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Does British Scandal Risk Murdoch's Hold On Empire?

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Does British Scandal Risk Murdoch's Hold On Empire?

Does British Scandal Risk Murdoch's Hold On Empire?

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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Now, when Rupert Murdoch and James Murdoch testified before that parliamentary panel in London yesterday, they were speaking to several different audiences. There were the members of parliament. There were the millions of viewers in Britain and the U.S. And there were the people who owned News Corp. company shares and sit on its board.

NPR's David Folkenflik says there are now very real questions about how tightly the Murdochs will be able to control their media empire.

DAVID FOLKENFLIK: From the opening moments, Rupert Murdoch made clear, even in crisis, that News Corp., while a publicly traded company, is very much propelled by the vision of one man. He interrupted his son James to make the point.

Mr. JAMES MURDOCH (News Corporation): As for my comments, Mr. Chairman, and my statement, which I believe was around the closure of the News of the World newspaper...

Mr. RUPERT MURDOCH (News Corporation): Before you get to that, I would just like to say one sentence: This is the most humble day in my life.

FOLKENFLIK: The problem for the Murdochs is fundamental. They've made a lot of money for shareholders. But if they knew what was going on, they either condoned or ignored what are likely crimes. Rupert and James Murdoch repeatedly said yesterday they did not know what was happening well below them. In which case, why would anyone want them to run the company?

Labour MP Tom Watson asked the senior Murdoch why News Corp. didn't instantly investigate reports that the paper's reporters bribed police for information.

Mr. R. MURDOCH: I didn't know of it. I'm sorry, I'm I need(ph) to say something, and this is not as an excuse, maybe it's an explanation of my laxity. The News of the World is less than one percent of our company. I employ 53,000 people around the world who are proud and great and ethical and distinguished people.

FOLKENFLIK: Just a rounding figure in his company's bottom line - and perhaps therefore not deserving of his full attention. And yet Murdoch is not known for laxity. He's known for being hands-on.

Yesterday he deflected questions to James Murdoch. And the one-time heir apparent faced his own difficulties. The scandal first erupted five years ago after complaints from Princes William and Harry of phone hacking. The paper's royals editor and private eye went to jail. An isolated case, the company said then.

James Murdoch testified he was jarred by evidence in a lawsuit filed by movie star Sienna Miller.

Mr. J. MURDOCH: As soon as we had that new information at the end of 2010, which indicated to us that there was a wider involvement, we acted on it immediately.

FOLKENFLIK: But the year before - in 2009 - the Guardian newspaper's exposes indicated dozens of celebrities and politicians had been illegal targets of the tabloid. James Murdoch himself had approved a secret payment of more than $1 million to settle a professional football figure's complaints.

Conservative MP Louise Mensch directed Rupert Murdoch to the resignation of the publisher of his American newspaper, the Wall Street Journal, who had previously been head of News Corp.'s British papers.

Ms. LOUISE MENSCH (Conservative MP): Is it not the case, sir, that you in fact are the captain of the ship? You are the chief executive officer of News Corp., the global corporation?

Mr. R. MURDOCH: A very much bigger ship, but yes.

Ms. MENSCH: It is a much bigger ship, but you are in charge of it. And as you said in earlier questions, you do not regard yourself as a hands-off chief executive. You work 10 to 12 hours a day. This terrible thing happened on your watch. Mr. Murdoch, have you considered resigning?

FOLKENFLIK: Murdoch said he hadn't, and more, that the buck stops somewhere else.

Mr. R. MURDOCH: People I've trusted - I'm not saying who, I don't know what level - have let me down, and I think they behaved disgracefully, betrayed the company and me, and it's for them to pay. I think that frankly I'm the best person to clean this up.

FOLKENFLIK: So far, however, crisis under his leadership has been costly. It killed a $12 billion takeover bid of the largest broadcaster in the U.K. The company's shareholders lost billions of dollars in market value. The News of the World was closed forever, and there are a series of criminal investigations.

Now the board's independent directors have hired their own lawyers to represent their interests.

The News of the World was less than 1 percent of News Corp., but it could -just could finally drag the company out of the Murdochs' grasp.

David Folkenflik, NPR News, New York.

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