James Murdoch pleads ignorance, again. Will his failure kill his father's dream deal?
Blog ››› ››› MATT GERTZ
James Murdoch, the chief executive of 21st Century Fox (21CF), Fox News’ parent company, would prefer you consider him incompetent rather than malicious. For the second time this decade, scandal at a company he oversaw has imperiled his father Rupert’s effort to take control of European broadcaster Sky. And for the second time, he’s pleading ignorance.
“It was news to me when we saw that number the other day,” James Murdoch told CNBC’s Julia Boorstin at an event yesterday when she asked him about the $32 million sexual harassment settlement Fox host Bill O’Reilly signed with longtime network legal analyst Lis Wiehl in January 2017, just weeks before Fox reupped O’Reilly’s contract and gave him a hefty raise. A few months later, O’Reilly would be shown the door after The New York Times reported that he or the company had paid out five previous settlements involving reports of workplace impropriety, triggering an advertiser exodus.
For Murdoch, all that matters is that O’Reilly is gone. Indeed, he appears to consider the O’Reilly affair a victory for his management style. “It’s easy from the outside to look at it and say, ‘Well, didn’t you know that?’ I think the issue becomes, how do you react to those things” once you do know, Murdoch told Boorstin.
Murdoch’s plea of ignorance is in line with 21st Century Fox’s statement that the company was aware of the settlement but not its amount. There are two problems with that argument. First, it suggests that Murdoch’s company was not interested enough to find out the terms of a sexual harassment settlement involving the network’s biggest star and preferred a strategy of plausible deniability. And second, it suggests that what matters is the size of the settlement, not the fact that it was the sixth involving O’Reilly during his tenure at Fox. That history was enough to drive the company to include language in O’Reilly’s new contract making it easier to fire him if new allegations surfaced, but not enough to give executives pause about keeping him at the network.
News of the sixth O’Reilly sexual harassment settlement could hardly have come at a worse time for James and Rupert, the chairman of 21st Century Fox’s board. British regulators are currently reviewing Rupert’s $15.4 billion takeover bid for Sky PLC, a company the mogul has sought to control for years. The U.K.’s Competition and Markets Authority is investigating whether Sky’s takeover by 21st Century Fox would put too much control of the nation’s media in the hands of the Murdochs and whether a Murdoch-controlled Sky would have a sufficient commitment to broadcasting standards.
The O’Reilly bombshell endangers the deal because it is part of a disastrous record of corporate governance at Fox, as Media Matters and others have pointed out. And much of the blame for that failure falls upon James Murdoch.
Rupert Murdoch put James in charge of 21st Century Fox in June 2015, as part of an effort to get James and his brother Lachlan to begin taking the reins of their then-84-year-old father’s media empire. Thirteen months later, Gretchen Carlson’s sexual harassment lawsuit against Fox founder Roger Ailes set off an avalanche of revelations and additional lawsuits, which exposed the network as a den of predation enforced by an institutional infrastructure geared toward silencing women. Ailes was forced out; the next year, the Times story set off a series of events leading to O’Reilly’s ouster.
The throughline in the network’s haphazard enforcement of whether it will protect its employees is whether the public is watching. Only media attention -- and the corresponding risk to the bottom line -- forces James Murdoch and the executives he oversees into action. In January, Murdoch didn’t want to know about whether O’Reilly was engaged in serial sexual harassment of his colleagues because O’Reilly was a huge network star who had made the company a lot of money over the years. And so now he pleads ignorance and hopes that the press and the British regulators will be satisfied with the action he took to rectify the situation once he had no other choice.
Tom Watson, the deputy leader of the Labour Party and shadow culture secretary, believes Murdoch’s Sky bid should be rejected in light of the O’Reilly revelations. “[Fox executives] knew they could rely on their employer to ignore serious allegations of sexual misconduct and pay huge sums to silence the women who made them,” he told The Guardian.
“The parallels with the phone-hacking scandal at Rupert Murdoch’s UK newspaper empire are unsettling,” Watson added, referring to the 2011 revelation of widespread hacking of voicemails and phones by reporters at the Murdoch-owned tabloid News of the World. Notably, it was the phone-hacking fallout that brought down Murdoch’s last effort to take control of Sky (at the time BSkyB), which was withdrawn later that year as the extent of the story became clear.
Other results of that scandal included the shuttering of the paper; the resignation and arrest of the prime minister’s spokesperson, who had been the paper’s editor when the activity occurred; several dozen settlements with people whose phones were hacked; hundreds of millions of dollars in company legal fees; the arrests of at least 16 former employees and a series of criminal trials for those involved with the phone hacking and the executives who oversaw them; personal testimony by Rupert Murdoch before a parliamentary committee that subsequently declared him “not a fit person” to run a major international company; and the resignations of several top executives in the Murdoch empire.
One of those executives was James Murdoch, who in 2012 resigned as chairman of News International, the publisher of the family’s British newspapers, which had previously included News of the World.
But then, too, Murdoch claimed ignorance of the illegal acts carried out by his company’s employees. He told a parliamentary inquiry in July 2011 that he had been unaware that phone hacking had been a widespread practice of his paper until very recently, and was “as surprised as you are that some of these arrangements had been made” by the company to suppress news of the scandal. It’s unclear whether that is true: Two News International executives subsequently contradicted Murdoch’s testimony, saying they had provided him with evidence years earlier; Murdoch stood by his story.
James Murdoch’s handling of the phone hacking scandal was seen as a major blow to his career and to his father’s hopes for a smooth succession plan. But just two years after his resignation from News International, he was promoted to co-chief operating officer of 21st Century Fox, and a year after that he became chief executive.
He was just in time to again claim ignorance over widespread abuses at a media company he oversaw. We’ll find out soon if British regulators buy his story.