News Limited is seeking to distance itself from the phone hacking scandal engulfing Rupert Murdoch's British media outlets by proving it has not been engaging in similar practices.In an open letter to Australian staff, CEO John Hartigan says News Limited will examine its books to make sure no payments have been made to private investigators.
It comes as News Corp today announced it would buy back up to $5 billion worth of its own shares, with Mr Murdoch scrambling to keep control of his empire. Mr Hartigan says he has no reason to suspect any wrongdoing at News Limited in Australia and he describes media attempts to connect the behaviour of News Of The World staff in the UK with News Limited's conduct in Australia as "offensive and wrong". "We will be conducting a thorough review of all editorial expenditure over the past three years to confirm that payments to contributors and other third parties were for legitimate services," he said.
Mr Hartigan also said he had in recent days had two lengthy discussions with Australian Press Council head Julian Disney, who recently appointed a person to devise a new set of national standards for the industry. Last week Mr Hartigan condemned the practices exposed at the News of the World, which printed its final paper on Sunday. But analysts say concerns are mounting that the bad press News Corp has received in the UK will result in further trouble for them in the US.
"There is clearly a bit of an unknown about just how far can News Corp unravel if this gets into the US as well, [and] starts to affect subscriber numbers to their US businesses," Paterson's Securities advisor Marcus Padley said. "Then there's going to be more damage. So they're just trying to put a cap on it."
The effect of all this on the stock price has been brutal, with its ASX listed shares shedding over 7 per cent just in the last few days. Mr Padley says the aim of the share buyback will be to help support the sliding share price.
Commentators also say Murdoch is worried about losing his grip on his media empire.
"Assuming that close to 80 per cent decided to vote against him, they could vote him out now on the ratio that 6 per cent of voting stock is held by non-Murdoch family interests," CCZ Equities media analyst Roger Coleman said. "Forty per cent [is] owned by Murdoch."
This latest share purchase will help Mr Murdoch achieve ownership of 50 per cent of voting stock. IG Markets institutional dealer Chris Weston says the News Corp brand has been dragged through the mud. "It's the nature of the business, the brand, that's very much been called into question," he said. "It's the high-profile nature of the people that have been called into question, who are questioning the brand and whilst News of the World is a very small percentage of their overall image, it's the perception of how this potentially could impact other areas of the business."
Mr Weston says News Corp's history of buying other companies leaves a lot to be desired. "News Corp is a company that has got a terrible reputation in terms of their activity. They always buy at ridiculous prices and they've got a bad name in that regard. Look at the MySpace transaction recently, for example," he said.
Author | Source | ABC/AAP | Photo News Ltd CEO John Hartigan
I believe the Australian Parliament should hold a Senate Committee inquiry into the conduct of media practices in Australia with the aim of uncovering any illegal behaviour. Australia must learn from the misdemeanour of overseas practices having in mind that News Ltd is the Australian arm of a global organisation controlled by Rupert Murdoch.