News Corp. Deputy COO James Murdoch: Controls Failed to Prevent Phone Hacking Despite Staff's Assurances

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UPDATED: A U.K.-government funded inquiry into media ethics also asked him about talks with politicians about the company's bid for BSkyB and the power of media giants as he said he only read the company's tabloid papers "from time to time."

LONDON -- News Corp. deputy COO James Murdoch told a panel probing media ethics and standards in the U.K. on Tuesday he was assured that the phone hacking situation was under control when he took over the conglomerate's U.K. newspaper unit in 2007; that he didn't have much interaction with British politicians, even when the conglomerate tried to acquire full control of BSkyB; and that he only read its tabloid papers "from time to time."

He reiterated previous comments that his staff kept key information from him and told the inquiry that he likely would have told the company to "cut out the cancer" had he known the full extent of the problem, butthere was likely "some desire not to do that" on the part of some people at the company.

His comments, which also touched on bidding for soccer broadcast rights and his interactions with recent British prime ministers, came early Tuesday in front of the U.K.-government funded Leveson Inquiry into media ethics and standards, including phone hacking. Led by Judge Brian Leveson, the panel has probed the British media’s relationships with politicians, police and the public.

Meanwhile, the leader of a U.K. parliamentary select committee reiterated on Twitter on Tuesday that the committee would formally consider its report on phone hacking on Monday with a view to publication on Tuesday.

Murdoch, the son of News Corp. founder Rupert Murdoch, was scheduled to be questioned at the Royal Courts of Justice in a session scheduled to last from 10 a.m. to 4:30 p.m. London time, including lunch and other breaks. Murdoch, dressed in a dark suit and a tie with diagonal stripes, was seen in the courthouse with his older brother Lachlan Murdoch, who was sporting a cane, before the hearing.

James Murdoch started giving evidence after taking an oath and giving his full name as James Rupert Jacob Murdoch. His father will appear at the Leveson Inquiry during the same hours Wednesday and, if necessary, Thursday.

The public questioning of the media moguls follow appearances in July when they faced a British parliamentary committee that asked them about the phone hacking scandal engulfing the conglomerate’s U.K. newspaper unit. Given the size of News Corp., the influence of its U.K. papers, including The Sun tabloid, and the phone hacking scandal that started with the now-defunct News of the World, the comments from the Murdochs will be closely followed by others in the industry and beyond, as well as Wall Street.

Asked early on about his business dealings with his father and whether they regularly discuss News Corp. business, Murdoch said, "We discuss from time to time -- quite often, various business issues."

When he took over News Corp.'s News International U.K. newspaper unit, Murdoch said he wanted a tight management team and a more collaborative culture to ensure transparency and effectiveness, which meant including editors in management meetings.

Asked if there weren't enough systems or staff in place to avoid legal and reputational risk at the unit, Murdoch said, "It's self-evident that whatever controls were in place failed." He said, though, that the unit had senior legal managers in place, editors were in charge of content and ethical decisions, and "assurances were given to me early on in my tenure" that the phone hacking issues of the past were under control and that the legal and editorial setup was stronger than in the past. Added Murdoch, "I got assurances from them that sometimes were wrong."

Murdoch also emphasized that he was in charge of six businesses, with News International being just one of them.

Asked about his company's tabloid papers, he said they are not just about gossip but investigative enterprises as well. Did he regularly read the now-defunct News of the World? Murdoch said he did "not read all of it" but read it "from time to time." How about The Sun? "I tried to familiarize myself with what was in it," he said. The Murdoch son has a reputation for being more interested in the global TV business, which he now oversees for the conglomerate from its New York headquarters.

Asked if the ends justify the means in journalism, Murdoch said no, highlighting the "importance of enterprise" but also the importance of "the way we do business." Added Murdoch, "In the end, the profitability of the News of the World didn't save it."

Observers on Twitter took some of Murdoch's morning comments as a continuation of a strategy to put blame on Tom Crone, the former top lawyer at News International, and former News of the World editor Colin Myler, who is now at the New York Daily News. "Why wouldn't they just come and tell me?" he said to questioning lawyer Robert Jay in Tuesday's morning session at one point. But he added, as he tried to avoid formally apportioning blame, "I don't want to conjecture."

In connection with a legal settlement and emerging evidence that there was more than one case of hacking, Murdoch said "there wasn't a proactive desire" on the part of the News International leaders to keep him on top of latest developments. He avoided clear-cut comments when asked if the company covered up wrongdoing or if its governance wasn't sufficient, but reiterated that he wasn't made aware of possible further hacking cases - something the other people involved have disputed.

At one point, Jay asked Murdoch about the appointment of Dominic Mohan as Sun editor and whether his political views played into his getting the job. "I didn't know" his political views, he said. "And I don't." Appointments are not just about political views but one's ability to lead a newsroom, make judgments on what to put in the paper every day and the ability to be "thoughtful about readers" and their interests, Murdoch said. "It is not simply a political exercise." Instead, then-outgoing News International editor Rebekah Brooks, a longtime ally of Rupert Murdoch, gave him a strong recommendation, and his father also liked the idea of his appointment, Murdoch said.

Asked why he recently left his post as chairman of U.K. pay TV giant BSkyB, in which News Corp. holds a 39 percent stake, Murdoch said it was "for the simple reason that I wanted to avoid really becoming a lightning rod" as "some people tried to conflate" the phone hacking issue in a way that could have become a distraction for BSkyB.

A chat with former Prime Minister Tony Blair about soccer TV rights and his take on current British PM David Cameron came up next in the questioning. In one of their discussions, the Murdoch son said foreign policy and other topics were in focus, but he said policies affecting News Corp. and its BSKyB bid were "not really" a major concern for him, though he pointed out that the Conservatives traditionally are seen as more business-friendly.

When Murdoch and Cameron discussed the planned BSkyB takeover bid in a dinner arranged by Brooks, his focus was more on timing than ensuring Britain had a government that was friendly toward News Corp., he said. "There was a question about how long it would take," Murdoch said. "It was more about duration, not the likelihood" of approval. Before a dinner with Cameron and Brooks and others, the issue came up as "a tiny side conversation," he said, emphasizing he mainly reiterated his hope of fair and appropriate regulatory review process.

He also acknowledged telling Cameron that the Sun planned to likely support him ahead of the last elections at the end of the party conference season. He added though that News Corp. wanted to wait with its BSkyB bid and its review until after the election, independent of its outcome, to avoid that the deal would "become a political football."

The topic of Business Secretary Vince Cable, who had to give up his responsibility for the BSkyB deal review after vowing to unleash a "war on Murdoch," also came up. Murdoch said the politician had shown "acute bias."

He also was confronted with emails that the inquiry said suggested that Culture Secretary Jeremy Hunt was in close communication with News Corp. about latest developments in the regulatory review of its BSkyB bid and signaled that the government would let it pass. Murdoch said exchanges were "not necessarily inappropiate" and that Hunt had previously signaled as much in public. The issue of Hunt's role was expected to be examined in more detail in the afternoon session.

Discussing the balance of power between media and politicians, Murdoch said, "Politicians are very, very eager to get their points across [and] eager to talk to the press [to] avail themselves of that megaphone" that media outlets represent. But as a business executive, he has not personally experienced much of that. "I haven't actually spent that much time with politicians personally," Murdoch said.

Is there an advantage for him in meetings with politicians because of News Corp.'s ties with BSkyB? Murdoch said he has seen "no evidence of any advantage. I just don't think that's there."

Jay then asked if the media have more power than politicians because the latter depend on the media. "I hope that they don't think that's the case," Murdoch said, adding that the days of a few big media proprietors controlling the media and public debate are long over. "I don't think it exists anymore."

When the main doors to the courthouse opened at exactly 9 a.m., a group of about 10 people, some of whom described themselves as regulars at the hearings, had gathered outside to listen to the proceedings from one of the 14 seats reserved for the public. "I would have expected more members of the public for this," said one of the men lined up.

They were joined by about two dozen photographers, newspaper reporters and TV crews, including one from business news network CNBC.


Twitter: @georgszalai


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