The News Corp (NWS) hacking virus is proving both virulent and highly contagious. Rupert Murdoch tried to treat it with amputation, by closing down the News of the World, but the surgery came too late, and he couldn’t prevent the virus from spreading to the Sun and the Sunday Times. At that point, the virus was unstoppable: its next victim was Murdoch’s $12 billion bid to take control of BSkyB. Now, with the UK police investigation barely having started, the virus has managed to jump over the Atlantic: the FBI is getting involved, looking into allegations that Murdoch’s papers tried to hack the phones of 9/11 victims.
This isn’t the investigation under the Foreign Corrupt Practices Act that Eliot Spitzer was calling for, although that might well come next. Both of them would normally seem like a bit of a stretch — it’s far from clear that anybody at News ever successfully hacked into voicemails on US phones, and it’s hard to use the FCPA when there’s no clear financial benefit for the company doing the bribing. But these, of course, are not normal times, and the more the virus spreads the more harmful and powerful it becomes. On this side of the pond, Les Hinton in particular is looking vulnerable; he’s currently running the Wall Street Journal, and if he ends up falling victim to the virus, there’s a chance the WSJ could get infected by association.
This is not an existential crisis for News Corp, a $42 billion behemoth which will continue to exist in one form or another whatever happens. But it’s much more damaging to Rupert Murdoch personally, and to his son James. Both of them are now going testify in parliament on Tuesday, and there’s no way that the experience is going to be a pleasant experience for either of them. They can’t lie — the truth is going to come out sooner or later, and neither will want to risk a criminal perjury trial. But at the same time it will defy credulity if Murdoch claims to have had no knowledge of his newspapers’ techniques, or if James claims that he genuinely thought the illegal activities were confined to one royal reporter at the News of the World.
Amid all the talk, over the years, about who will succeed Rupert as head of News Corp, no one seriously considered the possibility that Rupert might be forced to step down and hand over control to a non-relation. But there’s no doubt that Rupert Murdoch is now a serious liability to News Corp, and that liability wouldn’t go away if he were replaced by James.
Murdoch has always been more interested in power than money, and so the fact that resigning would make his net worth soar means very little to him. (It’s not like he’ll ever spend his billions in any case.) But Tuesday’s grilling will only be the first of many very difficult situations: the UK and US investigations are going to go on for the foreseeable future, and the headlines will continue to come out in a damaging drip for a long time yet.
Rupert Murdoch turned his father’s small media company into a global empire; it has always been his dream to keep News Corp in the Murdoch family for generations to come. But that dream has never looked less likely than it does right now; the virus is closing in on the Murdochs, and their immunity to the virus, which was weak to begin with, is rapidly disappearing. It’s a story fit for the movies: even after huge triumphs like acquiring the WSJ and releasing Avatar, Murdoch could be doomed by his first love — the love of aggressive tabloid journalism. He’s tough: he’ll try to hold out for as long as he can. But he’s human, too. I wouldn’t be at all surprised if someone within News Corp weren’t working right now on a face-saving exit for one of the most successful media moguls of any era.