The Hacking scandal and News Corporation International: What are the real implications ?

The Hacking scandal and News Corporation International: What are the real implications ?

Yesterday in the United Kingdom the British Government held a public session to investigate the mobile phone hacking scandal which has engulfed British politics. Questioned were Rupert Murdoch, Chairman of News Corporation International and his son James along with former CEO of the British print process Rebekah Brooks.

Leaving aside the obvious theatre as Members of Parliament relished the chance to 'have a go' before heading off for the Summer recess had a touch of English public school (USA: Private schooling) about it, "let's have old boy Murdurs in for a damn good thrashing!" you could imagine one of the Committee members yelling. Shaving foam pies aside what significance do these events have for the Murdoch's, the Company and for UK and US politics ? A British committee hearing is not a court of law and whilst interesting and at times insightful those desperate for more blood will have to await the Courts, where no doubt the Murdoch's have a phalanx of lawyers in preparation.

In the meantime, here are a few suggestions and implications as to possible outcomes;

1. This scandal severely reduces the likelihood of Rupert Murdoch establishing a dynasty at News Corporation International. Assuming the Murdoch's survive the UK legal process unscathed the name will become tarnished and may become regarded as synonymous with heavy-handed, no holds barred journalism and a monopolistic hold on media. The only way to even begin to diffuse this timebomb is to appoint trusted internal and external senior management. Consequence: Investors and politicians will likely not stand for a Murdoch succession.

2. The current situation does also bring into sharp relief the future for News Corporation International when Rupert Murdoch moves on. It is clear that he has been the driving force behind the business, though unlike say a Steve Jobs at Apple, helming a 'must have' product business like an iPad or iPhone. The print newspaper business is going through tumultuous times akin to the record labels and this scandal does raise the question of whether News Corporation and other media conglomerates are wise to retain a print newspaper business in their business model ?

3. The UK legal investigations could be dangerous for senior management at News Corporation in terms of cash payments (i.e. non-taxed) made "from a safe in the senior editor's office" to sources, police and otherwise. There are obviously tax implications and, like in the USA, the Inland Revenue (IRS) is a formidable adversary.

4. UK Politics: The scandal has given the opposition Labour Party a platform to act cohesively about and support their new leader. For the ruling Conservative : Liberal Democrat coalition this situation is far from pleasant. On the one hand the Liberal Democrat body-politic will regard News Corp with anathema and blame their Conservative partners at the subliminal level, at the very least, for 'dragging' them into it.

For Prime Minister David Cameron, run though he might, it will be difficult to escape the perception of him as a 'Murdoch Man' - not helped by having hired a former News Corp employee from the paper at the center of the scandal. Time will tell, though a General Election to capitalise on any feel-good factor (such as the Olympics ?) must seem attractive this morning.

5. US politics: Perhaps even more interestingly is the impact of this scandal on US politics. Reaction in the US has been muted on the whole, however Fox News is regarded as being one of the strongest supporters of Republican views and prospective Presidential candidates, such as Sarah Palin. The question for the likes of Sarah Palin is should they distance themselves now from the Murdoch empire before getting serious about the 2012 Presidential election ? For the Obama Administration their hatred of the Fox Network is pretty well known - If they can use this situation well, that coupled with the rapidly accumulating cash mountain in the re-election bank account should secure Barack Obama a second term.

6. The X-Factor - What about Wendy ? About the only positive for the Murdoch's is how Rupert's wife, Wendy sought to protect her husband from the shaving foam pie has gone viral world-wide. Perhaps centering a PR campaign on her values and credentials may make her the ultimate winner as the public face of a new News Corporation International.

Is anyone ready for the first Chinese, Female Executive of a global multi-media news organisation ? You read the forecast here first...