Phone Hacking Scandal on Agenda for News Corp. Board Meeting

The board of directors will meet Tuesday before announcing fiscal results Wednesday and the scandal is bound to be discussed

News Corp. executives have by and large been quiet when it comes to publicly discussing the phone hacking scandal that has endangered the U.K. portion of its media empire and raised questions about the practices of its operations on this side of the Atlantic as well.

There have been endorsements of the Murdoch family and denials of endemic ethical lapses but most of the talking has gone on behind closed doors.

That will continue on Tuesday when the News Corp. board will meet in Los Angeles before announcing the company’s fiscal year-end results on Wednesday.

Though the focus for the company’s 17 directors will be News Corp.’s financial situation, the scandal has not just tarnished its reputation but impacted its business plans as well.

News Corp. shares have fallen 19 percent since July 5, the first day of trading since the scandal escalated from a British to an international story.

The company is also sitting on a significant amount of cash as a result of its failed bid to buy the remaining 61 percent of British Sky Broadcasting, a satellite company. News Corp. already owned the largest stake in the company, of which James Murdoch serves as chairman, but the Murdochs had to abandon a full takeover as the British government began to question whether News Corp. was a fit and proper owner.

Those questions emerged only after the phone hacking scandal ballooned in early July with reports that a private investigator hired by News Corp.’s former British tabloid the News of the World hacked the phone of a murdered teenage girl.

The continued escalation of the scandal also forced the board to create an internal committee to investigate allegations of hacking and bribery, a committee chaired by one of the board’s nine independent directors – Georgetown law professor Viet Dinh.

The earnestness of the committee’s effort has been brought into question both because a previous internal investigation by British publishing arm News International was so ineffective and because it reports to News Corp. executive Joel Klein, who then reports to Dinh.  

The committee’s findings are bound to overlap with a discussion of the U.S. Justice Department investigation, which is examining two separate charges – whether bribery of police officials violated the Foreign Corrupt Practices Act and whether any News Corp. employees hacked or attempted to hack the phones of Sept. 11 victims.

One person who will not be there is Elisabeth Murdoch, daughter of Chairman and CEO Rupert Murdoch, who abandoned to become a board member, as announced on Friday.