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Marketplace Morning Report

Rupert Murdoch deemed ‘unfit’ to run company

Stephen Beard May 1, 2012
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David Brancaccio: Rupert Murdoch is “unfit to run a major international corporation.” That is the verdict from a committee of British lawmakers today. The committee was investigating allegations of widespread phone hacking by journalists working for Murdoch’s News of the World tabloid newspaper.

We’re joined now live by Marketplace’s Stephen Beard in London. Stephen this report has some tough words for Mr. Murdoch.

Stephen Beard: Yes, it’s pretty devastating stuff. It says Rupert Murdoch and his son James turned a blind eye to what was going on at their British newspaper group. It says they showed “willful ignorance” of the shenanigans.

Some committee members have gone even further. Lawmaker Tom Watson claims the Murdoch family actually fostered illegal activity in the U.K., including phone-hacking and bribery of the police. Watson was not mincing his words when he spoke about the Murdoch family today.

Tom Watson: These people corrupted our country, they brought shame on our police force and our Parliament. They lied and cheated and bullied and we should all be ashamed how we cowered before them for so long.

Now we should say, the committee split along party lines, which weakens their report a bit. A minority — the four conservative members of the ten person committee — would not go along with the really harsh criticism of Rupert Murdoch. They did not approve, for example, of the statement that he is “unfit to run a major international company.”

Brancaccio: But what does this ruling really mean? Does it have any teeth?

Beard: Yes it does. Although it’s not unanimous, it’s certainly going to have some effect. It’s going to pile the pressure on the U.K.’s broadcasting regulator, which is looking at News Corp.’s stake in Europe’s biggest satellite TV network, BSkyB. That’s an immensely profitable holding for News Corp.

Beard: If the regulator decides Murdoch is not a fit person to be involved in broadcasting in the U.K., that could pose a real dilemma for News Corp. — either boot Murdoch out of running the company, or you lose the stake in BSkyB.

Brancaccio: And briefly, could this affect Murdoch’s News Corp holdings here in the U.S.?

Beard: Yes, it seems likely that it will strengthen the hand of those U.S. investors who have been arguing that Murdoch’s control over the company — that he built — is now bad for the company and should be reduced.

Brancaccio: Marketplace’s Stephen Beard in London. Thank you very much.

Beard: It’s my pleasure.

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