Rupert Murdoch Has Another News Corp. Scandal, This Time at The Wall Street Journal [Updated]

Rupert Murdoch, chairman and chief executive officer of News Corp., speaks to members of the media outside Number One Aldwych hotel after meeting the family of murdered schoolgirl Milly Dowler, in London, U.K., on Friday, July 15, 2011. Murdoch and his son, James, are under mounting pressure from U.K. lawmakers to take responsibility for a phone-hacking scandal after bowing to calls for Rebekah Brooks to resign. Photographer: Chris Ratcliffe/Bloomberg via Getty Images Photo: Bloomberg/2011 Bloomberg

As if the phone-hacking nightmare wasn't enough, the Guardian is now reporting that the resignation of a top News Corp. executive is even more nefarious than an article in Rupert Murdoch–owned The Wall Street Journal makes it out to be. Andrew Langhoff, the publisher of the Journal's European edition, as well as the managing director of Dow Jones & Co. internationally, stepped down yesterday "following an internal investigation into two articles published in the Wall Street Journal Europe that featured a company with a contractual link to the paper's circulation department," his own paper reported. But the Guardian spells out the scam more clearly: The Journal was selling copies of the paper for as little as 1 cent to European companies to boost its circulation numbers, and in turn, even agreed to publish articles about one of the cooperating businesses.

Even though these games were being played at the European edition of the paper, the Guardian's Nick Davies reports, "Senior executives in New York, including Murdoch's right-hand man, Les Hinton, were alerted to the problems last year by an internal whistleblower and apparently chose to take no action. The whistleblower was then made redundant." Haven't we heard this all before?

According to the Guardian, the Audit Bureau of Circulation still decided to recognize the highly discounted newspapers in the Journal's sales numbers, but that in 2010, the deals made for 41 percent of the European edition's daily numbers: 31,000 copies out of 75,000.

And when one of the companies tried to back out, Langhoff promised them more than just a great price:

The addendum included a collection of side deals: the Journal would give ELP free advertising and, in exchange, the ELP would produce "leadership videos" for them; they would jointly organise more seminars and workshops on themes connected to ELP's work; but, crucially, Langhoff agreed that the Journal would publish "a minimum of three special reports" that would be based on surveys of the European market which ELP would run with the Journal's help.

But Murdoch and co. should look on the bright side: Compared to hacking the voice mail of a missing child, this is totally no big deal.

Update: The Journal insists the Guardian took it too far. Here's their full statement:

The Guardian’s inflammatory characterization of WSJE’s former ELP circulation program is replete with untruths and malign interpretations. Andrew Langhoff resigned because of a perceived breach of editorial integrity, not because of circulation programs, whose copies were certified by the ABC UK. The Guardian mischaracterizes a former employee as a "whistleblower." In fact, that employee was first investigated by the company because of concerns around his business dealings.

WSJE circulation programs were fully disclosed and certified. The practice of sponsored distribution to business schools and universities is common in the industry and clearly identified in all WSJE publisher statements. ELP was paid for legitimate services rendered; however, the manner in which they were paid was admittedly complex but nevertheless legitimate.

As we’ve stated, while the copies associated with ELP were legitimate and appropriate, we were not comfortable with the appearance of the programs and no longer have relationships with any of the third parties directly involved in these agreements.

Wall Street Journal circulation scam claims senior Murdoch executive [Guardian UK]
Publisher of WSJ Europe Resigns After Ethics Inquiry [WSJ]