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Two top News Corp. executives resign

Les Hinton resigns as chief executive of Dow Jones & Co. and publisher of its Wall Street Journal. Rebekah Brooks steps down as chief of News International in London. Mogul Rupert Murdoch apologizes to slain girl's family.

July 16, 2011|By Joe Flint, Meg James and Henry Chu, Los Angeles Times
  • The British phone-hacking scandal embroiling News Corp. led to Fridays resignations of Les Hinton, left, CEO of Dow Jones & Co. and publisher of its Wall Street Journal, and News International chief Rebekah Brooks, seen in 2005 sitting near Rupert Murdoch.
The British phone-hacking scandal embroiling News Corp. led to Fridays… (Graeme Robertson, Getty…)

Reporting from Los Angeles and London — The News Corp. phone-hacking scandal claimed two high-ranking executives running the company's U.S. and British operations as Chief Executive Rupert Murdoch tried to stem the fallout from a growing crisis he had been downplaying.

The resignations of longtime Murdoch intimates Les Hinton as chief executive of Dow Jones & Co. and publisher of its Wall Street Journal and Rebekah Brooks as chief of News International in London came hours apart Friday.

Hinton was in charge of News International and Brooks was editor of its News of the World when many of the hacking incidents are alleged to have occurred. Murdoch closed the 168-year-old tabloid last week amid the scandal.

Murdoch himself apologized Friday to the family of a 13-year-old homicide victim whose phone allegedly had been hacked by News of the World operatives in 2002 while the girl was still missing. A full-page apology he signed was scheduled to appear Saturday in all British national newspapers under a banner headline saying, "We are sorry."

Members of Parliament had been demanding Brooks' ouster, but it was Hinton's exit that was most dramatic, given his 52-year association with Murdoch.

"That this passage has come to an unexpected end, professionally, not personally, is a matter of much sadness to me," Murdoch said in a statement.

The flight of top executives underscores the severity of the crisis that has News Corp. on the ropes. The company has tried to contain the damage by mounting a public relations offensive after being battered for nearly two weeks by rival news organizations and government officials on both sides of the Atlantic.

On Thursday, it was disclosed that the FBI had launched an inquiry to determine whether Murdoch's minions hacked into the phones of victims and families of the Sept. 11, 2001, terrorist attacks at the World Trade Center and Pentagon.

Industry experts believe that Friday's developments are designed to protect Murdoch and his son and heir apparent, James, from further scrutiny by isolating the problem to Brooks and Hinton. The company has hired public relations firm Edelman to help navigate the crisis.

"Heads had to roll, and it seems the appropriate heads did roll," said Laura Martin, media analyst with Needham & Co. "Even the prime minister of Britain, David Cameron, had been saying that Brooks had to go. Maybe Hinton was the sacrificial lamb. They needed someone other than James, so it had to be a pretty senior executive."

"Murdoch is trying to keep his empire in the U.K. intact," Martin said.

Robert Eckerstrom, director of Moody's Capital Markets Research, warned about investing in the company, writing in a note: "The ramifications of the recent discoveries may grow as more questionable practices are uncovered."

In a statement Friday, Hinton appeared to provide a defense for the Murdochs.

"There had never been any evidence delivered to me that suggested the conduct had spread beyond one journalist," reiterating what he had testified in Parliament four years ago. "If others had evidence that wrongdoing went further, I was not told about it."

The spotlight now shifts to the Murdochs, who plan to answer questions about the imbroglio Tuesday in Parliament. The younger Murdoch had approved payments to victims of the phone hacking, but last week he said he had done so without knowledge of the full scope of questionable reporting practices.

The departure of two key members of Murdoch's inner circle also raises the profile of Chase Carey, News Corp.'s president and chief operating officer. Carey, an American who rejoined the company in 2009 after six years as head of El Segundo-based DirecTV, has yet to be tainted by the hacking scandal.

It was Carey, for instance, who announced this week that News Corp. would withdraw its $12-billion bid to acquire the 61% of satellite TV firm British Sky Broadcasting that it didn't already own.

A longtime lieutenant of Murdoch, Carey could take on even greater responsibilities if the company decides James Murdoch no longer figures into the company's succession plans. Carey is well-regarded on Wall Street, which is eager for signs that the situation is being brought under control.

Until Friday, News Corp. and the Murdochs had sought to downplay the scandal. A day earlier, the Journal quoted Rupert Murdoch as saying the company had handled the crisis "extremely well in every way possible," making just "minor mistakes." Murdoch expressed irritation with rivals' coverage, saying he was "just getting annoyed."

But Murdoch appeared to change course Friday.

"We are sorry for the serious wrongdoing that occurred. We are deeply sorry for the hurt suffered by the individuals affected," Rupert Murdoch wrote in the ads. "We regret not acting faster to sort things out."

A News Corp. spokeswoman did not respond to requests for comment.

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