Voicemail Scandal Hits News Corp Where It Hurts
The voicemail hacking scandal that shut down its News of the World tabloid in London has taken its toll on News Corp's bottom line. The media conglomerate on Wednesday said in an SEC filing that while total revenue rose to $7.96 billion, its profits dropped 5 percent. At the center of its profit drain were the costs of closing down the tabloid and its legal costs connected with its bid to gain full ownership of BSkyB, the British satellite service -- a bid that was forced to abandon in the wake of the hacking scandal. In a conference call, News Corp COO Chase Carey said that despite recent published reports raising questions about the veracity of James Murdoch, who has been regarded as the probable heir to his father Rupert's business but who faces questioning by members of Parliament next week about his claims that he knew little about the hacking, the younger Murdoch still enjoys the company's confidence. "James has done a good job," he maintained. Meanwhile, an upcoming article in Vanity Fair claims that early this year, Murdoch siblings James, Lachlan, Elisabeth and Prudence "had been in family counseling with a psychologist over the issue of succession. "Elisabeth blamed her brother for allowing the phone-hacking scandal to spiral out of control," the Vanity Fair article claims. "She approached her father and urged him to take control of the situation." The article was written by Sarah Ellison, a former reporter for the News Corp-owned Wall Street Journal.