News Corp's board of directors came out in full support of Chief Executive Rupert Murdoch on Wednesday, some 36 hours after a British parliamentary committee had described him as unfit to run a major international business.
"The Board based its vote of confidence on Rupert Murdoch's vision and leadership in building News Corporation, his ongoing performance as Chairman and CEO, and his demonstrated resolve to address the mistakes of the Company identified in the Select Committee's report," the company said in a statement following a board meeting.
News Corp was left reeling from a damning criticism of its handling of the phone hacking scandal at its now-defunct UK tabloid News of the World by the UK's Parliamentary Select Committee of Culture, Media and Sport Select Committee on Tuesday. The report lay much of the blame at the feet of its top executives, in particular Rupert Murdoch and his son James who runs the European operations.
The fact that it has taken nearly 36 hours since the publication of the Select Committee's report to back Murdoch had already raised speculation the board was undecided on how to approach the sensitive matter.
But one long-time News Corp watcher on Wall Street said the board, which has been under pressure since the scandal broke last year to show its independence from Murdoch, would have been reluctant to be seen giving a knee-jerk reaction to the critical 85-page report.
Bob Monks, founder of corporate governance ratings firm Governance Metrics International, said News Corp's board should probably have taken even longer to examine the facts around the latest stage of the hacking scandal to ensure they act in the best interest of smaller shareholders.
Governance Metrics rates News Corp with a grade 'F' in corporate governance.
The phone-hacking scandal, which instigated the inquiry, has already led to the arrest of tens of News Corp staff in Britain and resulted in it having to pull out of its largest ever merger transaction with British satellite operator BSkyB last year.
In a memo sent to News Corp staff on Tuesday, Murdoch said the company regretted its handling of the affair but the company's internal investigation had found no evidence of further illegal conduct at its other British papers other than a single incident reported some months ago.
New York-based News Corp's biggest concern will be to contain the scandal and its impact in Britain but there is an increasing possibility it could spill over to the United States.
On Wednesday, U.S. Sen. Jay Rockefeller sent a letter to Lord Justice Leveson, who is leading a judicial investigation into media ethics in Britain, to ask if the inquiry has uncovered any new information that the misconduct of News Corp's UK papers involved U.S. citizens or violated U.S. laws.
Rockefeller is chairman of the U.S. Senate Committee on Commerce, Science and Transportation, with jurisdiction over media and communications.
Murdoch and his son James appeared before the Leveson hearing last week.
News Corp shares closed up 10 cents to $19.89 on Nasdaq.
(Reporting By Yinka Adegoke; Editing by Richard Chang)