Friday, July 08, 2011

End Of The World – To Save Money

Rupert Murdoch’s son, James, has announced that this Sunday, 10-July-2011, will be last edition of The News of the World (NOTW). NOTW is a British tabloid newspaper which has a prior history of making up the news, and most recently, allegedly hacking phones of up to 4000 people, including: public identities (‘celebrities’ and politicians), actors & actresses, families of men and women killed while serving in the military forces, and murder victims. James Murdoch indicated that closing NOTW was ‘the right thing to do’.

Murdoch is staying loyal to Rebekah Brooks, the Editor of NOTW at the time of many of the alleged phone hacks. She has reportedly said she was “sickened” when told of the phone hack of a young murdered girls phone, including the deletion of voice mail messages so more could be left for the paper to report. As Editor, you would expect that she would have known what her journalists were doing (criminal), or incompetent, if she did not know. Rupert and James Murdoch must believe they have much to lose if she were to lose her job in their empire. Her inside knowledge would be priceless to another media organisation, and invaluable to police or a public inquiry.

But, why close the paper? There are a number of possible explanations:
  1. public anger, which might lead to a drop in sales revenue
  2. loss of advertising revenue, as companies express their anger
  3. Murdoch is ruthless in his business, and his use of journalism. In 2007, Bill Moyers, writing on  wrote:
    (Murdoch’s) accustomed to using journalism as a personal spittoon. In the months leading up to the invasion of Iraq, he turned the dogs of war loose in the newsrooms of his empire and they howled for blood. … he’s not the first to use journalism to promote his own interests.  …  His tabloids sell babes and breasts, gossip and celebrities.”
  4. closing the paper, and transferring as many assets as possible from News International (the publishing company) to other parts of News Corp, so that any more people who sue NOTW, will be suing a company with insufficient assets to pay. With up to 4000 people/families who might sue, for say, £500,000 it would face a bill of hundreds of millions of ponds, even if News ‘settled’ out of court.
Given Rupert Murdoch’s ruthless business acumen, my money is on option 4.
I believe that closing NOTW is a business decision only, driven by money considerations and the desire to remove a problem. That is, the closure is designed to limit exposure to compensation and punitive damages claims. I believe it has nothing to do with “the right thing”, as James Murdoch expressed it.


In researching this article, I also looked at: