News Corp. CEO Rupert Murdoch: 'I Failed,' Phone Hacking Was Covered Up

2:29 AM PST 04/26/2012 by Georg Szalai
NewsCorp

UPDATED: The media mogul also tells a U.K. probe into media ethics he's "guilty of not having paid enough attention to the News of the World," but "we are now a new company altogether" and internal probes have found no wrongdoing in the U.S.

LONDON -- News Corp. chairman and CEO Rupert Murdoch said here Thursday that there was a cover-up of the phone-hacking scandal and its extent from within the shuttered News of the World tabloid in the U.K., but he argued that the conglomerate has cleaned up its act.

"I failed" as the final authority at the company, he acknowledged. "I'm guilty of not having paid enough attention to the News of the World." If he had realized the problems earlier by taking on the issue himself and not relying as much on the police, he said, "I would have torn the place apart, and we wouldn't be here today."

But after spending what he said was hundreds of millions on an internal investigation and cleanup effort, he argued that "we are now a new company altogether." He added: "I pledged I would clean it up, and I did. I spent hundreds of millions of dollars."

Asked about the cost of increased compliance staff and other measures, Murdoch said it is "peanuts compared to what this whole scandal and inquiry has cost us." He said of the new systems in place, "I think we learned a lot" from past mistakes.

He also said internal investigations have revealed no wrongdoing at any of News Corp.'s U.S. operations -- or any businesses outside the U.K., for that matter. "We want to be absolutely certain that this … [happened] only here in London," he said.

On his second and final day in front of a U.K. panel on media ethics and standards, Murdoch said about the phone-hacking cover-up: "I do blame one or two people for that. Perhaps I shouldn't name them...There is no doubt in my mind that somebody took charge of a cover-up," that News Corp.'s senior leadership was a victim of. His team was "misinformed and shielded" about the extent of the hacking, he added.

Where did the cover-up come from? It came from within the NOTW -- "one or two very strong characters" who had been there for many years, Murdoch said. His son James Murdoch on Tuesday also argued that he had not been in the know on the extent of phone-hacking activity. He said Tom Crone, the former top lawyer at the NOTW, and former NOTW editor Colin Myler, who is now at the New York Daily News, were in charge of avoiding any wrongdoing, something his father reiterated Thursday implicitly. He rejected a suggestion that the chairman set the business culture, saying the editor and his legal adviser were responsible.

Later in the day, Rupert Murdoch seemed to emphasize that people close to him were not involved in the cover-up. "There was no attempt by me ... or several levels below me ... to cover it up," he said.

Murdoch at one point even lashed out against the inquisitor, saying that "people with minds like yours" might see a far-reaching cover-up. He then apologized and said he would like to take back that statement.

"That is not to excuse it," the mogul said about his lack of knowledge of the hacking activity. "I take it extremely seriously." While he was the final authority at the company, he trusted Les Hinton, who then ran the U.K. newspaper group, to be in control of the business. "I also have to say that I failed, and I'm very sorry about it."

He later also shared with the inquiry that he remains "greatly distressed" by the phone-hacking scandal and its fallout and said that the scandal "is a serious blot on my reputation."

Why did Murdoch close NOTW? The mogul said the voicemail-hacking case involving Milly Dowler, a schoolgirl who was kidnapped in 2002 and later found murdered, caused a firestorm of criticism. "To say it succinctly, I panicked," he said, adding he was happy he did. "I am sorry I didn't close it years [before] and put in a Sunday Sun."

One big topic of debate early in the day was whether the London police or News Corp.'s U.K. newspaper unit had reached the conclusion that the initial phone-hacking case was an isolated case. Murdoch said it was his understanding that the case was isolated and the police had concluded that as well.

On Wednesday, the media mogul had argued that people overestimate his influence in U.K. politics and said he has never asked a prime minister for any business or regulatory favors or promised positive news coverage in return for helping News Corp. accomplish any of its strategic goals.
 
On Thursday, Murdoch returned to the Leveson Inquiry, led by Judge Brian Leveson, at the Royal Courts of Justice here, dressed in a dark suit and blue tie.

Early-morning questions from lead inquisitor Robert Jay focused on comments Murdoch made during Wednesday's appearance that former Prime Minister Gordon Brown had declared war on News Corp. after a headline in a Murdoch paper suggesting he would lose the last elections, as he did, to conservative David Cameron. Brown denied these comments. "I stand by every word on it," Murdoch said early Thursday.

About News Corp.'s failed BSkyB bid, he said the deal struck him as a "commonplace [transaction], so why should I be worried about the politics of it." Culture Secretary Jeremy Hunt has been criticized for keeping News Corp. updated on the regulatory review of the deal and seeming friendly toward the company.

Asked if he ever met Hunt, Murdoch said, "No, I don't think I ever met him." But he said he was shocked when his son James told him that Hunt was taking over a role in the regulatory review for Commerce Secretary Vince Cable, who had told an undercover reporter he would start a "war" against Murdoch. The mogul said he was "shocked" about these comments and argued that the Daily Telegraph, a competitor of News Corp.'s papers, covered the story with a slant for its "commercial benefit."

He also said he didn't feel his lobby team had success in the BSkyB bid as the regulators looked for concessions he didn't understand. And he said he believes the phone-hacking scandal was the only reason the deal got derailed.

Discussing his relationship with his U.K. editors, Murdoch said he only spent about 10 percent of his time in the U.K. until recently, when he helped with the launch of a Sunday edition of The Sun. "They might know my thinking, but they don't have to agree with it." he said.

Murdoch reiterated his Wednesday argument that he doesn't use his papers to promote other business interests. He used the New York Post and the Fox film studio as examples. "I certainly do not tell journalists to promote our TV channels, our TV shows or our films," he said. The Post reviews of Fox films are often critical, he said, adding, "They kill them."

Noting that he was "under strict instructions from my lawyers not to say this," Murdoch then told the Leveson Inquiry that he was "really shocked" that Daily Mail editor Paul Dacre had said the other day that his editorial policy was driven by commercial interests. Murdoch called that the "most unethical" behavior he had heard of in a long time. Leveson quipped after Murdoch had mentioned his lawyers, "You just caused three coronaries."

Among other names of media personalities dropped Thursday was that of CNN host Piers Morgan, a former editor of the Daily Mirror. Morgan once used a picture of Murdoch with horns, he quipped.

Longtime ally and former News International boss Rebekah Brooks also came up, with Jay asking why Murdoch told reporters and paparazzi who chased him to get a comment on the phone-hacking investigation that his focus was on Brooks. Why didn't he declare "cleaning up my company" as his priority? Said Murdoch: "Because I was concerned for Rebekah Brooks. ... I was seeking to keep her self-confidence."

Murdoch early Thursday also launched into a lecture on education. "It's an absolute disgrace the standard of public education here and in the United States," he said. "This is a crime against the younger generation." News Corp. focuses on education to address this issue, he said. "We keep, keep hammering against it," he said. "I'm sorry to divert."

Murdoch's evidence ended with a discussion of the current media landscape. Among other things, Murdoch predicted that newspapers would be around for at least 10 years, probably 20, before news goes all-digital. He also said there is a danger that media regulation will lead to the disappearance of newspapers to regulate. And he expressed concern about the BBC's online news operations, supported by the public broadcaster's fees, for affecting newspaper circulation just like Google.

In the digital age, "we really have enormous disruptive technologies" and challenges, which the industry "must turn ... into an opportunity," Murdoch said.

He suggested that the Huffington Post is not making a profit yet, even though the site is read by millions. And while it has original writers, the AOL site is "mainly just stealing stories," he said.

Amid all the media industry's challenges, the inquiry mentioned that James Murdoch had said that solving them all was above his pay grade. Quipped Rupert Murdoch, "It's well above mine."

Thursday's inquiry session ended shortly after 1 p.m. London time.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

comments powered by Disqus