the audit

Audit Notes: News Corp. Coverup Continues, Guinness Record for Sellouts, AOL/HuffPo

June 7, 2011

The New York Times reports on the latest from Rupert Murdoch’s News Corporation phone hacking scandal and coverup. The news is that News has formally apologized to actress Sienna Miller as part of a $164,000 settlement for hacking into her phone messages.

But this shows that News is still trying to cover up the scandal, this time by paying off its victims:

At least four other people who say their phones were hacked into have reached out-of-court settlements with the newspaper; numerous lawsuits against it are still pending. The newspaper has offered to settle with at least seven other possible victims of its phone-hacking practices…

News Group said that it would lay out the full extent of its phone-hacking operation to Ms. Miller privately.

Say what? By now this is a very public story, with rampant criminal activity plus government corruption angles. The only reason we know what we do is because individuals have sued and forced damning information out of the government and News Corporation. Let’s hope Murdoch doesn’t get to buy his way out of this one.

These kinds of settlements seem to be increasingly becoming a way of preventing the public from learning about corporate wrongdoing.

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— iWatch News reports that Evan Bayh, the recently retired Democratic senator from Indiana, is going to work for the U.S. Chamber of Commerce to fight oppressive government red tape alongside former Bushie Andy Card.

For the Chamber, the team of Bayh and Card is a big catch: it could help gin up pressure on moderate Democrats in Congress for regulatory relief.

But the Chamber isn’t the first gold-plated job Bayh’s taken after pushing through the revolving door:

When he left Congress Bayh became a partner at McGuire Woods, a powerhouse law firm, and signed up as a senior adviser to a large private equity firm, Apollo Management Group. He also works for Fox News as a commentator.

The former senator is apparently trying to set the Guinness record for Most Sellouts In First Six Months of Retirement.

— Jeff Bercovici has some good reporting in Forbes on the AOL/Huffington Post merger. Let’s just say he’s not optimistic about the company’s prospects:

But Armstrong’s big coup could also be AOL’s eventual undoing. In hitching himself to Huffington, he has signed on to a mission and an agenda that go well beyond his mandate of re-creating value for shareholders. He has also tied himself to somebody who has demonstrated that she puts her own interests ahead of those of her partners. At HuffPo she repeatedly jousted with her fellow board members, whom she saw as stifling her ambitions to build a news operation to rival the New York Times. “There was a bucking bronco whenever someone said, ‘No, you can’t do that,’” says Greg Coleman, HuffPo’s chief revenue officer at the time, who wasn’t offered a job at AOL after the deal. “I know Arianna very well,” he continues. “She wanted three things: a big bag of gold, a big fat contract, which she deserved, and … unilateral decision making over her world. And that is where you’re going to have some problems. Arianna hates to be managed.”

Consider the way she railroaded the buyout over the objections of some of her board members. When Huffington first took the deal back to her partners, a couple of them protested. “Our goal was an IPO rather than building up the company to be acquired by another media company,” says Palo Alto venture capitalist Fred Harman, whose firm, Oak Investment Partners, injected $25 million into HuffPo in 2008 at a valuation of $100 million. While Ken Lerer, Huffington’s original partner in the launch, was content to sell, Harman and Eric Hippeau, HuffPo’s CEO and the fourth member of its small board of directors, held out, believing a billion-dollar public offering was possible given the patience to wait a year or two. “Even when Tim put a preemptive offer on the table, Eric and I were still inclined to roll forward as an independent company out of the belief that The Huffington Post could continue to rapidly scale and be the dominant social news company on the Web,” Harman says.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.