Murdoch’s U.K. Press Scandal Verdict May Bring Blame, Rules

After 102 days of hearings about phone hacking, celebrity stalking and Rupert Murdoch’s meeting on a yacht with David Cameron, a U.K. judge will issue a report on press ethics that publishers say will threaten free speech.

Justice Brian Leveson’s findings tomorrow in London may criticize Murdoch, the chairman of News Corp. (NWSA), and his deputies for a wide range of scandals that festered at his British tabloids. The media-ethics probe was called for by Cameron, the prime minister, last year to quell public anger over the wrongdoing and make proposals for regulating newspapers.

The probe, with celebrity witnesses including Harry Potter author J.K. Rowling and British actor Hugh Grant, an alleged phone-hacking victim, captivated Britain for months. Cameron and three of his predecessors, as well as Murdoch, also testified, underscoring the importance of the inquiry.

“It’s a question of how strongly those comments are going to be worded” and whether Leveson “sticks to institutional issues or goes beyond that and says there were particular bad guys poisoning the system,” Lorna Woods, a media-law professor at The City Law School in London, said in a phone interview. Leveson may blame the failures broadly on inadequate safeguards or fault the “influence of the Murdochs in editorial policy.”

News Corp. has spent more than $315 million on civil settlements, legal fees and costs of closing the News of the World weekly tabloid, where the hacking scandal started. More than 80 people have been arrested for intercepting voice mail and bribing public employees, including reporters at its daily Sun title, and a civil trial of claims by more than 150 hacking victims is scheduled for June.

Press Regulation

Alongside any findings about the conduct of Murdoch and U.K. journalists, the 63-year-old Levenson’s main task from Cameron was to draft new rules for press oversight. Paul Dacre, editor of Associated Newspapers, and Education Secretary Michael Gove have said any law that would regulate British newspapers for the first time will undermine media independence.

“Freedom of speech is not an unlimited right; it can be challenged by or trumped by a whole range of other people’s rights,” Woods said. Leveson will probably propose “co-regulation” where Parliament will make oversight mandatory while leaving the details to the industry, she said.

At least 86 lawmakers signed a letter opposing state regulation of the media, a move they say would threaten freedom of the press. The note, published in U.K. newspapers today, was signed by eight former Cabinet ministers and all the members of Cameron’s Conservative Party on Parliament’s Culture Committee. A letter earlier this month was signed by 42 lawmakers calling for new laws on the press.

BBC Scandals

The report comes as new U.K.-media scandals grab headlines, this time at the British Broadcasting Corp. The BBC is facing a wave of civil lawsuits after allegations one its best-known TV personalities, the late Jimmy Savile, who died last year, sexually abused girls for decades. In addition, the broadcaster has been criticized for a report on one of its news programs that linked a politician to pedophilia allegations.

Messages left at the press office of New York-based News Corp. (NWSA)’s U.K. unit, News International, weren’t returned. Cameron is “open-minded” about the Leveson report and hasn’t made any decisions in advance of it being published, his office said in a Nov. 25 posting on the Twitter Inc. social-networking site.

Leveson heard from 160 witnesses, including people who had their privacy violated by tabloids, chief among them the family of murdered schoolgirl Milly Dowler. The revelations last year that Dowler’s phone was hacked while she was missing a decade ago prompted Murdoch to close the News of the World and helped trigger the inquiry.

Murdoch Testimony

Murdoch and his son James Murdoch, News Corp.’s deputy chief operating officer who was once chairman of the U.K. unit, testified for three days in April, blaming their ignorance of corruption at the company’s tabloids on police, lawyers and subordinates.

The probe went beyond phone hacking and bribery to analyze the U.K. media’s perceived influence over police and politicians. The elder Murdoch denied suggestions by the inquiry’s lawyer, Robert Jay, that he agreed to give positive newspaper coverage to prime ministers in exchange for government favors.

The company disclosed e-mails that indicated Murdoch and Cameron met repeatedly after the politician became leader of the opposition Conservative Party in 2005, including a 2008 trip where Cameron flew on a Murdoch family member’s jet to meet the Murdochs on a yacht in Greece.

Overwhelmed Inquiry

“The inquiry has been overwhelmed by the amount of material it has had to consider in such a short space of time,” said Niri Shan, a media lawyer with Taylor Wessing LLP in London. “Some issues have not been explored properly and the media have not been given a proper opportunity to respond to some of the serious allegations made against them.”

A parliamentary committee that investigated the hacking scandal and also heard testimony from Murdoch said in a separate report on May 1 that he isn’t a “fit person‘‘ to lead a major international company.

Cameron testified at the inquiry in June about his ties to News Corp., including a friendship with Rebekah Brooks, who worked with James Murdoch when she ran the U.K. unit and now faces a criminal trial next year over phone hacking and bribery. The prime minister’s former press chief, Andy Coulson, edited the News of the World until 2007 and has also been charged.

BSkyB Bid

Brooks told Leveson in testimony in May that she discussed the company’s phone-hacking lawsuits by victims, as well as its ultimately failed 7.8 billion-pound bid for the rest of British Sky Broadcasting Group Plc (BSY) with Cameron before she resigned in July 2011.

A third of Cameron’s cabinet testified about their links to News Corp. Then-Culture Secretary Jeremy Hunt faced calls to resign after e-mails at the probe in May showed one of his aides offered inside information on Hunt’s views to a News Corp. lobbyist during the BSkyB bid. While the aide quit, Hunt was promoted to health secretary in September.

Brooks, Coulson

Leveson’s report will be published a few hours after Brooks and Coulson are scheduled to appear in court with three others in the first hearing in the criminal bribery case.

Cameron will be among a limited number of politicians who will see Leveson’s report a day early and he will comment on the day of publication, his spokeswoman Vickie Sheriff told reporters. The government will schedule a parliamentary debate for Dec. 3, she said.

Mark Lewis, one of the first lawyers to represent a phone hacking victim and a critic of Murdoch, said Leveson will probably suggest an industry-run regulator that lawmakers will make mandatory for the biggest publishers, a so-called statutory underpinning to self-regulation.

‘‘Cameron appointed Leveson -- it would be strange if he didn’t follow his recommendations,” Lewis said in an e-mail. The government may use a “carrot and stick” approach to punish newspapers that fail to join the system, possibly by taking away their value-added tax exemption if they don’t join, he said.

The previous newspaper watchdog, the industry-run Press Complaints Commission, shut down after the phone-hacking affair erupted last year. The regulator had dismissed Lewis’s early attempt at revealing the scandal and gave its support to police who wrongfully insisted the investigation was complete.

PCC Failure

While publishers may be “psychologically” opposed to government regulation, even if it’s limited, the failure of the Press Complaints Commission, which was run by industry insiders, shows government must be involved, said Andrew Terry, a media lawyer at Eversheds LLP in London.

“I think the reality is that there are real difficulties with voluntary regulation -- the failure of the PCC has shown that,” Terry said in an e-mail. “If it cannot be voluntary, it must be compulsory.”

Calls for statutory regulation have been met with strong opposition from publishers and some politicians.

Over-Regulation

“Over-regulate the press and you put democracy itself in peril,” Dacre, editor of the Daily Mail, told Leveson during testimony in October 2011. “Who should decide what’s of interest to the public? Politicians? Judges? Is that really what Britain wants?”

Cameron will be under pressure to implement Leveson’s proposals, whatever they are, because of the public perception that he’s been too close to Murdoch, said Woods, the law professor.

“There’s a sense with Cameron that a lot of cronyism is going on -- he’s certainly aware that he’ll be scrutinized,” Woods said. “He should be aware of that pressure because what’s gone on is not appropriate.”

Gove said in in February at a lunch for journalists, that the inquiry had been a mistake and that there was “a chilling atmosphere towards freedom of expression which emanates from the debate around Leveson.”

Leveson called Cameron’s office to complain about Gove’s remarks, the judge said at the inquiry in June.

While the most concrete outcome of the inquiry will be some form of regulation, Leveson’s report may also include findings about how Murdoch and his top deputies handled the scandals, which the company had suppressed. It will also analyze the way Murdoch and his deputies interacted with law enforcement and Parliament over the years, after critics said a too-close relationship created a conflict of interest.

“There’s always going to be an incentive for the press to publish salacious stories about celebrities because that sells,” said City Law School’s Woods. “Whatever regulatory body comes in should draw some clear lines to start with, because otherwise nothing is going to change.”

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.
Tap for Slideshow
Photographer: Simon Dawson/Bloomberg

Former head of News Corp.'s U.K. publishing unit Rebekah Brooks, right, exits the Royal Courts of Justice with Charlie Brooks, her husband, after testifying at the Leveson media-ethic inquiry in London, on Friday, May 11.

Close
Photographer: Simon Dawson/Bloomberg

Former head of News Corp.'s U.K. publishing unit Rebekah Brooks, right, exits the Royal Courts of Justice with Charlie Brooks, her husband, after testifying at the Leveson media-ethic inquiry in London, on Friday, May 11. Close

Former head of News Corp.'s U.K. publishing unit Rebekah Brooks, right, exits the Royal Courts of Justice with... Read More

Photographer: Sean Dempsey/AFP/Getty Images

Justice Brian Leveson will issue a report tomorrow on press ethics that publishers say will threaten free speech. Close

Justice Brian Leveson will issue a report tomorrow on press ethics that publishers say will threaten free speech.

Photographer: Chris Ratcliffe/Bloomberg

News Corp. has spent more than $315 million on civil settlements, legal fees and costs of closing the News of the World weekly tabloid, where the hacking scandal started. Close

News Corp. has spent more than $315 million on civil settlements, legal fees and costs of closing the News of the... Read More

Photographer: Simon Dawson/Bloomberg

News Corp. Chief Executive Officer Rupert Murdoch, right, testified for three days in April, blaming ignorance of corruption at the company’s tabloids on police, lawyers and subordinates. Close

News Corp. Chief Executive Officer Rupert Murdoch, right, testified for three days in April, blaming ignorance of... Read More

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.