Rebekah Brooks, News International CEO, Resigns

The fate of News Corp (NYSE: NWS), already uncertain, has become more so. Rebekah Brooks, News International CEO, resigned. News Corp CEO Rupert Murdoch said he would defend her until the end. Perhaps her departure means the end is closer at hand.

Hopeful shareholders of News Corp believed that only a few middle managers would resign because of the investigation into phone hacking and police bribes by News of the World employees. But now it seems the trouble might even extend to the management of the Times, which has been accused of similar tactics. The accusations and charges would stop there. But Murdoch has agreed to be questioned by Parliament, where members are likely to say he presides over a pirates culture where money is much more important than morality. There are even predictions that Murdoch will be forced out as the head of his own company and that his son James may be charged with crimes.

The alternative is that Brooks stepped down in a selfless gesture to appease the authorities and to show shareholders that News Corp’s broader interests would be served. She may be guilty of nothing more than blind faith in the quality of the reporting process at the papers she has overseen, but that is still a sin in a world where CEOs are supposed to know everything. Or at the very least these CEOs are to set a standard of morality. That is hard to do among thousand of employees, many of whom are not reliable, at least based on any large sample of the overall population.

The assumption has grown by the day that Murdoch and his top lieutenants knew that their reporters used techniques that were on the bright line between what is legal and illegal to obtain “news.” Those practices are as old as newspapering. They were just easier to detect in a world of cellphone records and email. And that is what may finally be Murdoch’s undoing. He came into the newspaper industry in the era of hot type when most newspapers had a reporter at city hall and another in police headquarters. Almost all of those reporters drank with politicians and cops. But there were not any surveillance cameras then.

Douglas A. McIntyre