Fri, July 22, 2011
World > Americas > News Corp. in hacking scandal

Analysis: Is it too early to write off Rupert Murdoch as CEO?

2011-07-20 08:10:48 GMT2011-07-20 16:10:48(Beijing Time)  SINA.com

NEW YORK - It looked like it was time for a changing of the guard at News Corp.

Rupert Murdoch appeared tired, close to the end of a remarkable corporate career. His son James came across as fresh, smart and eloquent, ready to deal with arguably the worst crisis at the global media empire.

But Murdoch senior, 80, made clear he wasn't ready to go yet.

"No," Murdoch firmly told a British parliamentary hearing on Tuesday, when asked if he would resign over the phone-hacking scandal that has rocked News Corp.

"I feel that people I trusted, I'm not saying who, I don't know on what level, have let me down and I think they behaved disgracefully, betrayed the company and me, and it's for them to pay."

He went on: "I'm the best person to clean this up."

The problem Rupert Murdoch faces is that his presumed heir is not in a position to take over. James Murdoch, 38, initially failed to deal adequately with the phone-hacking scandal at the company's News of the World tabloid, and he could be further implicated as police investigations pick up.

"I would have thought that after last night, that has accelerated the pace of change, rather than slowed it down," said Bruce Guthrie, former editor of Murdoch's Herald-Sun newspaper in Melbourne, Australia, between 2007-2008.

"I think the market will probably be looking in the short term for a non-Murdoch to take the reins, and then perhaps a Murdoch will take control again in the future," he told Australian radio. Guthrie won an unfair dismissal case against the company in 2008 and wrote a book called "Man bites Murdoch."

News Corp's board does not seem ready to strip Murdoch senior of the chief executive title -- leaving him just the chairmanship -- even though Chief Operating Officer Chase Carey is widely seen as a capable CEO replacement.

Independent directors Viet Dinh and Tom Perkins have now publicly stated that the News Corp board is united in support of the senior management team.

"In no uncertain terms, the Board and management team are singularly aligned," Dinh said in a statement on behalf of independent directors of News Corp after the hearing.

Even investors who criticized Murdoch's performance at the hearing felt it was too soon to write him off.

Murdoch called it the most humble day of his life and often looked ill at ease, rarely showing the passion and aggression on which he built his business over six decades.

He answered many questions in monosyllables and left long pauses before giving short replies. When Murdoch stumbled over answers, his son frequently tried to step in, only to be told he must let his father answer the question.

At one point, Murdoch senior admitted to being out of touch with the ins and outs of News International, the UK newspaper arm at the center of the scandal.

"James was well prepared and related his thoughts much more effectively than his father," said Keith Wirtz, chief investment officer at Fifth Third Asset Management, which owns News Corp shares.

But he said Rupert didn't look like he was about to quit.

"Rupert is News Corp, so I do not see him stepping down any time soon," said Wirtz.

SENSATIONAL

Until the phone hacking scandal exploded on July 4, James Murdoch had been expected to eventually take over from his father. But the younger Murdoch has been tainted by details that emerged on his handling of the aftermath, such as the paying off of some victims.

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