A month since the phone-hacking scandal claimed Dow Jones & Co. CEO Les Hinton, his lack of successor is turning out to be another elephant in the room for News Corp.
Hinton had been publisher of The Wall Street Journal and CEO of its parent Dow Jones for the past four years. But Hinton, a lifelong Rupert Murdoch lieutenant, had come under scrutiny because he presided over the British subsidiary News International for 12 years prior, when much of the alleged phone hacking took place. He resigned July 15.
The other high-ranking casualty of the scandal, Rebekah Brooks, was swiftly replaced after she resigned as CEO of News International. The company doesn’t seem to be in the same rush to replace Hinton, though.
A company source said a search is underway, with internal and external candidates being considered. But News Corp. won’t say who is leading the process or when it expects to name a successor. The company didn’t bother addressing the matter on its most recent earnings call.
With the economy heading into another maelstrom, it’s a bad time for any company to have a gap in its leadership. What’s more, the company has to think about the impact on internal morale, given speculation that the scandal might hasten a spinoff of News Corp.’s newspapers. The company’s reaction to all this seems to be to tamp down gossip. As one editorial staffer said darkly, “We’ve all been warned not to talk about it.”
Murdoch has a history of putting his own people in top roles, which would argue against the outsider scenario. The most obvious insider candidate, Todd Larsen, president of Dow Jones, could still be tapped. He joined the company 12 years ago, long enough that he’s not considered an outsider. He’s credited with helping build the company’s digital strategy, considered one of the few examples of a successful paid online news model. But he’s not a News Corp. crony, either. Larsen came to News Corp. under its previous ownership from Booz Allen Hamilton, and his distance from the scandal could make him a safe bet.
With all the troubles roiling News Corp., Dow Jones could do itself a favor by going outside for a CEO, though. “The challenge is going to be distancing themselves from all the problems going on in the company,” said Larry Kramer, founder of CBS Marketwatch.com, now part of Dow Jones, and a director of various media companies. “The smartest thing for them to do is find someone with journalistic credibility in the U.S.” Whether it can find someone to take a role overshadowed by scandal is another matter.