I notice that my old editor Quentin Spurring – known to all as Q – has been writing in recent days about the impact of the News Corporation Scandal on the Formula 1 world. He beat me to it by a day or so, which is only to be expected as he taught me much of what I know. The ongoing scandal has now led to the arrest of 10 people, including Rebekah Brooks, until last week chief executive of News International. It has also resulted in the resignation of Sir Paul Stephenson, the Commissioner of the Metropolitan Police. The next person in the firing line is James Murdoch, the son of Rupert Murdoch and chairman of News International. The arrests relate to phone-hacking and the cover-up that has followed. The News of the World newspaper has been closed down and many of Murdoch’s top management have resigned, including Les Hinton, the chief executive of Dow Jones, who was the head of News International when the alleged phone hacking is said to have taken place.
British prime minister David Cameron has announced a public inquiry to investigate the affair, once the police have finished their investigation. This will be headed by Lord Justice Leveson, who has been asked to look into the phone hacking and police bribery by the News of the World, and also to take a wider look at the culture and ethics of the British media.
Rupert Murdoch and his son James have been summoned to give evidence in parliament and the Federal Bureau of Investigation has launched its own investigation into News Corporation. The US Attorney General Eric Holder has also announced that the Department of Justice is investigating the company.
It is clear that politicians around the world see Murdoch’s problems as the long-awaited opportunity to escape from the powerful influence that Murdoch has had over them, allegedly using his newspapers and TV stations to sway public opinion in favour of those who offer him the most help.
News Corporation has already announced that it is abandoning its bid to gain complete control of satellite broadcaster BSkyB. There have even been suggestions that the Murdochs may be ousted from their empire by the other shareholders. At the moment they control 24 percent of News Corporation shares but have maintained control thanks to alliances with others. As the company’s share price tumbles on the different stock exchanges, the pressure will be on to separate the company from their influence, as billions of dollars depend on it. The departure of the Murdochs, at least from executive positions, would no doubt help the share price to recover. There is also increased resistance to the succession of James Murdoch.
Prince Alwaleed bin Talal al-Saud of Saudi Arabia is the second largest shareholder, with an estimated seven percent.
The scandal is significant for the Formula 1 world as it means that the much-rumoured bid to buy the Formula One group from CVC Capital Partners in unlikely to go ahead. News Corporation had announced its intention to bid for the rights in league with Fiat holding company Exor, but the scandal will blow that project out of the water – at least in the short- to medium- term. Even if the deal were to go ahead, it would still need clearance from the FIA President Jean Todt.