The United Kingdom’s biggest selling newspaper is set to close this Sunday. In an unprecedented move News International Chairman James Murdoch has ordered the closure of the 168 year old News of the World (NOTW) tabloid. Despite a circulation of nearly 3 million and a readership estimated at 7.5m every Sunday, the News Corporation group newspaper had had its reputation severely damaged from the phone hacking scandal that has left the British public and politicians in uproar.
According to the BBC, the first story published to raise concerns of phone hacking by NOTW was a November 2005 article about a knee injury Prince William sustained, which prompted fears that his aides’ phone voicemail messages were being intercepted. Whilst the turmoil over the hacking has been brewing in the United Kingdom for many years, it was not until this week that News International and parent-company News Corporation took the decisive move to shut down NOTW as more phone hacking allegations came to light. Allegations that the phones of a murdered girl and the relatives of dead soldiers had been hacked on top of the hundreds of celebrities, politicians and royals was enough for James Murdoch to close the curtain on the paper this weekend.
The allegations that the hacking had gone beyond public figures this week also saw many advertisers withdraw their ad spend in the Murdoch daily. Companies such as Halifax, Virgin Holidays, Renault, Vauxhall (UK’s General Motors brand), Mitsubishi, Aldi, Ford, O2, 3 mobile, supermarket Sainsbury and Boots all withdrew advertising from the newspaper in the last few days. According to reports NOTW takes about £660,000 in advertising income each weekend.
In a statement released on Thursday (7 July) James Murdoch said that the steps taken to close the paper were to address a very serious problem and that News Corporation is committed to journalism and a free press. He said,
“…The good things the News of the World does, however, have been sullied by behaviour that was wrong. Indeed, if recent allegations are true, it was inhuman and has no place in our Company. The News of the World is in the business of holding others to account. But it failed when it came to itself.
In 2006, the police focused their investigations on two men. Both went to jail. But the News of the World and News International failed to get to the bottom of repeated wrongdoing that occurred without conscience or legitimate purpose. Wrongdoers turned a good newsroom bad and this was not fully understood or adequately pursued.
As a result, the News of the World and News International wrongly maintained that these issues were confined to one reporter. We now have voluntarily given evidence to the police that I believe will prove that this was untrue and those who acted wrongly will have to face the consequences….”
Mr Murdoch went on to confirm in his statement that the Company had paid out-of-court settlements and that there are two major and ongoing police investigations, which News International are cooperating with “fully and actively”. Other key steps which News International have taken to repair the fallout from the scandal includes:
- admitting liability in civil cases
- established a Compensation Scheme, with cases to be adjudicated by former High Court judge Sir Charles Gray.
- established an internal Management and Standards Committee
- hired Olswang to examine past failings and recommend systems and practices that in the future should become industry standard
- welcomed broad public inquiries into press standards and police practices
Mr Murdoch said that it was necessary to take “decisive action” hence the last edition of the paper will be published this Sunday. Colin Myler will edit this final edition of the paper that was bought by Rupert Murdoch in 1969.
Mr James Murdoch also said,
“… In addition, I have decided that all of the News of the World’s revenue this weekend will go to good causes.
While we may never be able to make up for distress that has been caused, the right thing to do is for every penny of the circulation revenue we receive this weekend to go to organisations – many of whom are long-term friends and partners – that improve life in Britain and are devoted to treating others with dignity.
We will run no commercial advertisements this weekend. Any advertising space in this last edition will be donated to causes and charities that wish to expose their good works to our millions of readers.
These are strong measures. They are made humbly and out of respect. I am convinced they are the right thing to do.“
The full statement by Mr James Murdoch can be read here.
Earlier in the week Rupert Murdoch, Chairman and CEO of of News International’s parent, News Corporation said,
“Recent allegations of phone hacking and making payments to police with respect to the News of the World are deplorable and unacceptable. I have made clear that our company must fully and proactively cooperate with the police in all investigations and that is exactly what News International has been doing and will continue to do under Rebekah Brooks’ leadership.
We are committed to addressing these issues fully and have taken a number of important steps to prevent them from happening again. I have also appointed Joel Klein to provide important oversight and guidance and Joel and Viet Dinh, an Independent Director, are keeping News Corporation’s Board fully advised as well.”
The decision to close the NOTW appeared to be the only step left that the Murdoch empire could take in order to slow the outrage that has been growing in the UK and has now gained significant attention overseas. As News Corporation seeks to win UK Government approval of its takeover of British Sky Broadcasting for £7.8 billion the phone hacking scandal allegations has put a dent in this takeover and BSkyB shares are trading down 5% this week, wiping some £666 million off the value of the business as News Corporation seeks to takeover the remaining 61% of BSkyB. There is growing pressure for the British Government to withhold approval of the takeover in light of the phone hacking scandal.
What more hacking allegations are alleged over the next days and weeks only time will tell, but the ongoing furore of this scandal has certainly damaged the reputation of News International in the UK and is beginning to damage the global image of the Murdoch media empire. The move to close NOTW has brought speculation that the Sunday paper will be replaced its weekly sister paper The Sun as the domain names TheSunOnSunday.co.uk, TheSunOnSunday.com and SunOnSunday.co.uk were registered two days ago.
The unprecedented move to close News International’s most successful tabloid is a sign of the seriousness of the phone hacking scandal and is the first step for News International to rebuild its brand the UK and ensure a successful takeover of pay-TV giant BSkyB. For the record News Corporation shares in Australia are down 3.61% or $0.62 cents to $16.55 in earlier trade on Friday (8 July), according to Bloomberg’s iPad App.