LONDON—Was Rupert Murdoch’s decision to close the News of the World a calamitous blunder or a masterstroke? Thursday night, when a cross section of London’s media and political class assembled for the Spectator magazine’s annual summer party, the guests couldn’t quite decide. The one subject on everyone’s lips was the demise of the newspaper and the survival, for the time being, of Rebekah Brooks, chief executive of News International, News Corp.’s U.K. newspaper publishing subsidiary. Some were gleeful, some were merely exhilarated by the torrential flow of events—the News of the World was mentioned 7,000 times on Twitter in the hour and a half following the closure announcement—while others were sorry to see the closure of a newspaper title, whatever it might be.
However the decision to close the paper turns out, we have certainly come a long way since James Murdoch’s hubristic comment on the “Charlie Rose Show” back in April: “You talk about a reputation crisis—actually the business is doing really well. It shows what we were able to do is really put this problem in a box.”
The bitter irony of that statement was made all the more obvious on Friday. Around the same time that Prime Minister David Cameron was defending his decision to hire former News of the World editor Andy Coulson as his official spokesman—a post Coulson held until January of this year—Coulson was at a police station, being arrested "on suspicion of conspiring to intercept communications, contrary to Section1(1) Criminal Law Act 1977 and on suspicion of corruption allegations contrary to Section 1 of the Prevention of Corruption Act 1906." Coulson is in potential jeopardy over three lines of investigation: phone hacking, bribes to police officers, and his testimony under oath in a separate court action last year that he had no knowledge of phone hacking, which lays him open to a charge of perjury. Cameron also announced a judge-led inquiry into the phone-hacking scandal as well as a separate inquiry into the entire field of press ethics and regulation.
Coulson isn’t the only former News of the World editor in the spotlight this week. As Adweek reported yesterday, there were angry and tearful scenes in the News of the World newsroom when Brooks came to address the staff. Colin Myler, the current editor of the paper, was given barely any warning of the decision to shut it down. With security personnel standing on either side of her, Brooks explained that the acts of a few individuals had led to the closure and that she had twice offered her resignation, only to have it rejected. As reports in Friday’s papers made clear, News of the World staff believe they have been made scapegoats and that 200 jobs have been sacrificed in order to save Brooks. When she left the building after her announcement, she was again escorted by security.
One unnamed News of the World staff member told the Daily Telegraph: “Colin told us that the decision to close the paper had been made in New York, that as soon as the suits there saw that the shares had started to slide, they thought they had to cut us off.” Indeed, downward pressure on both the News Corp. and BSkyB share prices was almost certainly a key factor in reaching the decision to close the paper.
Furthermore, yesterday’s Evening Standard reported that MPs were urging major institutional shareholders in News Corp., such as Standard Life, Legal and General, and Aviva, to use their muscle to force Brooks out of her job.
With Rupert Murdoch having defended Brooks, who some describe as his surrogate daughter, and her leadership of News International, on Wednesday, it was James Murdoch’s turn to offer a ringing endorsement of Brooks yesterday.
However, the Labour MP Tom Watson, who was a prominent speaker in Wednesday’s emergency House of Commons debate on the phone-hacking scandal, told Sky News: “Let’s be clear about this, this paper has closed, but the hacking saga has not. The issue for me today is not whether Rupert Murdoch closes a paper that was going to go bankrupt because there are no advertisers or readers left, it is whether Rebekah Brooks is going to consider her position and resign as chief executive of News International. The anger will only subside when a very senior executive in this company takes responsibility for this heinous attack on British people. There are only two people in the country left who are supporting Rebekah Brooks today—Rupert Murdoch and David Cameron. I’m surprised she even bothered turning up to work this morning.”
That was yesterday. At a press conference Friday morning, Cameron, a personal friend of Brooks and her husband, said that if she had offered him her resignation he would have taken it. Of Britain’s two respected media columnists, one, Roy Greenslade, has joined politicians in calling for her to go, while another, Stephen Glover, has said that her departure is inevitable. “My belief is that Rebekah Brooks will have to go, and that James and even Rupert Murdoch may not be safe,” Glover wrote in today’s Independent. “Temporarily closing a newspaper—for that is what this announcement amounts to—should not divert our attention from the main culprits. This is a desperate ploy by a dysfunctional company.”
During the past two weeks there has been discussion of further staff cuts across News International’s four newspaper titles (the Sun, The Times, the Sunday Times, and the News of the World). The managing editorships of the two tabloids were merged; the same move was made at the two broadsheet titles. Awkward decisions about the staff cuts have been made easier by yesterday’s closure. Shifting the Sun to a seven-day publication schedule in order to suck up some of the News of the World’s lost readership is a very real possibility.
With the News of the World’s leading advertisers suspending all advertising with the paper until the police investigation is concluded, which could mean waiting for several months, the economics of the operation were beginning to look shaky. “Since the start of the economic recession, the News of the World, which has ceased to be the advertising cash cow that it once was, has struggled to attract clients, making £35m advertising revenue a year when once it generated £60m,” explained Ian Burrell, the Independent’s media editor. “Circulation figures have fallen to 2.6 million, although the £1 cover price means its sales revenue is much greater than that of the Sun. Nonetheless, in a digital future there are great advantages to having one brand rather than two, especially when one has turned toxic.”