New York Times CEO Defends BBC Tenure Amid Sex Scandal

New York Times Co. (NYT) incoming Chief Executive Officer Mark Thompson is going public to defend his leadership at the British Broadcasting Corp. amid calls for the newspaper company to reevaluate its CEO choice.

The BBC has been roiled by allegations that the popular presenter Jimmy Savile sexually abused dozens of children while he worked at the broadcaster and questions about why a BBC news program’s investigation into Savile was killed. Thompson, who led the BBC for eight years until September, said he wasn’t aware of the abuse allegations and didn’t participate in stopping the show “Newsnight” from airing its Savile segment.

“I was not involved in any way in the decision-making about the ‘Newsnight’ investigation into Savile,” Thompson said in an interview. “Our model is, unless there are exceptional circumstances, we let the editors make up their minds.”

Thompson’s comments come as some observers urge Times Co. to reexamine whether he is the best choice for CEO. The 55-year- old, scheduled to take charge the week of Nov. 12, signed an employment agreement in August valued at as much as $10.5 million, including a $4.5 million signing bonus.

Margaret Sullivan, public editor for the New York Times, openly questioned whether the company should reassess its choice on the newspaper’s website yesterday.

“His integrity and decision-making are bound to affect The Times and its journalism -- profoundly,” she wrote. “It’s worth considering now whether he is the right person for the job, given this turn of events.”

‘Ideal Person’

In a statement, Times Co. reiterated Thompson’s start date.

“We believe his experience and accomplishments make him the ideal person to take the helm of the Times Company as we focus on growing our businesses through digital and global expansion,” the company said.

Douglas Arthur, an analyst with Evercore Partners Inc. (EVR) who has covered the company for two decades, said Thompson would start in a weak position at Times Co. if he took over next month as planned.

“The Times should at least delay his start date until they know what’s going on,” Arthur said in an interview. “The Times is about to have a CEO who starts on soft ground.”

Evercore, an investment bank based in New York, works with newspaper companies. Times Co. isn’t currently a client.

Falling Advertising

Thompson’s pending arrival coincides with an advertising decline at the New York Times, the third-largest daily U.S. newspaper by circulation, and protracted negotiations with the Newspaper Guild of New York over a new contract representing around 1,100 employees at the newspaper.

“This kind of unfavorable publicity has to shine on the Times, and it’s at least got to be an embarrassment for them,” Edward Atorino, analyst with Benchmark Co. in New York, said in an interview.

Times Co., which reports financial results tomorrow, is projected to post its lowest quarterly revenue in more than 10 years, according to Bloomberg data. Sales are estimated to fall 11 percent to $479.4 million, while profit excluding some items is projected to rise to 8 cents a share from 5 cents a share a year ago, according to the average of analysts’ estimates.

In the past week, bearish options wagers against the Times Co. have climbed to the highest level ever. The ratio of outstanding puts to sell the stock versus calls increased almost 30-fold in two days to 4.1-to-1 on Oct. 22, an all-time high, according to data compiled by Bloomberg. A block of 8,500 January $10 puts changed hands that day after 10,000 traded at the end of last week, the data show.

Times Co. rose less than 1 percent to $10.65 in New York at the close. The shares have climbed 38 percent this year.

Eight Years

Thompson has come under pressure to provide more information about what he knew about the canceled report from the BBC show “Newsnight.” Last December, reporters for the show prepared a broadcast featuring interviews with women saying they had been sexually abused by Savile as children. Savile died in October 2011 at 84.

The Savile scandal has caused a firestorm in Britain. U.K. Prime Minister David Cameron said he wouldn’t rule out the possibility of a public inquiry into allegations of child abuse by Savile and added the BBC needs to ask itself “some very searching questions.” Other lawmakers have called on BBC executives, including Thompson, to provide more information on why the Savile report was canceled.

Journalistic Reasons

In a letter responding to questions from U.K. lawmaker Rob Wilson, Thompson said he was never formally notified about the “Newsnight” investigation and wasn’t briefed on the allegations about Savile. He did say in the letter that a journalist mentioned a “Newsnight” investigation to him at a cocktail reception late last year and he raised the issue with the senior management of BBC News. He said he was told the program had been canceled for journalistic reasons.

In the letter, Thompson also said that he never worked with Savile and never heard any allegations about him.

“I had no reason to believe that anyone in the BBC was withholding controversial or incriminating material” related to the “Newsnight” investigation, he said.

Top editors at the BBC knew of the pending report, including BBC News Director Helen Boaden, according to people with knowledge of the situation, who asked not to be identified because the matter is under investigation. Boaden reported to Thompson, who in addition to his title as director general of the BBC was also its editor-in-chief.

Andrew Neilson, a BBC spokesman, declined to comment.

Editorial Process

The BBC’s editorial process has been altered in recent years to allow for greater scrutiny from top editors following the suicide of David Kelly, a government scientist who was a source for a BBC report on British intelligence regarding Iraqi weapons. In 2003, a government inquiry into the broadcaster’s practices concluded that the BBC report was incorrect, the result of “defective” editorial controls.

In response, the BBC under Thompson’s leadership instituted new mechanisms whereby sensitive stories would be vetted by the top editors, according to two people with direct knowledge of the editorial workings of the BBC. The new structure has led to more centralized editorial decision-making, according to these people.

“This is the biggest scandal involving the BBC in terms of what I’ve witnessed,” Claire Enders, chief executive of Enders Analysis, said in an interview. “And why this wasn’t drawn to the attention of Mark Thompson -- this is going to cast a very very serious shadow on his last year of his leadership.”

The BBC recently appointed former Court of Appeal judge Janet Smith and former British Sky Broadcasting Group Plc (BSY) journalist Nick Pollard to head investigations into both Savile and the canceled “Newsnight” investigation.

Pollard will examine why the “Newsnight” program, reported by Liz McKean, was canceled. Smith will probe the culture and practices of the BBC during the 30 years when Savile worked at the broadcaster.

To contact the reporter on this story: Edmund Lee in New York at elee310@bloomberg.net

To contact the editor responsible for this story: Crayton Harrison at tharrison5@bloomberg.net

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