According to Bloomberg News, if Rupert Murdoch’s Parliamentary hearing goes south on Tuesday, he may be replaced as CEO by News Corp. COO Chase Carey. In this scenario, Murdoch would reportedly remain chairman. Sources told Bloomberg that “a decision hasn’t been made,” but the move is “under serious consideration,” especially after News Corp. executives watched 80-year-old Murdoch rehearse for his appearance before Parliament and became “concerned about how he handled questions.” According to Reuters, however, the board “totally supports” Murdoch. “We’re united behind him,” a source said. As many have pointed out, Carey has one thing over Murdoch either way: that ’stache.
Murdoch pere still has the public support of the News Corp board — venture capitalist Tom Perkins, an independent member, explains that though the board learned about the hacking problem two or three years ago, it “is fully supportive of the top management.” That doesn’t exactly come as a surprise, since, as Andrew Ross Sorkin writes, the board could be nicknamed ” Friends of Murdoch.”
Of the 16 board members, nine are technically considered independent. But few would truly qualify under any definition of good corporate governance.
One supposed independent voice, Kenneth Cowley, is a former News Corporation executive who has been on the board since 1979. Natalie Bancroft, an opera singer, was named to the board when the company acquired Dow Jones, mainly as a way to way to placate its former owners, the Bancrofts. Incidentally, the News Corporation picked Ms. Bancroft.
Perkins, for instance, might be expected to speak out against, rather than so publicly for, the way the Murdochs have handled the hacking scandal: He resigned from the board of Hewlett Packard when it became clear that the company had illegally obtained the phone records of reporters. This time, not so much — despite the fact that a rundown of the News Corp. board, ranking members for independence, puts Perkins near the top of the group that might be expected to break rank.
The pro-Murdoch- board isn’t just problematic because of the scandal; it has probably cost shareholders some very real cash of late.
Over the last five years, the company’s stock has fallen precipitously after a series of strategic missteps that appeared to be more about indulging Mr. Murdoch’s personal interests than helping the company.
So board members are yoking their reputation not only to a scandal-ridden entity, but one that no longer seems to have the same nose for profits it once did; at least the Friends of Murdoch, whatever else they can be accused of, can’t be tagged with “fair-weather.”