News Corp. CEO Rupert Murdoch received a startlingly strong rebuke Tuesday from a committee of British parliamentarians, who bluntly said the media magnate “is not a fit person to exercise the stewardship of a major international company.” It was the harshest fallout yet for Murdoch over a phone-hacking-and-police-corruption scandal that seems to get more dramatic by the week. But despite his increasingly plaintive displays of contrition, the octogenarian mogul shows no signs of stepping down from the company that he built from a single Australian paper over 50 years ago, which is now one of the most powerful media empires in the world.
Despite the fact that the parliamentary committee deemed Murdoch “not a fit person” to run a major international company, the mogul hasn’t failed the U.K. government test that really matters, as Businessweek‘s Felix Gilette points out.
In British politics, the phrase “fit and proper” is a term of art — a legal standard, really — that Ofcom, the U.K. agency that regulates competition in the telecommunications industry, uses to judge whether a person qualifies to hold a broadcast license. News Corp. owns 40% of satellite TV giant BSkyB, which it wanted to take over completely until the phone-hacking scandal exploded last summer, scuttling those plans. Murdoch has made clear how important the very lucrative BSkyB stake is to the company’s future.
British parliamentarians can issue statements about whether Murdoch is “fit” to do anything, but what really matters is whether Ofcom determines that he’s not “fit and proper” to hold a broadcast license. That has not happened — yet — although Tuesday’s report may have moved the needle closer. Such a decision could put at risk News Corp.’s 40% stake in BSkyB, which is viewed as a crucial component of the empire, and thus could possibly convince Murdoch to step aside. But even that is questionable for a man so closely identified with the company.
Ofcom released a statement saying it was reading the parliamentary report “with interest,” adding: “Ofcom has a duty under the Broadcasting Acts 1990 and 1996 to be satisfied that any person holding a broadcasting license is, and remains, fit and proper to do so. Ofcom is continuing to assess the evidence that may assist it in discharging these duties. As part of this we are considering the Committee report.”
With his son James now shuttled off to the side in the wake of the phone-hacking scandal, Murdoch’s likely successor appears to be veteran media executive Chase Carey, the deputy chairman, president and chief operating officer of News Corp. But Murdoch, a lover of newspapers and the back-and-forth scrum of public life, seems intent to hold on as long as he can. And given the family’s 40% voting control of the company, it seems unlikely that a shareholder effort will force him to give up control until he’s ready.
“Self-made billionaires are fighters. He’s not going to leave because someone writes a report and says he’s not a nice guy,” analyst Laura Martin of Needham & Co. told CNNMoney, succinctly capturing why Murdoch will likely remain as CEO — at least for now.