Code of Ethics Case Study: News Corporation

Introduction: News Corporation, under the leadership of Rupert Murdoch, has unparalleled power and reach in the news media industry. The Murdoch Empire spans several continents, with significant footholds in Australia, United States and the United Kingdom. Founded and headquartered in Australia, the company now boasts of being the number one newspaper publisher in the world, with a cumulative daily readership of 14 million in these three countries alone. Murdoch has a near monopoly in the media space in Australia, owning two-thirds of all newspaper circulation in the country. Across the Tasman Sea, in New Zealand, he owns nearly half. Further, he is the owner of two fifths of the Australian Associated Press. (Knowlton & Parsons, 1995, p. 200) These holdings are notwithstanding his considerable market share in Britain and the United States. These statistics bear testimony to the Murdoch’s media monopoly. Between the lines one can read the dangers posed by monopoly in an industry that is crucial to socio-cultural discourse. This report will evaluate how News Corporation holds up to the scrutiny of their stated Code of Ethics as well as against the triple bottom line criteria for ethical evaluation. Official Standards of Business Conduct proclaimed by News Corp News Corp’s official Standards of Business Conduct (SBC) document makes some bold claims. In the area of building trust with business partners and customers, it claims that trust and integrity are of utmost importance. The SBC goes on to outline generic principles that “underlie the culture of trust that is at the heart of News....While it is impossible to formulate rules to govern every possible situation, these Standards seek to assist us in continuing to avoid misconduct and the appearance of misconduct.” (Standards, 2013) Further, under the heading ‘Ensuring integrity and transparency of conduct’, the SBC defines what constitutes a conflicting situation and how the News Corp Management will resolve it: “A conflict of interest arises when personal interests or divided loyalties interfere with our ability to make sound, objective business decisions on behalf of the Company. We are committed to a work force that is clearly and obviously motivated by the best business interests of our Company.” (Standards, 2013) Under the heading ‘Maintaining Credibility’, the SBC lays out three commandments for ethical management of news gathering and reportage. These rules were also meant to apply to its relationship with other business partners, government contacts and the readership. These are: “We do not make deliberately false or misleading statements about our businesses, or about other companies....We obtain competitive information legally. We do not obtain information about competitors through theft, blackmail, wiretapping, trespassing or other methods prohibited by law.” (Standards, 2013) The Triple Bottom Line (TBL) Standard At the core of the TBL standard is the principle of sustainability. Equally applicable to nonprofits, governments as well as businesses, the TBL measures the “degree to which an organization is being sustainable or pursuing sustainable growth can be difficult.” (Slaper & Hall, 2013) Scholars like John Elkington were instrumental in devising quantitative measurement scales for TBL. Under the system, conventional focus on profits is excluded. It its place, new parameters such as environmental and social effects of business actions were added to the usual measures of return on investment and shareholder value. By focusing on comprehensive investment results— “that is, with respect to performance along the interrelated dimensions of profits, people and the planet—triple bottom line reporting can be an important tool to support sustainability goals. Many businesses and non-profit organizations have adopted the TBL sustainability framework to evaluate their performance, and a similar approach has gained currency with governments at the federal, state and local levels.” (Slaper & Hall, 2013) TBL is an apt choice for evaluating News Corp’s business practices because it encompasses all relevant ethical dimensions. News Corp’s SBC also briefly mentions the environmental and people dimensions, but its main concern is its ‘stakeholders’, which is usually limited to shareholders, partners and consumers. Hence, TBL offers a more comprehensive ethical framework compared to the limited guiding principles written into the SBC. Comparison of News Corp’s Practices under TBL and SBC Undue Intrusions into Political Processes One of the first instances of News Corp’s opportunistic use of political connections came to light in1995. Murdoch struck a book deal with the then House Speaker Newt Gingrich for a substantial sum of $4.5 million. The ethical problem was obvious in this case. Murdoch, who was even at that time an influential and trans-global media personality, owned a newspaper chain and several television stations. He stood to gain enormously through the relationship with the Speaker. It was only after severe public backlash that Gingrich decided to return the advance and settled for sales-driven royalties. (Tolchin & Tolchin, 2001, p. 5) While Gingrich’s guilt is more obvious, Murdoch’s intention of inducement is equally culpable. It was unethical of him to create a conflict of interest situation for a high-placed public representative. Through the relationship Murdoch expected to be reciprocated with business friendly public policies and granting of legal concessions. Some other objections against the Gingrich-Murdoch deal focussed on “the source, magnitude, and timing of the profit, which rose legitimate questions of independence and fairness.” (Thompson, 1995, p. 206) Questions were also raised about other possible gains for Murdoch through the relationship, for he had “a substantial interest in pending changes in federal regulations and legislation that were to come before the next Congress.” (Thompson, 1995, p. 207) If one were to apply the triple bottom-line standard to this situation, it would certainly fail to qualify. Of the three P’s – Profit, People, Planet – that govern the triple bottom-line, the Murdoch-Gingrich affair fails the people of the United States. If their contract had remained valid, the democratic political processes of the country would have been compromised. Likewise, this event stands in breach of News Corp’s proclaimed SBC guidelines, as it has let down the company’s stakeholders – in particular the readership, and in general the broader citizenry. The Diminishing Ethical Legacy of Keith Murdoch Incidents such as the Gingrich affair were one of numerous let-downs of the News Corporation’s self-proclaimed Standards of Business Conduct. Rupert Murdoch’s father Keith Murdoch had adopted a more balanced and moderate approach to business than his son’s more ruthless approach. He was a noted journalist in his day and drew upon Aristotle’s Ethics to set standards for his own company. In his correspondence to employees Keith Murdoch used to quote Aristotle, appreciating his practical wisdom, which “is less a capacity to apply rules than an ability to see situations correctly... Acquiring wisdom requires experience, one's being able to see what matters in certain circumstances, and why.” (Rohm, 2002, p. 265) Another simple policy that Keith Murdoch brought to work was his oft quoted mantra ‘Explain, simplify, clarify!’ It is fair to state that his son has not kept up with the acceptable standards set by his father. Merely going by Rupert Murdoch’s blinkered empire building vision it is obvious that ethical principles have been subsumed by profit interest and market expansion. Apart from the deviation from Keith Murdoch’s moderate business practices, the News Corporation of today has brought disrepute to journalism as a whole. To the extent that negative publicity and dilution of reputation have direct correlations with newspaper circulation and concomitant profits, News Corp has let its shareholders down. This is in contradiction to what is stipulated in the SBC. Similarly, under the TBL framework, the diminishing legacy of Keith Murdoch has an effect on Profits – one of the three P’s. Unethical Antecedents of Rupert Murdoch For a business enterprise that is synonymous with its leader, it is apt to evaluate the ethical standards of the business with the actions of its top leadership. Rupert Murdoch has proved controversial right through his media career starting in 1968, when he “tricked his way into Fleet Street in a watered stock deal from which he emerged with 40 percent of the voting stock of News of the World” (Sherrill, 1993) News of the World, which is the flagship weekly paper of News Corp in Britain, is arguably also its most salacious. Media analyst Shawcross calls it a Sunday paper “specializing in randy vicars, homosexual housemasters, threesomes in bed, stolen underpants, misplaced virginities." (Sherrill, 1993) There are other glaring examples of News Corp’s ordinary ethical standards. When in 1976 Murdoch purchased New York Post from its proprietor Dorothy Schiff, he promised the latter that the newspaper’s cherished liberal values and liberal politics would be respected and continued. But in a matter of months of the takeover, the newspaper was turned into a hawkish right-wing rag. The organization was also restructured, laying-off many local employees. This again is a breach of the triple bottom-line standard as it placed ‘profits’ ahead of ‘people’ – in this case employees. Further, a personal friend of Murdoch from Australia was brought it to lead the business & finance section. The man was ill-reputed, having previously fought off drug addiction and having been involved in the brothel business. It was not surprise then that Reaganomics and attendant right-wing culture was the economic framework that was promoted strongly. These political affiliations make hallow the claims of objectivity and neutrality given lip-service in the Standards of Business Conduct document. In terms of the TBL, Murdoch’s actions are all the more dissonant, for they affect ‘people’ and ‘profits’ both. Poor Employee Relations within News Corp The sort of employee relations that exists in News Corp makes it one of the least preferred organizations to work for. The numerous instances of summary dismissals by Murdoch are now legion. All employees from entry level reporters to chief editors are made to understand that their job is secure only as long as they toe the line. Any show of independent thought or personal discretion will be swiftly and surely quelled. For any editor, getting fired by Murdoch is almost a certainty, if their standards strike Murdoch as elitist and some because they are, in his words, "too nasty even for me". (Sherrill, 1993) This remark proved to Tina Brown how sporting Murdoch was. If editors dare to show any measure of independent judgement, they are ripe to being fired. As one unfortunate such editor notes, Murdoch’s method of running the business is ‘by phone and by clone’. This practice proves very distasteful, especially when, “because of chaos or tragedies in their private lives, they are most vulnerable. He also likes to fire his most loyal subordinates by memo, preferably sending the memo through a third party. A real charmer. Needless to say, hardly a soul remains in his organization who started out with him.” (Sherrill, 1993) With the reputation of News Corp’s ubiquitous leader being thus dented, it undermines the ‘Maintaining Credibility’ criteria expressed in the company’s SBC. Reflection It is fair to say that today News Corp is one of the least trusted transnational businesses. This is a betrayal of the company’s own SBC. An entire section of the SBC was dedicated to ‘trust’ – both with its partners as well as its customers. Both these relationships are significantly weakened today. Studied in the backdrop of TBL News Corp’s ethics score even more poorly. The illegal phone-tapping and espionage activities carried out in 2011-12 by the company are one of the lowest points in its history. It is a failure to meet the commitment made in the SBC that says “We do not obtain information about competitors through theft, blackmail, wiretapping, trespassing or other methods prohibited by law “ (SBC, 2013) It is such a steep fall from the respectability earned under Keith Murdoch. While as a business personality Rupert Murdoch can be charming and polite, his style and goals of business are far from agreeable. Indeed the disrepute surrounding his media conglomerate is such that News Corporation’s foray into the American media industry was fraught with mistrust and fear by commentators and media analysts. Mike Royko has this to say about Murdoch, based on how News Corp’s ventures in Chicago panned out – “a greedy, money-grubbing, power-seeking, status-climbing cad"; Auberon Waugh's description of the media mogul is no less flattering - "a hairy-heeled, tit-and-bum merchant from Oz"; even more to the point, Lowell Weicker called Murdoch "the number-one dirt-bag" in the business. (Sherrill, 1993) This assessment of the leader of News Corp from within the industry is an indication of the broader public distrust of the enterprise. Between the lines one can read the dangers posed by monopoly in an industry that is crucial to socio-cultural discourse. It is highly unlikely that any business enterprise could establish a monopoly by adopting fair and ethical means. This is underscored by the fact that some major monopolies in the IT industry, most notably Microsoft and Google, have several lawsuits lined up against them on grounds of thwarting fair competition and employing unethical business methods. In this regard, it is a letting down of ‘people’ as seen through the TBL criteria. Conclusion In conclusion, it is fair to sum up that News Corp scores fairly poorly upon evaluating its ethics. Not only does the media empire fail to measure up to the triple bottom-line criteria, but it also doesn’t fulfil principles outlined in its internal Standards of Business Conduct document. The current situation is a decline from the days of Keith Murdoch, wherein a more moderate and reasonable approach to business prevailed. More of concern is the fact that News Corp can no longer claim to be a journalistic enterprise, with all its attendant values and virtues. Sleaze, scandal and salaciousness have come to dominate the content of News Corp. When this fact is allied to the empire’s extreme right-wing orientation, it poses a serious threat to social harmony and political progress. References Knowlton, S. R., & Parsons, P. R. (Eds.). (1995). The Journalist's Moral Compass: Basic Principles. Westport, CT: Praeger. Meyers, C. (Ed.). (2010). Journalism Ethics: A Philosophical Approach. New York: Oxford University Press. Rohm, W. G. (2002). The Murdoch Mission: The Digital Transformation of a Media Empire. New York: Wiley. Sherrill, R. (1993, May 10). Newsdom's 'Number-One Dirtbag.' (Robert Murdoch) (Editorial). The Nation, 256(18), 613+. Some Things Are Worse Than a Murdoch. (2003, November 10). New Statesman (1996),132(4663), 6+. Thompson, D. F. (1995). Ethics in Congress: From Individual to Institutional Corruption. Washington, DC: Brookings Institution. Tolchin, S. J., & Tolchin, M. (2001). Glass Houses: Congressional Ethics and the Politics of Venom. Boulder, CO: Westview Press. Slaper, Timothy F. & Hall, Tanya J. What is Triple Bottom Line and How Does it Work?, Indiana Business Review, retrieved from on 6th November 2013

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