A News Corp. Without Rupert Murdoch?
Many of the day after headlines covering Rupert and James Murdoch's appearance before Parliament focus on the sensational shaving foam attack, Wendi's left hook and David Cameron's inquisition before the House of Commons. But buried beneath the history of pie throwing and Chinese bloggers' praise for Rupert Murdoch's wife is some stark analysis of what the News Corp. board thought of their aging CEO's absent-eyed performance at the hearings.
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After Murdoch's appearance in Parliament Tuesday morning, Bloomberg reported that News Corp. was considering elevating Chase Carey, the company's current chief operating officer, to CEO. Based on interviews with corporate governance experts, Bloomberg suggests in a follow-up story that emboldens their original report, which came from anonymous sources, that Murdoch's refusal to take responsibility will further hurt his credibility with the board:
“If he didn’t know what was going on, he’s doing a lousy job as CEO and the board should replace him,” said Jay Lorsch, a Harvard Business School professor. “The board should be asking, ‘Where were you?’ The buck stops with him.”
Chief executive officers who don’t hold themselves responsible for crises at their companies often have stepped aside under pressure. While Murdoch’s almost 40 percent voting control makes an involuntary ouster unlikely, the weight of the crisis may ultimately persuade him to give up the CEO post, said Sydney Finkelstein, a professor of management at Dartmouth College’s Tuck School of Business in Hanover, New Hampshire.
Bloomberg's bullish take on Chase Carey replacing Murdoch is echoed in the British press. The Telegraph reports that the company's directors could use Murdoch's "doddery" performance as an excuse to challenge the family's grip on the company. "I would absolutely prefer Chase Carey," a manager at a hedge fund that invests in News Corp. told the paper. "I don't put much weight on the Murdochs' outward appearance [before the Select Committee] but I do put weight on how the independent directors feel. They may use this as an opportunity to push Rupert Murdoch upwards to be a non-exec."
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The board itself has remained vague with their response to the Murdoch hearings. "The News Corporation Board of Directors was shocked and outraged by the allegations concerning the News of the World, and we are united in support of the senior management team to address these issues," said board member Viet Dinh in a press release. "In no uncertain terms, the Board and management team are singularly aligned and committed to doing the right thing."
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The careful wording of the two-sentence statement does not specify whether that their support is pointed at Murdoch or at Chase Carey or both. But the independent directors are showing signs of grappling with the crisis on their own. Tuesday, the board hired its own legal team to deal with the fallout over phone hacking. In an interview with The Wall Street Journal, billionaire investor and board member Tom Perkins tipped his hat to Murdoch but reiterated his concern for shareholders' interests.
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"The board honestly thinks Rupert is a genius and we need him and the company needs him," said Perkins. "Our worry is the shareholders at this point. The British police will take care of the hacking victims. The next step is not to let the company go down the drain on this thing because we're focused on events in London that are a small percentage of our business overall."
