That other scandal at News Corp.

 The really interesting question about the waning days of Rupert Murdoch’s reign over News Corp., his global media empire, is just how much irreparable harm his regime will do to the marquee institutions it controls that preceded him and deserve to survive.

So far, the redoubtable, 226-year-old Times of London is largely unscathed — though, sadly, it has become a tabloid — and, I suspect, civilization will manage without Britain’s News of the World, the century-and-a-half-old scandal sheet that Murdoch folded last summer amid continuing investigations that its reporters had been hacking into private voice mailboxes for years and their bosses had been lying about it.

Over here, nobody can blame Murdoch for ruining Fox News, since it’s thriving and, besides, it was he and his henchman Roger Ailes who created it, so it had no proud traditions they could disgrace.

Not so with The Wall Street Journal. When Murdoch bought its parent Dow Jones & Co. in 2007, overpaying scandalously, it was one of a small number of truly great newspapers — in its breadth, thoroughness, clarity, news judgment, the scope of its editorial imagination, its respectability.

Within the news world, The Journal’s shadow was long. It was admired and imitated. It pioneered styles of investigative reporting and narrative craft. People studied its front page to learn how to write and edit. I know I did.

Despite his reputation for swill and swagger, in 2007 it seemed plausible to assume that Murdoch understood his strategic success depended on keeping The Journal good. Whether he did is open to dispute. Some argue it’s a better paper, livelier, visually engaging, nimbler, less self-indulgent. Me, I don’t trust it the way I used to. I find its coverage of public policy now skews to the right, its stories are twitchy and impatient. I think the old Journal would have been much bolder in exposing the financial pigfest that shoved us into our current economic muddle.

But now it seems the more troubling concerns about the influence of News Corp. center less on The Journal’s news than its business practices. Earlier this month, the publisher of The Journal’s European edition and the head of Dow Jones for Europe, the Middle East and Africa was forced out amid astonishing allegations, first reported by The Guardian, the London daily that spearheaded disclosures about sleazy doings at the News of the World.

The story is that the Brussels-based Wall Street Journal Europe had arranged with some European companies for them to buy a huge proportion of its total circulation at deep discounts. By last year, some 46,000 of the Journal’s European circulation of 74,800 consisted of bulk sales at no more than a nickel apiece.

Although such cut-rate sales are classified differently here, they’re considered paid circulation under European rules. But not only were these papers sold for a fraction of their full price, a common practice.

The newspaper also allegedly agreed with its biggest bulk buyer — a Dutch company headed by a former Journal executive — to collaborate editorially in producing an insert and sponsoring workshops, and in publishing special reports in which the company would figure in favorable ways. So The Journal was offering editorial stroking as part of the bargain-basement sales package.

That tale gets better. By the end of 2010 the Dutch company was threatening not to pay its 15,000-euro subscription bill, which would have forced the paper to restate its circulation drastically. So The Journal allegedly arranged to channel that money to the company via third parties. In effect, the Journal was puffing its circulation by buying up its own papers.

And to cap it off, the nine-year Dow Jones official who called this to the attention of highers-up in New York had his job eliminated, the Guardian said.

For its part, Dow Jones defended the circulation sales arrangement, assailed the Guardian’s account — much of it confirmed by subsequent reporting by The Journal’s own U.S.-based staff — and in announcing the resignation of its European publisher, apologized for any breach of editorial standards.

But these are serious allegations, far more revealing of managerial rot within News Corp. than the phone hacking scandal that became such a media sensation earlier this year. These concern not some gamey tabloid that specialized in celebrity bust-ups, but the operations of Dow Jones’ highly respected flagship in the second-most important market in the world.

Those allegations, and indications that the wrongdoing was being tolerated until a rival paper exposed it, speak of a culture that was foreign to the Dow Jones that Murdoch took over four years ago.


One thought on “That other scandal at News Corp.

  1. Mr. Wasserman,

    I read with interest your column about Wikileaks in Today’s Miami Herald. You are right when you say censorship has been privatized. However, you miss the point when you state that the Bankers are pinning a deputy’s badge on their own lapel. It was pinned on their by the Government.

    In reality, under the USA Patriot Act and the Bank Secrecy Act, ALL financial institutions, including banks, non-bank money transmitters, such as Western Union and Paypal and even the neighborhood check cashing store are forbidden from handling any funds which may be illegal for ANY reason.

    Unfortunately, Bank of America, VISA and company had no choice but to not accept payments for Wikileaks, otherwise they would have been found to violate US laws and would have been fined and potentially been shut down by the Regulators.

    Bankers have been deputized by the Government and it is getting worse every day. Think Elliot Spitzer, former governor of New York, paying a call girl with a wire transfer that a teller noticed and reported. Think the Banks of North Korea and Iran (even if they do deserve this treatment) that cannot cash a check in the West.

    Do not even mention to your banker that you collect some rents in cash and they are not reported on your tax return, this and any other suggestion of impropriety would lead to the filling of a Suspicious Activity Report that goes straight to FINCEN, the IRS and other law enforcement organizations.

    Bankers do not like being deputized; however, it is the world we live in today.


    Mike Rasco

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