2012.

September 2016.
Exhibit 1
Selected Murdoch Holdings in 2012
Broadcast/production/film/cable/television assets
Fox Groups
Blue Sky Studios
Shine Group
FX Networks
National Geographic Channel (US) (67%)
National Geographic Channel (International) (50%)
Speed Channel
SportSouth
LAPTV Latin America
Telecine Brazil
BSkyB [United Kingdom] (39.1%)
Sky Deutschland [Germany] (49.90%)
SKY Italia [Italy] (100%)
SKY Network Television [New Zealand] (43.65%)
Star TV [India & Greater China] (100%)
Tata Sky [India] (20%)
Internet
Fox Interactive Media (AmericanIdol.com, AskMen.com,
Fox.com, etc.)

News Digital Media
Authonomy via HarperCollins
MySpace (5%)
Magazines and inserts
All titles sourced from News Ltd. (over 100 Tabloids)
Dow Jones & Company (Wall Street Journal, Barrons, etc.)
Books
HarperCollins
Zondervan Publishing
Miscellaneous
National Rugby League
Fox Music
Jamba! – Mobile Entertainment/Mobile Handsets
Personalisation/Games.
Maximedia Israel (67%)
Mosgorreklama (50%) - Russia sign and marketing material
manufacturer
NDS Group (49%) - DRM and conditional access company.
Wireless Generation - Software for Education
Source:
http://en.wikipedia.org/wiki/List_of_assets_owned_by_News_C
orporation

September 2016.
September 2016.
Exhibit 2
News Corp Employee Arrests
April 2011 – News Corp journalists Ian Edmondson, James
Weatherup and Neville Thurlbeck arrested
on suspicion of conspiring to intercept communications and
unlawfully accessing voicemail messages.
8 July 2011 – Andy Coulson arrested over alleged phone
hacking and making illegal payments to
police. Clive Goodman arrested on suspicion of making illegal
payments to police.
4 July 2011 – Former News of the World executive editor Neil

Wallis arrested.
17 July 2011 – Rebecca Brooks arrested over corruption and
phone hacking.
2 August 2011 – Former News of the World managing editor
Stuart Kuttner arrested.
10 August 2011 – Former News of the World news editor Greg
Miskiw arrested.
18 August 2011 – Former News of the World US editor James
Desborough arrested.[
19 August 2011 – Former News of the World reporter Dan
Evans arrested.
30 August 2011 – Former News of the World managing editor
Stuart Kuttner arrested.
2 September 2011 – Arrest of a 30 year old man, who wrote
under the pen name of Ross Hindley.
7 September 2011 – Deputy football editor of The Times, Raoul
Simons, arrested.
28 January 2012 – The Sun's former Managing Editor Graham
Dudman, Head of News Chris Pharo,
Crime Editor Mike Sullivan, and former Deputy Editor Fergus
Shanahan are all arrested.
11 February 2012 – Picture editor John Edwards, Associate
Editor Geoff Webster, reporters John Kay,
Nick Parker, and John Sturgis arrested.
13 March 2012 – Former News Corp. executive Rebekah Brooks

re-arrested in phone hacking scandal,
along with her husband, and charged with conspiracy to pervert
the cause of justice.
19 April 2012 – The Sun's royal editor Duncan Larcombe
arrested.
25 May 2012 – The Sun's Whitehall editor Clodagh Hartley
arrested.
14 June 2012 – The Sun journalist Neil Millard arrested.
5 July 2012 – Daily Mirror reporter Grieg Box-Turnbull
arrested.
30 July 2012 – The Sun’s chief foreign correspondent Nick
Parker arrested.
29 August 2012 – The Times journalist Patrick Foster arrested
on suspicion of computer hacking. Bob
Bird, former News of The World Scotland editor, arrested for
perjury and phone hacking.
30 August 2012 – Tom Crone, a barrister and legal manager at
News of the World, arrested on
suspicion of conspiring to intercept communications.
Source:
http://en.wikipedia.org/wiki/News_International_phone_hacking
_scandal#Timeline

September 2016.
Exhibit 3
Financials, News Corp, 2012
Selected Financial Data
The selected consolidated financial data should be read in
conjunction with “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” and “Financial Statements
and Supplementary Data” and the other financial information
included elsewhere herein.
For the years ended June 30,
2011(1) 2010(1) 2009(1) 2008(2) 2007(2)
(in millions, except per share data)
Statement of Operations Data:
Revenues $ 33,405
$ 32,778
$ 30,423

$ 32,996
$ 28,655
Income (loss) from continuing
operations attributable
to News Corporation
stockholders
2,993
2,539
(3,378)
5,387
3,426
Net income (loss) attributable to
News Corporation

stockholders
2,739
2,539
(3,378)
5,387
3,426
Basic income (loss) from continuing
operations attributable
to News Corporation
stockholders per share:(4)
Class A
Class B
$ 1.14

$ 0.97
$ (1.29)
$ 1.82
$ 1.14
$ 0.95
Diluted income (loss) from
continuing operations attributable
to News Corporation
Class A
Class B
$ 1.14
$ 0.97

$ (1.29)
$ 1.81
$ 1.14
$ 0.95
Basic income (loss) attributable to
News Corporation
Class A
Class B
$ 1.04
$ 0.97
$ (1.29)
$ 1.82

$ 1.14
$ 0.95
Diluted income (loss) attributable to
News Corporation
Class A
Class B
$ 1.04
$ 0.97
$ (1.29)
$ 1.81
$ 1.14
$ 0.95

Cash dividend per share:(4)(5)
Class A
Class B
$ 0.150
$ 0.135
$ 0.120
$ 0.120
$ 0.110
$ 0.120
$ 0.100
As of June 30,
2011 2010 2009 2008 2007
(in millions)

September 2016.
Balance Sheet Data:
Cash and cash
equivalents
$ 12,680
$ 8,709
$ 6,540
$ 4,662
$ 7,654
Total assets 61,980
54,384
53,121

62,308
62,343
Borrowings 15,495
13,320
14,289
13,511
12,502
(1) See Notes 2, 3, 4, 6 and 9 to the Consolidated Financial
Statements of News Corporation for information with
respect to significant acquisitions, disposals, changes in
accounting, impairment charges, restructuring charges and
other transactions during fiscal 2011, 2010 and 2009.
(2) Fiscal 2008 results included the Company's acquisition of
Dow Jones for consideration of approximately $5.7
billion. The consideration consisted of approximately $5.2
billion in cash, assumed net debt of $330 million and
$200 million in equity instruments. In addition, fiscal 2008
results included the share exchange agreement with
Liberty Media Corporation ("Liberty"). Liberty exchanged its

entire interest in the Company's common stock in
exchange for the Company's entire interest in The DIRECTV
Group, Inc. ("DIRECTV"), three of the Company's
Regional Sports Networks and approximately $625 million cash
resulting in a tax-free gain of approximately $1.7
billion.
(3) Fiscal 2007 results included the disposal of the Company's
investment in SKY Brasil to DIRECTV resulting in a
total pretax gain of $426 million of which $261 million was
recognized in fiscal 2007. The remaining $165 million
was realized when the Company's interest in DIRECTV was
disposed of in fiscal 2008.
(4) Shares of the Class A Common Stock carried rights to a
greater dividend than shares of the Class B Common Stock
through fiscal 2007. As such, for the periods through fiscal
2007, net income available to the Company's
stockholders was allocated between shares of Class A Common
Stock and Class B Common Stock. The allocation
between these classes of common stock was based upon the two-
class method. Subsequent to the final fiscal 2007
dividend payment, shares of Class A Common Stock ceased to
carry any rights to a greater dividend than shares of
Class B Common Stock.
(5) The Company's Board of Directors (the "Board") currently
declares an interim and final dividend each fiscal year.
The final dividend is determined by the Board subsequent to the
fiscal year end. The total dividend declared related
to fiscal 2011 results was $0.17 per share of Class A Common
Stock and Class B Common Stock. The total dividend
declared related to fiscal 2010 results was $0.15 per share of
Class A Common Stock and Class B Common Stock.

Source:
http://www.newscorp.com/Report2011/1_financial_data.html
September 2016.
Exhibit 4
Source:
http://money.cnn.com/2011/07/19/news/companies/news_corp_
murdoch_ceo/index.htm
September 2016.
This is question which the professor asks to do on paper.
Answer on each question

It is require 7 papers. All papers should be in proper form,
double-spaced, using 12-point Times New Roman font, with 1-
inch margins with citations properly noted and conform to the
university writing standards
1. Was the phone hacking the action of “rogue journalists” or
something more systemic?
What evidence in the case supports the claim that it was
systemic?
2. If it was systemic, why did it happen, and in what ways was
the organization culpable?
In what ways, if at all, were Rupert and James responsible for
what happened?
3. What is Rupert Murdoch’s leadership style?
Has it contributed to the problem?
4. Compare the leadership style of Murdoch vs the leadership
style portrayed in the “Parable of the Sadhu”.
What differences do you observe?
How do they relate to business ethics?
5. What could News Corp have done differently to avoid the
problems described in the case?
What could Rupert and James Murdoch have done?

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