Scandal at News Corp.

Life After Rupert's Reign: What Will Happen in a Post-Murdoch World?

With the Closure of the News of the World, the Rule of One of the Most Powerful Media Moguls of All Time Has Officially Begun to Wind Down

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With Sunday's closure of News Corp.'s 168-year-old News of the World -- and the arrest on Friday of its former editor -- in the wake of the phone-hacking scandal, the reign of one of the most powerful and feared media moguls of all time has officially begun to wind down.

Rupert Murdoch, 80, simply can't bounce back from this. Given The Guardian's report that a Murdoch executive may have deleted literally millions of emails in an attempt to obstruct justice, it's clear that this will drag on forever. So what happens next? Here's a look at the moves that will mark the post-Murdoch era.

Last week News Corp. stock actually ticked up a bit after the closure of News of the World. Quite simply, Wall Street sees the hacking-scandal as a mess confined to News Corp.'s newspaper operations. The company has long derived most of its revenue from its non-newspaper operations (e.g., 20th Century Fox). Plus , in the Street 's view, anytime a media conglomerate reduces its footprint in the newspaper business, well, yay.

Rupert Murdoch
Rupert Murdoch

According to reports late last week, Renault and massive British online retailer Shop Direct have pulled advertising from all News Corp. newspapers while the hacking investigation continues. For now, media buyers seem to think most News Corp. advertisers will stay put. But if even just a few more bail, the risk of a domino effect is real. Clearly it is not just News of the World that was radioactive. What we're seeing is a popular referendum on News Corp. corporate-journalistic ethics overall.

News Corp. already owns 39% of the BSkyB satellite group but wants 100% of it. Shuttering News of the World was News Corp.'s attempt at washing its hands of its inky sins and placating British satellite-industry regulators. But last week Ofcom (Office of Communications) Chief Ed Richards stated that "in considering whether any licensee remains a "fit and proper' person to hold broadcasting licenses, Ofcom will consider any relevant conduct of those who manage and control such a license." After sending out a signal that blatant, it would be politically disastrous for Ofcom to proceed apace with approval.

Last fall, Slate's Jack Shafer called the phone-hacking scandal "Murdoch's Watergate." But we're unlikely to get a Nixon-esque photo op -- no images of Rupert being spirited away from News Corp. HQ one last time by helicopter -- simply because the Murdoch family maintains tight control of voting shares. The phone-hacking scandal will, though, accelerate the elevation of his heir-apparent son James -- already head of News Corp.'s European and Asian operations -- to CEO. Rupert will likely retain an honorary-chairman title until his dying breath, but it is "steadfastly liberal" (as The New York Times calls him) James who will really be steering the ship. (Good luck, Fox News!)

News Corp. still bothers with ink and newsprint because Rupert Murdoch is a newspaper fetishist. But in the wake of the rapid closure of News of the World, James can say, "See, Pop? That wasn't so hard." Investors will applaud -- indeed, compel -- further reduction of News Corp.'s exposure to the sinking newspaper sector, and will finally have the momentum to counter Old Man Rupert's newsy nostalgia. First to go (by , I'd say, 2015): The perpetually money-hemorrhaging New York Post. And when Rupert is either dead or no longer lucid, his late-life folly, the purchase of The Wall Street Journal, gets undone. The buyer? Bloomberg.

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