News Corp. brushes off scandal during quarterly call
Although News Corporation posted better numbers than analysts expected in its quarterly earnings report on Wednesday, everyone was more interested in hearing about the News of the World scandal.
Speaking during a call with investors, CEO Rupert Murdoch went on the defensive immediately and took a hard stance against the News of the World reporters who hacked into cell phones illegally, causing the 168-year old newspaper to shutter forever:
I'll be very clear about where I stand. [I've] run this company for more than 50 years. The kind of behavior that occurred in that newsroom has no place at News Corporation. It does not reflect the actions and beliefs of our more than 50,000 professional employees. The goal the Board and I believe I should continue in my current role as Chairman and CEO but make no mistake, Chase Carey and I run this company as a team and the strength of that partnership is reflected in our improved results. I'm personally determined to put things right when it comes to the News of the World. Likewise, our Board of Directors and senior management are acting decisively to get to the bottom of what happened...
The Board and the Company have retained independent outside counsel. In addition, our nominating corporate governance entity has engaged to advise on our corporate governance practices. We are all committed to doing the right thing. We have taken decisive actions to hold people accountable and we will continue to do whatever is necessary to prevent something like this from ever occurring again. There can be no doubt about our commitment to ethics and integrity.
As evident by News Corp.'s Q4 earnings, it hasn't taken a serious hit because of the scandal -- although that we could see that very well change three months from now.
Murdoch explained that "there's been no material impact on our operations outside of the closure of the News of the World." However, CFO Dave DeVoe added that the "elimination of the operating contributions from the News of the World" as well as because of lower results in Australia will hurt the company.
Fortunately for News Corp., DeVoe noted that the "absence of nearly $230 million in operating losses from MySpace in fiscal 2012" will benefit and offset other losses to some extent. The once-great social media company was sold off for $35 million in June to Specific Media. However, actor/musician Justin Timberlake was brought on by the new owners to help resuscitate some life into the beleaguered social network.
The joke is on News Corp. now, right?
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