Murdoch: Hacking scandal changed my entire company

By RAPHAEL SATTER,Associated Press Updated at 2012-04-26 20:20:00 +0000


LONDON (AP) — Rupert Murdoch used his testimony before a U.K. inquiry on Thursday to portray himself as the victim, not perpetrator, of a cover-up over phone hacking — a bold claim unlikely to be accepted by those suing his company for invading their privacy.

The 81-year-old media magnate apologized. He said he had failed. He noted that the corporate cleanup of the British phone hacking scandal had cost his New York-based News Corp. hundreds of millions of dollars and transformed its culture.

"I failed, and I'm sorry about it," Murdoch said, adding later: "We are now a new company altogether."

Murdoch's two days of testimony, which began Wednesday, marked his attempt to corral the scandal that has rocked Britain, tainted senior politicians, prompted top police commanders and media executives to resign and affected large swathes of his media empire.

It boiled over in July after it became clear that journalists at Murdoch's now-shuttered News of the World tabloid routinely broke the law in pursuit of scoops, with Murdoch-friendly police and politicians turning a blind eye to a litany of abuses including illegal espionage and bribery.

The scandal prompted Prime Minister David Cameron to order a wide-ranging judicial inquiry into the country's media, which has heard from a range of journalists and public figures. Murdoch's testimony was the most hotly anticipated thus far.

Murdoch's words, delivered under oath, offered an unusual public glimpse into the media mogul's personality, alternately combative and contrite. Murdoch showed the occasional sign of annoyance, but pointed questions about his alleged vast political influence and business interests were largely parried with firm denials and touches of dry wit.

A few new revelations tumbled out, among them his admission Thursday that his dramatic decision to shut down the 168-year-old News of the World — the Sunday paper at the center of the scandal — was an impulse move. He said he snapped his fingers and "it was done like that."

"I panicked. But I'm glad I did," Murdoch said, explaining that he'd long wanted to replace the paper with a Sunday edition of The Sun, his top-selling tabloid.

Murdoch also revealed that he had been taken aback at the size of the 2008 payout made to phone hacking victim and former England soccer manager Gordon Taylor — testimony at odds with what his son James Murdoch told the inquiry earlier in the week.

The elder Murdoch's admission was important, because critics have alleged that the $1 million settlement to Taylor — 10 to 20 times larger than a typical payout for breach of privacy — was intended to bury the hacking scandal.

If James Murdoch knew that the settlement was outrageously large when he signed off on it, it would strengthen the argument that the 39-year-old media executive knew that the payout was aimed at hiding wrongdoing.

The younger Murdoch said Tuesday that, at the time, he had no way of knowing whether the sum was particularly large. But the elder Murdoch expressed no such doubts Thursday.

"The size seemed incredible," Murdoch said. "It still does seem incredible."

Overall, Murdoch stuck to the line that he and his son were deliberately kept in the dark by subordinates about the illegal behavior at the News of the World.

"The senior executives were all misinformed, and shielded from anything that was going on there," he told the inquiry. "I do blame one or two people for that."

He didn't name them, but he identified one as "a clever lawyer" who shared drinks with many of the journalists involved — a transparent reference to News International legal manager Tom Crone.

Crone, in a statement, called Murdoch's testimony "a shameful lie."

Murdoch seemed to catch Lord Justice Brian Leveson, the head of the media inquiry, off guard with his statement that "a journalist doing a favor for someone and getting a favor back is pretty much everyday practice."

"It's a common thing in life, well beyond journalism, for people to say: 'I'll scratch your back if you scratch my back,'" Murdoch said.

The comment came as a surprise because Murdoch and his son James had spent much of their testimony denying that they ever traded favors with top politicians.

Observers say Murdoch largely dodged the potential pitfalls during his testimony.

"Rupert got the best of them," said Murdoch biographer Michael Wolff.

Murdoch may have performed well, but storm clouds still linger over News Corp.

U.K. police, parliamentary and regulatory investigations into the company are ongoing on both sides of the Atlantic. Just as Murdoch finished testifying, British broadcasting regulator Ofcom announced it was expanding its investigation into his U.K. satellite broadcaster British Sky Broadcasting Group PLC.

At the same time, British lawmakers announced that they would publish their long-delayed report into the phone-hacking scandal on May 1.

Murdoch's testimony Thursday appeared to have little effect on News Corp.'s New York-listed shares, which were up slightly, 0.6 percent, at $19.38. At the height of the phone-hacking scandal last summer, the company's stock price had sunk to $13.38.