Dumb defence deepens the 'Murdoch discount'

PUBLISHED : Friday, 22 July, 2011, 12:00am
UPDATED : Friday, 22 July, 2011, 12:00am


Panic makes people stupid. It would be very stupid, say, for the former editor of a British national newspaper, facing probable criminal charges for bribing policemen and illegally accessing the voicemail of several thousand people, to put her computer and incriminating papers in a large plastic bag and dump them in a garbage bin in a parking garage within a few metres of her London home.

Rebekah Brooks, a former editor of the News of the World, the paper that did the bribing and phone hacking, is not a stupid woman, so she cannot have done such a thing.

She was arrested anyway on Sunday, on suspicion of conspiring to intercept communications and of corrupting police officers. The website called 'Has Rebekah Brooks Been Arrested Yet' that was set up last week is now redundant - but the same people have now launched a site called 'Has James Murdoch Been Arrested Yet'.

James Murdoch is the son and heir of media tycoon Rupert Murdoch. He is head of the European and Asian operations of News Corporation, which controls assets like Fox News, The Wall Street Journal and three British national newspapers. It used to be four British national newspapers; the News of the World was closed down nearly two weeks ago.

With Rebekah Brooks down, the legal inquiries move up the food chain to the next level: her immediate boss, James Murdoch. James denied all knowledge of the crimes committed in his corner of the empire in impenetrable management-speak, and more or less got away with it. The problem was Rupert himself.

Rupert Murdoch is 80 years old, and he looks every day of it. There were painfully long pauses in his answers. To make matters worse, the strategy adopted by both men in order to avoid self-incrimination was to insist that their positions were so high up in the organisation that they could not be expected to know about the misdeeds of any single newspaper.

Well, maybe, but the downside of this strategy is that they have to portray themselves as hopelessly out of touch with the business they are supposed to be running. That means it is not just a story about a scandal in Britain. It is embracing the whole Murdoch empire.

There is something called the 'Murdoch discount'. It is the gap between the market value of News Corporation as it is, and the considerably larger sum that it would be worth without Rupert Murdoch at the helm. (Bloomberg estimates that it would be 50 per cent higher.)

This is playing into the hands of those shareholders who think that it's high time Rupert Murdoch retired. And although James will probably escape criminal charges, they don't see him as a suitable replacement for his father, either.

Gwynne Dyer is a London-based independent journalist