In a stunning example of corporate overreaction, News Corp. today announced that it will shut down Britain’s largest Sunday newspaper amid a growing scandal over voicemail hacking.
The 168-year-old News of the World, which boasts a Sunday circulation of 2.5 million, will publish its last edition on July 10. The move comes as outrage in Britain reached a fever pitch over allegations that the tabloid had illegally accessed and even deleted voice mail messages on the phone of a 13-year-old girl who was kidnapped and later found murdered.
Allegations of phone hacking are nothing new for the tabloid. Reports of reportorial excess have swirled around News of the World for two years. However, public anger and advertiser boycotts grew this week amid allegations that as many as 4,000 people have been victimized by such tactics, including relatives of terrorist attack victims and soldiers killed in combat.
The tipping point came with reports this week that hired investigators had not only hacked into the phone of 13-year-old Milly Dowler (left) but also deleted some of the voicemails, giving her parents false hope that the girl was still alive. James Murdoch, the heir apparent to the Rupert Murdoch empire, issued a statement saying such a practice – if it occurred – “was inhuman and has no place in our company.”
Analysts speculated that the decision to shutter the News of the World and lay off 200 employees was made by the younger Murdoch and supported by his dad, although such drama has not been typical of the elder statesman. Skeptics saw more nefarious motives.
Specifically, they questioned why News Corp. didn’t demand the resignation of Rebekah Brooks, chief executive of News International and editor of News of the World at the time the allegations first surfaced. Brooks is a Murdoch confidante, and critics suggested that the jobs of 200 people had been sacrificed to preserve hers.
The scandal also broke as News Corp. neared the final stages of its bid for BSkyB, the largest pay-TV broadcaster in the United Kingdom, with over 10 million subscribers, according to Wikipedia. Critics suggested that the cloud created by the News of the World allegations could have jeopardized Murdoch’s bid.
Writing in the Telegraph¸ Harry Wallop quotes politicians and media commentators speculating that an even more cynical business objective was involved. News Corp. had already announced plans to move to a seven-day-a-week publishing schedule across its four UK titles: the Sun, News of the World, the Times and the Sunday Times. The expansion could potentially create internal competition across the News Corp. properties. Eliminating one title may have little impact on revenues as advertisers simply migrate their business to other holdings within the portfolio.
Whatever the motives, the decision strikes us as a massive overreaction. Scandals like this are usually addressed by a few high-level resignations and some corporate self-flagellation. It could be that the timing was simply bad for News Corp., but depriving 200 people of their livelihoods – and a couple of million Brits of their weekly celebrity scandals – strikes us as a bit over the top.