The Journal gets some sharp critics on the record but undermines that by granting anonymity to board members to talk about how “very comfortable” they are with their independence. Either they can go on the record or they can not be quoted. The Beast writes that Murdoch’s stacked board shows how “at News Corp., despite an org chart that spans continents, oversight is concentrated at the very top—and even there, it isn’t very thorough.”
But Geoff Colvin of Fortune wrote the best piece on News Corporation’s board a week ago, and it’s worth revisiting it.
Colvin gets to the heart of why Rupert Murdoch has ultimate responsibility for what happened at the News of the World: News Corp. is Murdoch and Murdoch is News Corp.—there’s no separating the two (the fact that Rupert himself recently said the exact opposite is all the assurance you need of that).
Some people aren’t at all surprised by the unending scandal at Rupert Murdoch’s News Corp. They are the investors, insurers, lawyers, and others who had read the “Governance Analysis” report on the company from The Corporate Library, a research firm. The firm grades companies’ governance from A to F, and for the past six years News Corp. has received an F — “only because there is no lower grade,” says Nell Minow, who co-founded The Corporate Library in 1999 on the premise that governance “can be rated like bonds, from triple-A to junk.” News Corp.’s overall risk, says the prophetic report: “very high.” Risk of class-action securities litigation: “very high.” Scandal-related lawsuits are already piling up.
For those who think corporate governance is the concern of prissy do-gooders who don’t understand real-world business, News Corp. (NWS) is the latest example that the truth is just the opposite: Governance is the foundation of real-world business. If it isn’t solid, trouble is inevitable. For News Corp., it’s the reason the trouble is far from over.
This is yet another serious reason why News Corp. should never have been owner of The Wall Street Journal, the world’s foremost press watchdog of pesky issues like corporate governance. As Chief Dean Starkman wrote way back in 2007, “News Corp. Can’t Cover the U.S. Business Story” because “It is the story.” Dow Jones, because of its own dual-class stock structure, could not be a paragon of corporate governance. But it did its best, as Dean wrote:
… former Dow Jones executive and director James Ottaway said the controlling Bancroft family avoided even taking on debt because they didn’t want the Journal to appear beholden to financial institutions it covered and wouldn’t own TV stations because they didn’t want the company to appear before any regulator.
Try to imagine those fussy little concepts ever crossing Murdoch’s mind. This is a guy who called one of his Australian editors a “wanker” for asking whether Murdoch’s Sun abided by any journalistic ethics, writes the editor, Bruce Guthrie, in The Age, part of the 30 percent of the Australian press that Murdoch doesn’t own:
IN 1988, while attending a conference of News Corporation editors in Aspen, Colorado, I made the mistake of raising the thorny issue of journalistic ethics. The proprietor, Rupert Murdoch, was not amused.
In short order, Murdoch, who was hosting the session, turned red, then purple, as I repeatedly asked a senior executive from his London paper The Sun whether the publication had any ethical framework. It didn’t, the paper’s news editor finally admitted. In most media companies that admission might have earned the executive a rebuke. But instead, I copped it, with Murdoch later dismissing me as a ”Fairfax wanker.”