Murdoch resigns from his papers' boards

The British newspapers were key to building his fortune over the years after he expanded his media holdings beyond Australia

After more than a year of scandal in his British newspaper empire, Rupert Murdoch has resigned his directorships in a string of companies that control titles that include The Sun tabloid, The Times and The Sunday Times, raising fresh speculation that he may be planning for an eventual sale of the newspapers that were a major steppingstone during the decades in which he built his global media empire.

A company spokeswoman said Saturday that Murdoch, the 81-year-old founder of the News Corporation, resigned last week as a director of the NI Group, the Times Newspaper Holdings, and Newscorp Investments in Britain. Those companies are subsidiaries of the News Corporation, Murdoch’s $53 billion New York-based company whose assets include The Wall Street Journal, the Fox Broadcasting television networks and the 20th Century Fox film company.

Apparently eager to calm disquiet among thousands of staff members at the British newspapers, who received a corporate email confirming Murdoch’s moves on Saturday, the company offered assurances that Murdoch and his family had no immediate plans to sever their connection to the newspapers. The British newspapers were central to building Murdoch’s fortune in the years after he expanded his media holdings beyond his native Australia, and before he moved on to expanding his empire with far more profitable enterprises in the United States.

“Last week, Murdoch stepped down from a number of boards, many of them small subsidiary boards, both in the UK and US,” a spokeswoman for News International, the British newspaper subsidiary of the News Corporation, said Saturday, speaking on the condition of anonymity in line with company policy.

She described Murdoch’s resignations from the British directorships as “nothing more than a corporate housecleaning exercise” ahead of the restructuring announced last month that will split News Corporation into two separate entities. One company will consist primarily of newspapers and other print assets, while the other will own the far more profitable television and film enterprises. The latter businesses generated an operating profit of $4.6 billion in the fiscal year that ended June 2011, more than five times what the publishing businesses earned.

The email outlining the move to staff members said Murdoch would remain personally involved in the British newspaper operations, enterprises he has often said were central to a lifelong passion for newspapering, as chairman of the newspaper and publishing business that will be set up as part of the split, according to an employee who did not want to be identified as discussing a confidential internal document.

Still, the move was a remarkable turnaround. Last February, Murdoch skipped the Oscars and flew to London to personally oversee the inaugural issue of the Sunday version of The Sun, pledging his “unwavering support”  in a memo to employees.

The British newspapers, with which Murdoch has had a strong personal bond since moving his corporate base to London from Australia in the 1960s, have been badly tarnished in the past year by revelations of widespread phone hacking and other newsroom wrongdoing, particularly at The Sun and The News of the World, a 168-year-old tabloid that was one of the country’s most profitable papers.

According to company officials who claim to be familiar with his thinking, the scandal has convinced Murdoch that the British newspapers, including The Times and The Sunday Times, which have been racking up tens of millions of dollars in losses in recent years, have become a financial and reputational drag on the News Corporation’s other holdings. On both sides of the Atlantic, there has been mounting speculation among corporate analysts that he would seek to sell the newspapers once dozens of impending lawsuits stemming from the phone-hacking have been concluded.

The scandal has led to a wide-ranging investigation by Scotland Yard, whose investigators have been looking into allegations that the Murdoch-owned newspapers illegally intercepted the voice mail messages of hundreds of people, including politicians, athletes, celebrities and crime victims, and that the wrongdoing extended to computer hacking and payments to public officials, including police officers, in search of scoops.

The scandal prompted Murdoch to close The News of the World last summer, and led in recent months to the arrest of about 50 people, many of them executives, editors and reporters at the Murdoch-owned newspapers, on suspicion of criminal activities. In recent weeks, some of those arrested have been formally charged, including Rebekah Brooks, who resigned as chief executive of News International when the scandal broke last year.

Brooks and her husband, Charlie Brooks, a racehorse trainer, have been charged with conspiracy to pervert the course of justice. Both have been close friends of Prime Minister David Cameron, whose government has been caught in a bitter controversy over the web of connections among Britain’s newspapers, politicians and the police.

The ramifications have been explored for the past nine months by a judge-led inquiry into the scandal that has produced a drumbeat of embarrassing headlines for Cameron and the Conservative Party, as well as for his Labour Party predecessors as prime minister, Gordon Brown and Tony Blair.

Company representatives did not return messages seeking further comment on Murdoch’s resignation from the British corporate boards on Saturday evening.

Before his resignation from the British directorships became public, Murdoch had signaled a waning interest in his British operations.

In the wake of announcement that News Corporation would split, he told the Fox Business channel that he had decided to step back from efforts to acquire all of British Sky Broadcasting, or BSkyB, a British satellite television network that is 39 per cent owned by the News Corporation. The abandonment of a $12 billion offer to acquire the remaining shares in the company, announced as the phone hacking scandal grew last year, was part of the heavy price the Murdochs have paid for the tabloid scandal.

Referring to billions of dollars that the News Corporation had amassed for the BSkyB bid, Murdoch said, “If Britain doesn’t want them, we’ll invest them here. I’m much more bullish about America than I am about England.”

It was not immediately clear whether Murdoch’s American newspaper and publishing interests would be affected by the moves announced Saturday.

David Carr contributed reporting from Montclair, New Jersey.

© 2012 The New York Times News Service