More drama in the ongoing News Corp saga: Rupert and James Murdoch, along with News International boss Rebekah Brooks, have been summonsed to appear before a Commons select committee next Tuesday - and although the Murdochs are under no obligation to attend, as US citizens, Brooks has apparently agreed to enter the lions' den. Rupert clearly hoped that the decision to close the NotW - and yesterday's decision to pull the plug on his bid to buy the 61% of Sky he doesn't already own - would draw the sting from proceedings. But that might not happen until the top brass have performed some very public contrition...
News Corp decided to abandon its 13-month pursuit of the UK’s most valuable commercial broadcaster yesterday, in the face of almost-unanimous public and political opposition. COO Chase Carey told the FT: ‘We believed that the proposed acquisition of BSkyB by News Corp would benefit both companies, but it has become clear that it is too difficult to progress in this climate.’ No kidding.
This will come as a bitter blow to James Murdoch in particular. The former CEO of BSkyB, Murdoch jr has been responsible for rejuvenating News Corp's activities in digital broadcasting and the internet in recent years. To add insult to injury, News Corp will also have to shell out the best part of £40m as a break fee to BSkyB, and won't be able to re-bid for the company for at least six months (not that this would have been politically viable anyway). Shares in the broadcaster, which have fallen over 150p in the last 10 days, fell further to around 685p on the announcement (they're currently back up around the 700p mark).
But this won't be enough to ease the political and public pressure on the Murdochs. News Corp's shares have always traded at substantial discount to their book value because of investor concerns over its 'unconventional' corporate governance. If the further turbulence created by the phone-hacking saga doesn't settle quickly, independent shareholders may start to voice some long-held concerns rather more forcefully than they have in the past.
As for the fate of News International, its UK newspaper subsidiary, only time will tell - although the fact that the BSkyB bid has been dropped would seem to make the recent speculation over a possible sudden exit from the UK market seem a lot less likely. Nor, apparently, does News Corp have any plans to dispose of its existing 39% BSkyB stake; it remains ‘a committed long-term shareholder’, according to Carey. Still, this is clearly a hugely embarrassing climbdown from an organisation not known for failing to get its own way.
Some of the reactions to this saga have been a bit unseemly, often smacking of hypocrisy and self-interest. And insofar as the resulting backlash is likely to constrain the freedom of investigative reporting in this country, we should be careful what we wish for. On the other hand, the general bloodlust has clearly not been sated yet. Brooks (and possibly James himself) might as well appear before the select committee and take their medicine, because the furore's unlikely to die down until they do.