Watch CBSN Live

Murdoch's Last Defense May Be Burning His U.K. Newspapers

Rupert Murdoch may need to destroy his U.K. media empire in order to save it -- particularly now that the political heat has forced News Corp. (NWS) to abandon its bid for the broadcaster BSkyB. Liquidating his newspapers would let Murdoch torch a lot of potentially incriminating evidence before it can used against him.

Under British law, shutting down News Group Newspapers would mean handing all the group's assets -- including records -- to a professional liquidator. That person or company is required to maximize assets. This would clearly include defaulting on pending claims rather than defending them. Reuters' Allison Frankel considered this logic with respect to the now-shuttered tabloid News of the World:

That way, the paper could simply destroy its documents to avoid the cost of warehousing them -- and to preclude any other time bombs contained in News of the World's records from exploding.
The same scenario could presumably hold true for the newspaper group as a whole.

While Murdoch is said to have been considering selling his U.K. newspapers -- the Sun, the Times and the Sunday Times -- for some time, buyers had been hard to find. In the wake of the News of the World feces hitting the fan, that has probably changed to impossible.

Lose the evidence, win public sympathy
In addition to letting Murdoch deep-six so much evidence, shutting down the papers would be a great PR move. The public would see closing the papers as a bold act of contrition. At the same time, people are unlikely to pay much attention to the finer points of British bankruptcy law. That and a little time would probably be enough to get the BSkyB deal back on track -- and that's where the money is.

The newspaper business has been sucking for a while and only a fool would want to stay in it at this point. Rupert's choice is between closing down the papers for a loss and legal cover or holding on to them for a slightly smaller loss and a hell of a lot more trouble. This is the perfect move in the "reverse ferret" strategy which Murdoch is so famous for.

It is worth remembering that what got Richard Nixon in trouble wasn't the Watergate break-in but the Oval Office tapes showing his complicity. It has never been explained why the smart-but-paranoid president didn't do the smart and paranoid thing by just destroying them. After all, you can't get evidence that doesn't exist.

So don't be surprised if Murdoch stages a bonfire of his publishing vanities.

Photo: WikiCommons

View CBS News In