Journalism in the Public Interest

The Basics on the Latest Murdoch Scandal

Another high-profile executive within the Murdoch empire stepped down this week. But there are conflicting accounts of what brought on his resignation. Here’s a rundown of the basics.


(WILLIAM WEST/AFP/Getty Images file photo)

Yet another scandal is bubbling up at Rupert Murdoch’s News Corp. On Tuesday, the Murdoch-owned Dow Jones announced that the publisher of The Wall Street Journal’s European edition was resigning, without mentioning why. The next day, The Wall Street Journal reported that the top European exec stepped down after an internal ethics investigation found he had pressured reporters to write two positive stories about a Dutch firm with which the paper had an agreement that helped boost circulation figures.

Circulation numbers matter because they’re used to set advertising rates, and American papers are no strangers to scandals over inflated circulation figures.

But that was just the beginning. Also on Wednesday, the Guardian came out with a story by Nick Davies — the same reporter who first drew attention to the breadth of the phone hacking scandal — asserting further transgressions. The Guardian suggested that The Journal funneled its own money to the Dutch firm, Executive Learning Partnership, through middleman companies. In other words, the Guardian reported, The Wall Street Journal Europe was buying its own papers by proxy. The Guardian also reported that Dow Jones and News Corp. executives had known since December that this was going on, and fired the employee who brought it to light.

Dow Jones issued a statement calling the Guardian’s claims “inflammatory” and “replete with untruths and malign interpretations.” But a story in this morning’s Wall Street Journal confirmed much of the Guardian’s account, including that WSJ Europe’s circulation department had channeled “thousands of euros” to ELP through third-party companies.

It’s an embarrassing turn of events for News Corp., which has been embroiled in a few other high-profile scandals (see our previous guides for a refresher.) Here’s a rundown of the facts and allegations so far.

How it started

The Journal and the Guardian both report that over the past few years, The Wall Street Journal Europe arranged with companies to buy copies of the paper at a bulk rate — the Guardian reported for as little as a penny apiece — and hand them out to students at conferences they sponsored. In return, the companies would be named in a promotional segment that ran in WSJ Europe. According to the Guardian, 41 percent of WSJ Europe’s daily sales last year came from the program.

That may be surprising but not particularly unusual. The U.K. Audit Bureau of Circulations had approved the arrangement, and as the Columbia Journalism Review points out, “though advertisers dislike bulk sales like these, lots of papers do them.”

But then ELP, a strategy and learning consultancy, one of the initiative’s biggest participants, said it wanted to stop buying the papers, even at the reduced rate.

The plot thickens

According to the Guardian and The Journal, ELP bought 3.1 million copies of the paper last year, accounting for 16 percent of The Journal’s total European circulation. Fearing a sudden drop in its reported circulation, The Journal cut some new, sketchier deals, including free advertising and positive coverage, to keep ELP. The Dutch firm has stated that it wasn’t promised editorial coverage.

Soon after, The Journal published the two positive stories about ELP. (The stories appeared in special sections of the paper, which are often advertising-friendly.) CJR’s Ryan Chittum noted that ELP had gotten little or no previous newspaper coverage. The Journal didn’t disclose its relationship with the company at the time that the articles were published, though both articles now feature disclaimers online.

Incidentally, one of ELP’s partners, Rien van Lent, is a former publisher of The Wall Street Journal Europe. In one of the special reports The Journal produced about ELP, van Lent was quoted and described as ELP’s chief executive.

ELP complained months later that The Journal wasn’t giving the company enough publicity, and threatened to withhold payments. To avoid that, the Guardian reported, The Journal arranged to give ELP money with which to buy the papers by channeling it through other companies. The Journal reported that payments through third-party companies were arranged for services ELP provided at events.

In its response to the Guardian’s story, Dow Jones said that “the manner in which [ELP was] paid was admittedly complex but nevertheless legitimate.” The company said the WSJ Europe executive at the center of the brouhaha, Andrew Langhoff, stepped down over a “perceived breach of editorial integrity,” and not in relation to the details of the circulation deal itself.

Who knew, and what did they do about it?

The Guardian reported that complaints from a Journal staff member about the deal went up the chain of command but were ignored. An employee took concerns about the arrangement to top human-resources executives, a company lawyer and former Wall Street Journal publisher and Dow Jones CEO Les Hinton. The employee was let go shortly afterward. According to the Guardian, he was told to keep quiet.

Hinton stepped down last summer after he was accused of making misleading statements to Parliament about phone hacking at News International, News Corp.’s British subsidiary. Hinton maintains he didn’t know about phone hacking at the company.

Dow Jones disputed the Guardian’s characterization of the employee as a “whistleblower,” since he was under investigation by the company “because of concerns around his business dealings.” But The Wall Street Journal interviewed the employee, Gert van Mol, and got his side of the story. He was quoted as saying that he was involved in the deal at a lower level, and that Dow Jones put him under investigation after he raised concerns about the deal to his superiors. "I was not in a position to make payments or authorize contracts,” he told The Journal. “I was just an employee.”

ben greenblatt

Oct. 13, 2011, 9:28 p.m.

It’s obviously not only greed, but greed that leads to corruption…..
and the beat goes on!!!

He was a tool of the elusive crocodile and Hacking should be legalized as good guys have nothing to hide and I have given my legal authorizationto all the Governments of the World to hack my phone calls by any means they are capable of hacking but not to manipulate or modify the call logs.
This will be the demand of the future generation, anbd the policies need to be changed now.

Good guys have nothing to hide?  You have no understanding of how allowing a government to have that kind of intrusive behavior into your private life will ultimately cost you your life.

This is corporate corruption grown in a bed corporate greed.  But in the USA we have the solution, abolish the regulations that make all of this illegal.  After all it is the onerous regulations that is killing jobs and interfering with the business of America.

Ask the revolutionaries in Syria whether good people have anything to hide from authorities.  Or are they bad by definition for defying their government?

Anyway, I’m having trouble working up any anger, here.  I’m not a “print is dead” kind of guy, by any means, but when all the print papers (and all the news networks, and…well, you get the idea) march lock-step to press releases and the Reuters or AP feed, let them die, since they’ve done so much to smother investigative journalism.

I love this judicial of ours, going after Iran for a perceived plot to kill the ambassador to America of one of the worst, most cruel and repressive governments in the world, bar none and based only on conjectures as our government loves to do, when oil is involved as in Lybia, Iraq, but refuses to go after criminals that had done more damage to our devalued “moral values.”
I could understand this selective Alzheimer’s episode if it was coming from tea partiers, republicans, but it’s coming from-get a load of this-constitutional scholar, AKA, Barack Hussein Osama, oops, I meant Obama.
I would like to ask our DOJ why go after many innocent “terrorists” when America is burning to the ground, morally and fiscally speaking.  Is it much to ask when can we have our Constitution back?  I thought we had it up to here after eight full years of crimes and not just crimes galore, but I’m talking about the Everest of war crimes.  OMG, what have you done to my country, Obama, the candidate, the anti-thesis to all that the retard pervert from Texas stood for, once elected he became Bush the third.  Talking about a switcheroo.

After witnessing the gradual degradation of the venerable NYT and some of the tabloid trash it now prints and the soundbites that pass for journalism on REUTERS site, Murdoch is a dirtbag but probably not crossing the line anymore than many other “news” sources these days. It does not excuse his behavior but it also not his exclusively. Few news sources today regardless of the medium with the exception of a few sites such as ProPublica offer any investigative journalism or true analysis. It has become a hard task to separate fact from fiction and real news from fluff pieces, outright plants, vanity articles and canned press releases.

Murdoch’s Oligarch friend, Ivan Seidenberg will be soon to embarressed in the news also. Both of them ought to be in jail. I don’t know who is more criminal in their behaviors, Ivan or Rupert. The usual Oligarch stuff, you know…

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