According to a report from Bloomberg, Rupert and James Murdoch are currently spending hours preparing for their appearance before a British Parliamentary inquiry, scheduled for Tuesday morning London time (Tuesday evening our time).
And prepare they should. It’s hard to imagine a more important public appearance in the history of the Murdoch family and News Corporation.
Following the widely-expected resignation of former News International editor and chief executive Rebekah Brooks on the weekend – and her subsequent arrest – the Murdoch family has been left horribly exposed.
With Brooks gone, and apparently unlikely to answer questions at tomorrow’s inquiry due to her arrest, it will be up to James and Rupert Murdoch to explain how much they knew and when.
If the pair appears even slightly arrogant or dismissive at tomorrow’s televised hearings – indeed, if they appear anything other than completely honest and contrite – then there could be severe repercussions for News Corporation.
According to the Financial Times, investors in British Sky Broadcasting (the British company News Corporation were trying to buy before the scandal struck) are waiting to see how James Murdoch performs before making a decision about whether to keep James Murdoch on as chairman.
“This committee meeting is going to be box office television. It’s a pity Sky can’t put it on pay-per-view,” one investor told the FT.
“But to be serious, if on television he came across as someone with something to hide, or he got angry with MPs or, who knows, anything might happen, you might take a view that Sky could be affected and it would be better not to have the Murdoch name on the chairmanship.”
Of course, it’s not just BSkyB shareholders that are worried about what the damaged reputations of the Murdochs might do to their value of their investments.
News Corp shareholders – who have seen the value of the company’s stock fall by 16% since the start of last week, and almost 5% this morning – are already asking how much this scandal is going to hurt the wider business and what can be done to stop the scandal spreading.
The resignations of executives such as Brooks and long-time Murdoch confidant Les Hinton appear to have done very little, which makes the performance of Rupert and James at the inquiry even more important.
Unfortunately for the Murdochs, it’s hard to see their appearances before the inquiry going well. The MPs on the inquiry will be out for blood and the likely answer to many of the inquiry’s questions – variations on “I was not aware” – is unlikely to satisfy anyone.
Indeed, if the Murdochs and their senior executives are going to continue to say they knew nothing about what has been described as “industrial-scale” hacking then questions about the company’s governance procedures will only grow.
Regardless of the performance of the Murdochs tomorrow, there seems to be a very real possibility that the family could be forced to dramatically reshape News Corp.
It’s certainly not hard to imagine Rupert being forced to retire, as Robert Gottliebsen has persuasively argued he should do.
And it’s not hard to imagine James Murdoch could be forced to step down and therefore step out of the position as the person most likely to replace Rupert.
Could we really see a News Corp that doesn’t have a Murdoch in charge within the space of a few weeks or months?
Tomorrow’s inquiry hearings will probably give us a better idea.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
