Rupert Murdoch And News Corp: The Rise Of A Corporate Empire, An Essay.

Murdoch's Journey to Entrepreneurial Success

Rupert Murdoch inherited a series of Australian newspapers businesses after his father died in 1952. After taking over, fifteen years later, he has built a vast corporate empire after various acquisitions. This paper will analyse how Rupert Murdoch managed to create such a vast corporate empire, the corporate structures and processes employed and their importance, the relevant companies, the News of the World scandal regarding corporate liability. Moreover, it will establish whether the CEO is liable for the staff's actions, the relationship between the CEO and the board, the hierarchy of the company and the roles of various positions, and how they relate to each other.

Murdoch's journey to entrepreneurial success began at a tender age after exposure to the activities involved in journalism. He acknowledged that he was raised in a publishing family, a home of a newspaper father and that generally excited him. Murdoch's father, Sir Keith Murdoch, controlled News Corp Australia in 1949, trading as News Limited. Initially, James Edward Davidson had founded the company in 1923 and published many notable newspapers in the country, Australia. Not long after he graduated from Oxford University, Murdoch inherited the newspaper business after the sudden death of his beloved father. But before his return to Australia, Murdoch worked as an apprentice at the London's Daily Express and acquired knowledge on the general operations of the newspaper business. At 22, he became a managing director at the business he inherited, News Corp Australia. Shortly after taking over his father's business, he began to implement changes in corporate structures and processes of the business. By inventing modern tabloid, the company's newspapers emphasized eye-appealing headlines that focused on controversy and scandal stories (Timothy, 2018). The incorporation of the new approach significantly increased the circulation of newspapers.  

The growth of News Corp Australia can significantly be attributed to various acquisitions over time. Murdoch bought The Sunday Times in 1956, which was a newspaper selling in the western parts of Australia, a few years after purchasing The Mirror, a daily newspaper failing in Sydney. According to Timothy (2018), Murdoch's management saw the paper as the region's most sold daily afternoon newspaper. At the age of 34, he established the first national daily paper in the country, The Australian. In 1968, Rupert Murdoch began to expand his businesses outside the country. He moved to the UK and made various acquisitions, including the News of the World and The Sun. In 1973, he moved to the US and made several acquisitions by first acquiring the San Antonio News and later in 1974 purchased the Chicago Sun-Times The Times of London founded in 1785.

The Growth of News Corp Australia through Acquisitions

In 1987, News Corp acquired a book publishing corporation known as Harper & Row. News Corp made yet another significant acquisition of Collins, another book publishing company, a few years later. Subsequently, the two publishers were merged later and formed HarperCollins. The most important investment was when Murdoch purchased Dow Jones, a parent company to Wall Street Journal, for $6 billion in 2007, bringing the Bancroft family's century of ownership to an end (Richard, 2007). Under the management of Murdoch, the Wall Street Journal shifted its focus from exclusively business to a general-interest newspaper. Moreover, Murdoch repurchased the New York Post in 1993 after selling it after its acquisition.

In 1984, after Marc Rich fled the US following his indiction with criminal charges of tax evasion and wire transfer, Murdoch acquired Marc's stake in 20th Century FOX Film Corporation for $250. Later, he received the remaining stake from Davis for $325 million. Moreover, Murdoch acquired various independent television stations. He later merged all these companies to create the Fox Broadcasting Company, which can also be attributed to other cable channels such as FX and FXX. Murdoch announced his plans in 1988 to start a television network in the UK. His plans turned into reality in that year when he launched Sky News. Sky News became the only 24-hour broadcasting news channel in Britain until 1997. From its inception, the company has spent a lot of money, with a significant percentage financed with debt from various banks. To mitigate the losses made by the Sky News company, he merged the company with British Satellite Broadcasting in 1990 to create BSkyB, which is currently known as Sky UK Limited. The company became the most prominent television company by digital subscription in the UK. However, in 2018 Murdoch sold his stake in Sky UK Limited to Comcast, a giant media company.

In 2011, Rupert Murdoch and News Corporation were under robust scrutiny for corporate malicious practices and liability at the News of the World. Increasing evidence portrayed that the newspaper staffers were deeply involved in illegal and unethical practices, evidently the hacking of mobile phone mails for murder victims, celebrities, and British army soldiers killed in the war in Afghanistan (Steven & Ivor, 2016). Although Murdoch closed the newspaper later, the scandal increased immensely. Subsequently, he was summoned and testified before on various incidences before Britain MPs, asserting that he was not aware of the hacking incidences. His son James resigned from various key positions, which was implied in the scandal. The parliamentary panel investigating the scandal considered Murdoch unfit to lead a big international company. It recommended that he remain willfully blind to the company's misconduct he led. In addition, the FBI in the US was investigating Murdoch and the News Corporation.

Expansion into the UK and US Markets

Rupert Murdoch and his son James informed the British Parliamentary Panel that they were not responsible for the corporation's practices resulting in the News of the World scandal engulfing the corporation. However, corporate governance law is unambiguous that the chairman and the chief executive officer are responsible for the actions of the corporate staffers (Apreda, 2019). Murdoch is responsible for the actions of the newspaper staffers as both the board chair and the chief executive officer, regardless of his claims that he was not aware of the illegal and unethical practices of the staffers. As the chair and the chief executive officer, he and his board of directors play a significant role in serving the shareholders of the company. Murdoch and the board should practice their duties following regulatory and legal standards and appropriately observe risk management in doing its shareholders. Leal and Oliveira (2016) argue that the board and its chair are responsible for corporate culture and governance. They are significantly accountable for delegating management responsibilities and ensuring accountability of the management to such obligations.

However, while Murdoch, the chief executive officer, and the board are capable of delegating responsibilities to management, they are not capable of charging the administration's accountability. Harris (2017) asserts that they may be unaware of the practices of the newspaper staffers. Still, their governance role implies that they must offer oversight and monitoring of the company's management. The chief executive officer and the board are responsible for ensuring that ethical codes of practices and adequate internal controls are implemented and monitoring how such procedures and policies are effective (Husted & Serrano, 2017). Moreover, the chief executive officer and the board have the right to ask the correct questions as often as possible in instances such as where sophisticated corporate structures are incorporated to justify why information is not conveyed through the management chain.

As opposed to the management, directors can not be aware of the company's day-to-day management. Still, they employ executives to perform the duties and fire them or force them to leave if they fail in the responsibilities. Bedicks and Arruda (2015) posits once a crisis comes to the public attention, the directors focus on their reputation rather than the processes of preventing the situation from happening. Personal relationships between the chair, the chief executive officer, and the directors are not as essential as the chair, and the board is mandated to monitor the senior management progressively. Together with the chief executive officer, they have a duty of loyalty and care in making decisions for the shareholders (Badicks & Arruda, 2015). They should have all the necessary information and weigh all the available alternatives.

Unless directors and the chief executive officer are involved in practices considered self-dealing or negligence, they will ultimately not be implicated in criminal or civil court proceedings meant for their companies (Badicks & Arruda, 2015). However, in this incidence, negligence and criminal proceedings may show poor judgment in business and make Murdoch's role challenging to sustain in the future. The board of News Corporation is responsible for ensuring that an effective chief executive officer's succession plan is put in place and not leaving it in the hands of Murdoch to decide during his departure. His role as both the chair of the board and the chief executive officer to the company may have contributed to the scenario where the board did question the company's senior management staffers and offer independent oversight to the company.

In conclusion, the company's senior manager is accountable to the board of directors. The management role renders them responsible for the company's practices and actions. Murdoch and his son James may appear as weathering the storm. Still, the board has the responsibility of exercising its mandate in ensuring that the company's culture is put in place from above. That governance is enhanced by asking the correct questions concerning conduct and management practices.

Reference

Apreda, R. (2019), "Corporate governance in Australia: the outcome of economic freedom", Corporate Governance an International Review, Vol. 20 No. 4, pp. 298?310.

Bedicks, H.B. and Arruda, M.C. (2015), "Business ethics and corporate governance in Latin America", Business and Society, Vol. 44 No. 2, pp. 218?29.

Harris, J.E. (2017), "Acceptance of good practices of corporate governance: a case?based model from developing capital markets", Journal of Global Business Advancement, Vol. 2 Nos 1/2, pp. 191?206.

Husted, B.W. & Serrano, C. (2017), "Corporate governance in Australia", Journal of Business Ethic, Vol. 37 No. 3, pp. 337?49.

Leal, R.P.C. & Oliveira, C.L. (2016), "An evaluation of board practices in Brazil", Corporate Governance, Vol. 2 No. 3, pp. 21?6.

Richard P. (2007). News Corp. completes takeover of Dow Jones, New York Times.

Steven, B. & Ivor G. (2016). Westminster Tales: the twenty first century crisis in political journalism. London; 66–67.

Timothy, M. (2018). News Corporation, Technology and the Workplace: Global Strategies, Local Change. Cambridge: Cambridge University Press.