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Catch up on the 'Phone Hacking' Scandal Before News Corp.'s Board Meets in L.A.

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The last edition of News of the World on July 10, 2011

The ongoing "phone hacking" scandal in the UK may seem like a distant and isolated issue considering how limited the reporting has been in the U.S. press but it's possible that the media is shying away because it hits too close to home.

What's come to light in the past month in Britain may be indicative of unethical -- if not unlawful -- behavior that's become pervasive across all Western media in the digital age.

At the center of attention is News Corporation, owned by Rupert Murdoch. News Corp. executives will meet with board members in Los Angeles this week for the first time since the scandal, which had been brewing for years, finally broke.

News Corp.'s 16-member board will meet Tuesday and on Wednesday will discuss the results of its annual earnings, according to the Wall Street Journal, which is owned by News Corp. Among the least of its problems is a $12 billion pile of cash the company is sitting on after pulling its bid to acquire BSkyB, Britain's largest satellite broadcaster, of which it already owns 39.1 percent.

The fact that News Corp. (and its subsidiaries News Limited in Australia and News International in the UK) has extensive holdings across multiple media platforms suggests that its next moves represent an accountability moment.

What can News Corp. execs and board members do with its billions to responsibly investigate itself and assure global publics and governments that occasionally nebulous and at times illegal practices revealed in the fatal indictment of News of the World are not pervasive?

On July 7, News of the World abruptly closed its doors, just days after details of a phone hacking scandal were revealed. Sure, NOTW was a Sunday tabloid that revelled in the exploits of the rich and famous. But it was hardly a tabloid in the U.S. supermarket sense -- News of the World was a mainstay in British culture since 1843 and was the most widely read Sunday paper over much of its existence.

Since 1969, News of the World was owned by Rupert Murdoch, who's News Corporation expanded to include significant holdings around the world over the past 40 years. Since the News of the World emerged several incidents have made it clear just how directly connected influential media is with politics.

But this is nothing new. Around the turn of the 20th century it was William Randolph Hearst and Joseph Pulitzer battle to increase circulation of their respective New York daily newspapers which led to the dubious practice of yellow journalism and Hearst's highly-sensationalized opinion pieces, one of which arguably led the U.S. into the Spanish-American War.

In today's information age it's not so easy to fabricate stories without getting caught. But the media business is still dominated by the need to have a growing audience to sustain interest from advertisers. The picture emerging from the scandal in the UK is that media outlets will go to great lengths to break stories and attain new information -- even illegally -- and pay whatever price necessary to keep authorities, whistleblowers, and employees quiet.

The specific incident most commonly associated with the downfall of News of the World did not happen recently -- it occurred nearly a decade ago. After 13-year-old Milly Dowler was abducted in March 2002, NOTW hacked into her voicemails, at one point deleting messages to make room for new ones. This created false hope in the search for Dowler, who's body was found months later.

News of the World was rather transparent about its practices, detailing an instance in which a voicemail was left on Dowler's mobile by an employment agency days after her disappearance. But it wasn't until the June 2011 murder trial that these details were brought into focus. On July 4, the Guardian published the findings of its investigation into the phone hacking. Three days later, Murdoch reacted by announcing the immediate closure of News of the World foilowing that Sunday's edition.

Nick Davies, the journalist who led the investigation and often reported on unethical practices by the tabloids, discussed the fallout on Democracy Now. While NOTW journalists had been accused and convicted for hacking the phones of public figures in the past, the revelation that Milly Dowler's phone was hacked suddenly turned everyone in the public and in politics against Murdoch, said Davies.

Leveraging influence with authorities through payment or blackmail is verboten but it's an issue that crosses seamlessly over to News Corp's U.S. holdings, which include Fox News. Through his stable of newspapers, magazines, and broadcast holdings, Murdoch has "strenuously endorsed political candidates and causes and, at times, secured government favors that serve their business interests," writes Frank Rich in New York which recently published a list of politicians on News Corp.'s payroll.

Whatever action News Corp.'s board takes this week in Los Angeles, it's bound to get uglier as ongoing investigations in the UK may lead to criminal charges. Davies predicts turnover at the top, suggesting to Deadline that shareholders may vote to fire deputy COO James Murdoch, who ordered at least $1 million in payoffs to phone hacking victims since 2008. Some board members may wish to strip Rupert Murdoch of his chairmanship, speculates The Atlantic. The UK investigation has resulted in 11 arrests through last week (see timeline). Rebekah Brooks, who resigned as chief executive of News International last month is reportedly still on the company's payroll, despite being arrested two days after stepping down.

Further investigation into News Corp.'s U.S. holdings seems inevitable. The FBI last month opened an investigation into claims News Corp. reporters tried to obtain phone records belonging to victims of the 9/11 World Trade Center attacks. Senators Durbin (D-Ill.), Lautenberg (D-NJ.) and Rockefeller (D-Va.) lobbied for a Congressional investigation in July and the Freepress Action Fund is encouraging citizens to write their representatives.

It's possible that de-consolidation of the News Corp. empire could be good for both Murdoch and the future of private media and the public interest, as Nicholas Lemann recently suggested on the Council on Foreign Relations website.

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