One of News Corp.’s chief deputies in Europe, Andrew Langhoff, has resigned because of a scandal at the media conglomerate’s flagship newspaper, the Wall Street Journal.
According to the Guardian, the Journal channeled money through several European companies so that it could secretly buy thousands of copies of its own paper at discounted rates and enhance its circulation numbers.
The Journal, which is owned by News Corp. through Dow Jones & Co., reported that Langhoff resigned due to a violation of journalistic ethics.
An internal investigation revealed that a pair of articles in the Journal’s European edition were influenced by a deal with a Dutch consulting firm, Executive Leadership Partnership (ELP).
However, the Guardian’s Nick Davies, the reporter who broke open the phone hacking scandal, believes he has uncovered a different reason — the circulation scam.
Citing Audit Bureau of Circulation figures, the Guardian reported that the scam accounted for 41 percent of the Journal's European edition's sales (31,000 out of 75,000).
The journalistic scandal the Journal blames for Langhoff’s departure is just part of that equation. According to the Guardian, in order to secure ELP’s cooperation in this larger scheme, the Journal promised favorable coverage of the firm.
ELP later tried to back out, claiming it was not benefiting enough from the arrangment, so the Journal eventually resorted to bankrolling the purchases itself, the Guardian reported.
Davies also wrote that a whisteblower produced a report seen by News Corp. executives, including former Dow Jones CEO Les Hinton. TheWrap reported Tuesday that Hinton will testify before Parliament Oct. 24.
This latest scandal is likely to increase calls for News Corp. to drastically change the makeup of its board.
In the wake of the phone hacking scandal over the summer, shareholders advisory firms have called for certain board members to be replaced and shareholders themselves have filed suit against the company.
The Institutional Shareholders Service called for all three Murdochs on the board — chairman and CEO Rupert, and his sons James and Lachlan — to resign.
The Murdoch family still controls 40 percent of the voting shares.
As for this story, the Guardian no doubt has some incentive in pursuing controversial stories about News Corp. since chairman and CEO Rupert Murdoch’s company owns competing papers in the UK.
Yet Davies’ instincts on the phone hacking scandal proved correct, so question his credibility at your own risk.