MEDIA mogul Rupert Murdoch has acknowledged the phone-hacking scandal in the UK has damaged the standing of his son James, long thought to be his putative heir, by endorsing News Corp deputy chairman Chase Carey as his successor.
By doing so he is taking a small step in reforming controversial corporate governance arrangements that have led some to complain that News Corp is run like a family firm, not a global media corporation.
On top of that, by favouring Mr Carey, a veteran television executive, Mr Murdoch is emphasising the company’s fortunes are very much tied to broadcasting and not the newspapers that have given him political clout in the UK and overseas.
Mr Murdoch, whose sometimes faltering appearance in front of MPs last month prompted concerns he was not on top of events, said: “The board and I believe I should continue in my current role of chairman and chief executive, but make no mistake, Chase Carey and I run this company as a team.”
Mr Carey began his career at Columbia Pictures selling programmes to TV networks.
He joined Fox in 1988 before being appointed chief executive of satellite broadcaster DirectTV and helping to return it to profitability. He became News Corp’s chief operating officer in 2009.
But Mr Murdoch didn’t completely close the door on his son’s eventual elevation. He and Mr Carey had “full confidence” in James Murdoch, he said.
The younger Murdoch has been under pressure since the phone-hacking scandal at its UK newspaper division News International exploded last month, leading to the closure of its News of the World tabloid. The business ultimately reported to James Murdoch.
Mr Murdoch senior said: “I’m personally determined to put things right when it comes to the News of the World.”
News Corp, which owns The Sun, The Times and The Sunday Times newspapers in the UK, is continuing to prosper at an operational level. It announced a full-year operating income of nearly $5 billion (£3.1bn), 11.6% up from $4.5bn (£2.7bn) in 2010.
The increase, which was ahead of analysts’ expectations, was driven by good performances by his television businesses, including the Fox TV network.
The biggest black mark was a loss on the sale of struggling social network Myspace, which it had bought for $580m in 2005 but was offloaded for just $35m (£21.6m).
This led to a 22% drop in income for the final quarter of its financial year.
Investors will have to wait until News Corp’s next quarterly results for more information on how the closure of News of the World has affected its profits, as the title’s final issue was on July 10, 10 days after the period covered in the latest figures.
The only immediate sign of the financial damage done by the scandal was a break-up fee of $63m (£39m) paid to BSkyB after News Corp ditched its attempt to buy the 61% of the business it didn’t already own.
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