Murdoch pleads ignorance but MPs fail to land killer blow

Rupert Murdoch's main defence to the Home Affairs Select Committee's questions was that he knew virtually nothing about the details of the phone-hacking row. But is ignorance really a legitimate defence for a CEO?

by James Taylor
Last Updated: 19 Aug 2013

Watching Rupert Murdoch’s appearance before the Select Committee on Tuesday was a pretty excruciating experience: the media mogul looked all of his 80 years as he repeatedly stonewalled attempts by the MPs – particularly Labour’s Tom Watson – to press him on his knowledge of the phone-hacking scandal. Time after time, Murdoch pleaded ignorance to questions about what he’d known, when he’d known, and what he’d done about it – his main line of defence being that since the News of the World represented less than 1% of his media empire, he couldn’t be expected to know everything about it. OK, so the CEO of a 50,000-person company can’t be up to speed with all of the operational detail; that’s what senior managers are for. But the level of ignorance he claimed today was pretty extraordinary for someone who’s supposed to be the chairman and CEO of a global company, and in charge of its corporate governance...

There was a fairly marked contrast between the styles of the two Murdochs today. James – who, as we expected, did his best to answer every question, even the ones specifically addressed to his father – was polished, slick, respectful and never shy to use four words when one would do; Rupert, on the other hand, was halting, brusque, grumpy and largely monosyllabic, particularly when Watson was on his case. (Perhaps the guy who attacked him with the foam pie at the end was his media trainer?).

Although the Murdochs were predictably full of apologies ('this is the most humble day of my life' Rupert said at the start), they proved fairly slippery on the specifics of the original episode - Rupert's usual line was that he didn't know, James's that it happened before he returned to News Corp from Sky. So while the MPs scored some telling blows - notably the admission that the company had been paying Glenn Mulcaire's legal fees, and that there were 'no immediate plans' for a Sunday tabloid to replace the NotW - there was no real killer punch landed.

However, questions will surely be asked about Murdoch Senior's combined chairman/CEO role. He may have an unparalleled strategic grasp of the media universe, but today's proceedings suggested he has little or no knowledge of the operational detail, and no real interest in its corporate governance. In fact the most impressive performer was undoubtedly his wife Wendi, who leaped to his aid like an uncaged tigress during foampiegate. Will shareholders be thinking that it's time Rupert opted to spend a bit more time in her company?

The good news for investors is that News Corp's share price actually recovered a bit yesterday, presumably because things at least didn't get any worse (and perhaps the idiotic foam pie incident engendered some sympathy too). But there's increasing disquiet about News Corp's corporate governance (or lack thereof), even from influential shareholders like Calpers. It's going to be very difficult for Rupert to keep on running this public company like a family business if he loses the confidence of his shareholders - and Tuesday's proceedings won't have helped in that regard...

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