DeadlineNow Morning Report: UK Hacking Verdicts, UTA Sues ‘Unforgettable’ Star, ‘American Idol’ Judges Return (Video)
News Of The (Media) World: Split Decision Frees Rebekah Brooks, Cuffs Andy Coulson In Murdoch’s Hacking Scandal
UPDATES WITH NEW INFORMATION: A 130-day trial highlighted by testimony as lurid as the tabloid headlines at its center ended today with a split decision for two of media mogul Rupert Murdoch‘s most trusted consiglieres. Rebekah Brooks, the flame-haired former head of Murdoch’s U.K. print operations, was found not guilty on five charges related to the notorious telephone-hacking scandal that resulted in the 2011 shuttering of the News Of The World scandal sheet. The official jury findings were not guilty on one count of conspiracy to hack voicemails, two counts of conspiracy to pay public officials and two counts of conspiracy to pervert the course of justice
Brooks’ successor, bespectacled tabloid editor Andy Coulson, the former communications chief to Prime Minister David Cameron, may face prison time, having been found guilty of conspiring to hack phones while he ran the News Of The World. The jury is still considering charges of misconduct in public office against Coulson and former News of the World royals editor Clive Goodman.
Coulson, a former lover of Brooks’s, was the only one among seven on trial found guilty of conspiracy to intercept mobile phone calls and messages. The Cameron connection will undoubtedly exacerbate reaction to the decision, as the verdicts reverberate through UK and U.S. political and media centers.
Only U.S.-Based News Corp Phone-Hacking Suit Dismissed; Angelina Jolie’s Stunt Double Must Pursue Case In UK
Confirming his tentative ruling from February, a federal judge has formally dismissed the U.S.-based phone-hacking scandal suit against News Corp filed last June by a stunt double for Angelina Jolie. “The underlying facts here do not seem to be in dispute, at least by these parties. It appears, and certainly is alleged, that Plaintiff Eunice Huthart has suffered a grotesque invasion of her privacy,” said Judge Michael Fitzgerald this week, granting the dismissal motion by the media giant in the first and only American-based suit in the wide-reaching scandal. “Nonetheless … the Court concludes that Huthart must obtain her relief from the courts of England and Wales,” he added in the order (read it here) filed Wednesday. Despite attempts by Huthart in March to keep the case in the U.S. with an argument that a move to the British courts would be the “litigation equivalent of purgatory,” this latest order is almost verbatim what the judge said in his tentative ruling in February.
In her initial complaint filed on June 13, 2013, the England-born Huthart — whose most recent gig was as a stunt coordinator on Disney’s upcoming Maleficent starring Jolie — claimed her cell phone was hacked in 2004 while staying in the U.S. and working with Jolie on Mr. And Mrs. Smith. Her fears turned out to be correct when Huthart’s name and phone number later turned up in the notes of Glenn Mulcaire, the jailed P.I. who worked for the now-shuttered Rupert Murdoch tabloid News Of The World. That hacking seems to be connected to a number of stories about the early days of Jolie’s relationship with her Smith co-star Brad Pitt.
The mostly publishing company that split from Fox last year will pay $455M in Canadian dollars (about $415M U.S.) for the Toronto-based specialist in romance novels. About 99% of HarperCollins‘ books are in English, so with more than 1,300 authors and reach into more than 100 global markets, Harlequin is eyed to provide a boost for News Corp. The deal “is expected to provide an immediate lift to earnings,” News Corp CEO Robert Thomson says. He calls this “a significant step in our strategy to establish a network of digital properties in the growth regions of the world.” Harlequin will remain a distinct brand at HarperCollins and give it “an immediate foothold in 11 new countries from which we can expand into dozens of foreign languages for authors who choose to work with us globally,” the publishing unit’s CEO Brian Murray says. The deal is expected to close in Q3 following approval by shareholders of Harlequin’s parent company, Torstar Corp. It reported that Harlequin generated C$398M ($363M U.S.) in revenues last year with C$56M ($51M U.S.) in cash flow using international accounting rules, which differ from those in the U.S.
NEW YORK– Social news agency Storyful, a division of News Corp, has partnered with Facebook for the launch of FB Newswire (http://www.facebook.com/FBNewswire), a resource that will make it easier for journalists and newsrooms to find, share and embed newsworthy content from Facebook in the media they produce.
More than one billion people use Facebook to discover, explore and participate in news-making events around the world. Powered by Storyful, which discovers, verifies, acquires and distributes timely and relevant video and user-generated content, FB Newswire is a resource for journalists that aggregates newsworthy content shared publicly on Facebook by individuals and organizations across the world. This includes original photos, videos, and status updates posted by people on the front lines of major events including protests, elections, and sporting events.
Rupert Murdoch is all over Twitter. (“My family are horrified that I’m on it,” he says.) But in agreeing to sit down for a broad interview with Fortune, one of the media industry’s most powerful moguls signals that he’s finally ready to return in a serious way to the public stage that he has largely abandoned as he grappled with his UK hacking scandals and a bitter divorce, as well as uncertainty about the prospects for his media empire — which he split into two companies last year — and his succession plans. You should check out the piece by senior editor-at-large Pattie Sellers. Here are a few of the highlights:
Succession: His sons James and Lachlan are first in line to take over although “I’m going to be here for a long time. And so will [Fox COO] Chase Carey and [News Corp CEO] Robert Thomson.” The effort to bring Lachlan back intensified after a private meeting with James at last year’s Allen & Co confab in Sun Valley. “We had two or three hours together. Lachlan was not not going to come back. It was a question of how we would work together.”
Daughter Liz Murdoch’s decision not to join the News Corp board: Rupert says he’d “rather not go into that.” A lot of close families “have good arguments. That doesn’t mean they don’t love each other.” And it’s “more than possible” that she’ll return to the family business.
Who’ll be the GOP’s 2016 presidential candidate: Murdoch says former Florida Gov. Jeb Bush is “my number one” calling him “a man of very fine character.” He also has “particular admiration” for Wisconsin Rep. Paul Ryan. New Jersey Gov. Chris Christie “could recover” from inquiries into his possible role in manufactured traffic jams at the George Washington Bridge. Murdoch agrees with Kentucky Sen. Rand Paul on “a great number of things” but disagrees on foreign policy “too strongly perhaps to vote for him.”
His view of Hillary Clinton: He left open the possibility of supporting her but “it would depend on the Republican candidate totally.” He adds that he “could live with Hillary as President. We have to live with who we get. We don’t have any choice.”
Avon Pension Fund and others who owned News Corp stock from mid-February to mid-July 2011 charged in the class action suit that Rupert Murdoch, James Murdoch, former News Of The World editor Rebekah Brooks, and other execs at News Corp (before it split into two companies) committed fraud when the UK hacking scandal was unfolding. They told the public — including in testimony at Parliament — that it was just an isolated problem, and it wasn’t. When the widespread extent of the hacking became known in mid-2011, News Corp shares fell 17%, and it derailed the company’s plan to buy British Sky Broadcasting. But a U.S. District Court in New York dismissed the case today, Reuters reports. The problem? Judge Paul Gardephe said that the News Corp execs couldn’t be held liable for statements made before the period when the plaintiffs said that they lost money.”To hold otherwise would require adopting an ‘endless breach argument,’ which would permit plaintiffs to circumvent the well-settled rule that defendants are liable only for those statements made during the class period,” Gardephe says.
Lachlan And James Murdoch Given Big New Roles At News Corp, 21st Century Fox; Fox Nets Group’s Peter Rice Extends Contract
UPDATE: Below the original post is a copy of Rupert Murdoch’s memo to staff at 21st Century Fox regarding today’s appointments. In it, he notes that the evolution of the company’s leadership, “underscores the considerable planning that both the Company and the Board have undertaken to ensure a vibrant future for 21st Century Fox and its shareholders.”
PREVIOUS: In what looks like a clear sign that Rupert Murdoch is putting his succession plans in order, News Corp and 21st Century Fox made big announcements early Wednesday morning outlining changes to their boards and executive structure — and each involving Murdoch’s sons. Lachlan Murdoch has been named Non-Executive Co-Chairman of News Corp and has been given the same title at 21st Century Fox, the media and entertainment company. Also at 21st Century Fox, James Murdoch has been elevated to Co-Chief Operating Officer. Further, Fox Networks Group Chairman and CEO Peter Rice, who has close ties to the Murdoch family, has extended his contract for an unspecified term. “Under Peter Rice’s leadership Fox Networks Group has continued to push creative boundaries across the company, and has grown tremendously with successful channel launches including Fox Sports 1 and FXX, an increased international footprint and enhanced sports offerings across the world,” James Murdoch said.
The Stateside phone hacking-scandal suit that a former body double for Angelina Jolie filed against News Corp last summer looks likely to end up in the U.K. if a federal judge doesn’t change his mind. Before a hearing Monday on the company’s motion to dismiss, Judge Michael Fitzgerald said in a tentative ruling that Eunice Huthart‘s case belonged in “the courts of England and Wales” not the U.S.
Alleging that her phone was tampered with in 2004 while living with Jolie in L.A., Huthart’s initial complaint on June 13 was the first hacking scandal suit filed against News Corp and its UK Press arm in the U.S. Back in September of last year, News Corp and News International filed their motion to toss the case or have it move to Britain. After issuing his tentative and hearing arguments from lawyers representing the English-born stuntwoman and the media corporation, Judge Fitzgerald said he would take the matter under submission (read it here). Though it happens, it is very unusual for a judge to reverse himself after issuing such a clear tentative.
Lex Fenwick had joined News Corp’s Dow Jones & Co in February 2012 coming from a long run at Bloomberg Llp. He will be replaced on an interim basis by News Corp COO William Lewis while the company reviews its institutional strategy, according to a News Corp release announcing the shift. Fenwick had overseen Dow Jones’ DJX information service, which has been in beta since its launch last year. “We’re reviewing the institutional strategy of Dow Jones with an eye towards changes that will deliver even more value to its customers. As part of that, we’re planning improvements to DJX,” said News Corp CEO Robert Thomson, who also signaled greater flexibility in Dow Jones’ product offerings is likely in the works soon. Lewis, meanwhile, joined News Corp in 2010 as Group General Manager at News International (now News UK), and was appointed COO at News Corp last year. The one-time Sunday Times and Financial Times journalist will help with the review while the search for permanent replacement is completed.
Global Showbiz Briefs: China Lifts Video Game Console Ban; Fox Turkey Appointment; News Corp Commits To London; Sports Rights; ‘Downton’
China’s State Council has temporarily repealed a ban on selling foreign video game consoles, Reuters reports this morning. The move had been expected and will open up a path for the likes of Sony, Microsoft and Nintendo to sell their wares after a 14-year block. Now, “foreign-invested enterprises” will be allowed to make game consoles within Shanghai’s free trade zone and sell them in China after inspection by cultural departments. Consoles were initially banned in 2000 over concern that gaming would harm young people. Reuters says the growing market is worth a potential $14B.
Fox Turkey has appointed Shebnem Askin as EVP of programming. She was previously SVP of international acquisitions and sales at Fox International Productions and will take up her new role immediately. Her mandate will cover building on Fox Turkey’s entertainment offering and commissioning, acquiring and scheduling film, drama, factual, kids and event entertainment programming in addition to working with Fox Turkey’s channel partners in the increasingly hot TV territory. At FIP, Askin was a key player on co-productions and acquisitions including Mexico’s Academy Award entry Miss.BALA; Gaumont’s upcoming Mea Culpa directed by Fred Cavaye; and Sundance prize winner Metro Manila.
While the phone-hacking trials involving a number of its former staff continue in Britain, News Corp Monday signaled its “long term …
In a bid to ramp up its digital and video strategy, News Corp is adding social news agency, Storyful, to its stable. Storyful is a Dublin, Ireland-based news gathering platform developed and powered by journalists. The media giant paid 18M euros ($24.6M) for the company that was founded in 2008 by Mark Little. It discovers, verifies, acquires and distributes video and user-generated content to its partners and provides social media dashboards, feeds and analytics, so that customers can integrate video into their news or advertising efforts, and monitor social conversations. So far in 2013, user-generated videos managed by Storyful brought in 750M million views for its partners. The company will operate as a stand-alone business unit within News Corp which will expand Storyful’s video products and services. News Corp will also utilize Storyful’s tools to help drive engagement and revenue across the conglom’s businesses. The company has previously worked with News Corp properties like The Wall Street Journal. News Corp CEO Robert Thompson said, “Video is a vocation for the new News, which will combine with Storyful to reach a growing global audience, enhancing our own editorial products and creating new content communities.”
Jim Kennedy had joined Sony Pictures in 2005 after working as a Deputy Assistant to the President and Deputy Press Secretary to President Bill Clinton and as head of communications for the White House Counsel’s office, Vice President Al Gore, Sens. Hillary Clinton and Joe Lieberman, the Connecticut Attorney General’s office, and the Clinton Foundation. He has been overseeing media relations for SCA at Sony’s New York headquarters since October 2011. Here’s today’s release about him running communications at the “new” News Corp:
Shares are down about 2.7% in postmarket trading after News Corp reported disappointing results for the quarter ended September 30. The company generated net income of $38M, up from an $83M loss in the period last year, on revenues of $2.07B, -2.9%. Analysts expected revenues to come in at $2.2B. Earnings at 5 cents a share matched the consensus forecast. The News and Information Services unit — which includes The Wall Street Journal — was hit hardest, with revenues -10% to $1.5B. The Australian newspapers weighed on the results, with revenues -22% accounting for a majority of the decline. But the company says it also saw “moderating declines at Dow Jones and News UK.” Ad sales fell 12%, and circulation was -6%. In Book Publishing, which includes HarperCollins, revenues fell 7% to $328M. News Corp says e-book sales were up 30%, accounting for 22% of revenues, but were offset by the company’s divestiture of the Women of Faith live events business and softness in Christian publishing. Revenues would have fallen 5% without the one-time changes and fluctuations in foreign exchange rates.
On October 14, Rupert Murdoch tweeted: “Big media trials in London in 2 weeks. Remember, everyone innocent until proven guilty, entitled to fair trial in most countries.” Murdoch was referring to the criminal trial related to phone hacking at his now defunct News Of The World tabloid. This morning, eight defendants including former Murdoch employees Rebekah Brooks and Andy Coulson made it to court amid a media frenzy for what some are calling the “Trial of the Century.” It may feel like a century once the proceedings wrap sometime around Easter 2014 and after an expected 100 witnesses have been called. Jury selection began today with the prosecution starting later in the week.
While Murdoch, Brooks and Coulson are no longer linked professionally, the outcome of the trial has the potential to impact the mogul’s business going forward. Even the News Corp-owned Wall Street Journal wrote that the courtroom drama “could further embarrass both the media giant and the British government.” One of the lines of questioning during the Leveson Inquiry into UK media ethics, the probe hatched by Prime Minister David Cameron in the wake of the News Of The World scandal, focused on the relationships between politicians and newspaper proprietors and editors. With Brooks and Coulson now standing trial, this could put News Corp’s relationship with the UK government back into the spotlight. Brooks was head of News Corp‘s UK press arm, News International (now News UK), until the phone-hacking scandal first exploded at the News Of The World in July 2011. She has denied the five charges against her including conspiracy to hack phones, conspiracy to commit misconduct in a public office by paying officials for stories, and conspiracy to pervert the course of justice. Coulson was formerly editor of News Of The World. He went on to become Cameron’s spin doctor, a post he vacated in 2011. He is facing three charges related to phone hacking and conspiracy to commit misconduct in a public office. They are joined by six other defendants who have all pleaded not guilty, including Brooks’ husband Charlie, a longtime Cameron friend.
This is a shift for Institutional Shareholder Services, and a recommendation that it has to know is doomed to fail. The investor advisory firm endorsed all of the board candidates last year when Rupert Murdoch‘s entertainment and publishing properties were combined at News Corp. But ISS is upset that the mogul adopted an anti-takeover plan called a poison pill in June when he split his assets between two companies: 21st Century Fox for entertainment, and News Corp for publishing. ISS now wants Fox shareholders to oppose Murdoch, his sons James and Lachlan, COO Chase Carey, and five Murdoch allies when they’re up for election to the board at Fox’s first annual meeting on October 18. In addition, the firm wants shareholders to support a resolution calling for an independent board chairman — Rupert is CEO and chairman — and to end the two-tier stock system that enables the Murdoch family to control 39.4% of the votes even though it owns just 14% of the all shares.
This is a complicated annual exercise for 21st Century Fox — and its predecessor, News Corp — as it tries to comply with U.S. laws that bar a company from owning TV station licenses if non-citizens control more than 25% of its total voting shares. To stay under that threshold, Fox applies a discount to the votes of non-U.S. shareholders. And with 31% of its Class B voting shares held by foreigners, the company determined that it could reduce the discount to 35% from 40%. If you’ve followed along this far, you might wonder whether a process that discounts some investors’ holdings would inflate the clout of CEO Rupert Murdoch and his family who control 39.4% of the B shares. Not to worry: The company says they’ll stay at that percentage of the total by agreeing not to vote or provide voting instructions for “a portion” of their shares. When all’s said and done, about 711.9M Class B shares will be entitled to vote at the annual meeting that’ll be held October 18 in Los Angeles. As a technical matter, Fox (which includes the Fox studio and TV networks) is the same company that we knew as News Corp until June. At that point the Murdoch-controlled publishing assets and Australian media properties were spun off into a new entity that’s now called News Corp.
News Corp has paid out nearly $200 million in the past year alone in settlements related to the ongoing phone hacking scandal. Late last week, the company made it very clear that it doesn’t intend to make a payment to Eunice Huthart, a former body double for Angelina Jolie. In a June civil complaint, Huthart became the first person to file a hacking-scandal suit against News Corp and its UK press arm News International in the U.S. On September 20, News Corp filed back, asking the federal court to dismiss Huthart’s privacy violations case on a series of grounds. “The Court should dismiss the complaint on the grounds of lack of personal jurisdiction and failure to state a claim. But it need not even reach those issues — instead, the Court should dismiss this lawsuit under the doctrine of forum non conveniens with instructions that it be re-filed, if at all, in the United Kingdom,” said the motion by the company (read it here). A hearing in the case is scheduled for January 6.
It’s hard to say that the write-down hurt the publishing operation for the fiscal year that ended in June. The noncash charge, disclosed today in the company’s first annual report since being separated from Rupert Murdoch‘s Fox entertainment assets, is an improvement over the $2.6B charge it took last year. All told, News Corp ended the year with net income of $506M, up from a $2.1B loss last year, on revenues of $8.9B, +2.7%. The revenue figure is short of the $8.96B that analysts anticipated. Earnings at 87 cents a share beat forecasts for 57 cents. The uptick in revenues reflects News Corp’s consolidation of Fox Sports Australia and acquisition of publishing company Thomas Nelson, and includes contributions from the introduction in February 2012 of the Sunday edition of UK’s The Sun. But ad sales overall fell by 7.4% cutting the revenue contribution of the Australian newspapers by $350M, and Dow Jones — which includes The Wall Street Journal — by $76M. The slowdowns were a factor in News Corp’s impairment charge which it says reflects its diminished assessment of the prospects for the News and Information Services businesses in Australia and the U.S. News Corp share prices rose 1% in after-market trading.