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Rebekah Brooks could be forgiven for experiencing a pang of déjà vu when she starts work on Monday morning. Four years after she quit at the height of the phone-hacking scandal, Rupert Murdoch’s protégé has returned to his side as chief executive of News Corp’s UK division.
Ms Brooks has been given the task of plotting a new path for a media company grappling with the transition from print to digital. She was cleared of all phone-hacking charges 14 months ago but her reappointment to lead the division responsible for The Times, Sunday Times, Sun and Sun on Sunday still attracted plenty of opprobrium. Critics include Chris Bryant, the Labour MP, who says Mr Murdoch “stuck two fingers up to the British public and the thousands of people whose phones were hacked” when he rehired Ms Brooks.
Mark Hanna, the newspaper group’s former head of security who stood trial with Ms Brooks, says her reappointment “shows total contempt” for victims of the phone-hacking affair.
“Very soon I intend to make it known just how underhanded [Murdoch and Brooks] have been,” he says in a video posted on YouTube.
Yet Mr Murdoch is a committed fan of Ms Brooks’ talents — first as an editor and then as an executive — and her return to the News Corp fold once she had been cleared of criminal charges, was never in doubt. Her first priority will be to restore Mr Murdoch’s beloved Sun to glory by making a success of its digital operation.
The tabloid is Britain’s biggest selling newspaper but its paywall strategy, introduced two years ago, has failed. It has attracted only 225,000 digital subscribers — a fraction of the title’s print sales, which are falling. As chief executive of News UK, the buck will stop with Ms Brooks if she fails to turn round The Sun.
“Rupert loves Rebekah,” says one insider. “But he loves The Sun more.”
This would be in line with a new operating environment at News Corp, which has changed significantly since Ms Brooks last worked at the company. News Corp split into two, with its broadcast television, cable portfolio and Hollywood studio housed within a new company, 21st Century Fox. News Corp, the smaller of the two companies, kept the newspapers in the US, UK and Australia, as well as HarperCollins, its publishing group.
Without the cushion of the more profitable US television and video side of the business, there is no room to hide when quarterly targets are not met. People familiar with the situation say pressure on senior News Corp executives has intensified since the split.
There is evidence of this in the turnover in senior executive positions. Lex Fenwick, the former chief executive of the Dow Jones division, parted company with News Corp last year after only two years in the role, when he was replaced by former Daily Telegraph editor Will Lewis. Kim Williams, the former chief executive of News Corp Australia, abruptly retired in 2013 after less than two years in his job.
The jury is out on whether Ms Brooks will be able to steady the ship at News UK. Mr Murdoch clearly thinks she can. In the press release announcing her appointment, News Corp pointed to the financial success she achieved in her previous stint as chief executive, when operating profits rose in successive years.
That period, from 2009-11, is remembered more for gimmicky promotions than strategy. But people close to News UK still expect Ms Brooks to inject energy into the company, which has yet fully to escape the aftermath of the phone-hacking scandal.
In her time away, News UK’s fortunes have sunk. It recorded an operating loss of £67m in the financial year ending June 2014, compared with an operating profit of £81m three years earlier. In the latest financial year, it amassed another $50m in legal costs related to phone-hacking, while The Sun, suffered from a “challenging” advertising market.
News Corp, News UK’s parent company, has fared little better, judging by its share price, which last month hit a 52-week low. However, there are signs it may have turned a corner. It has finished a two-year “investment phase” that included a change of course at Dow Jones, where initiatives pursued by Mr Fenwick “didn’t work”, says Tim Nollen, an analyst with Macquarie Securities.
News Corp has also diversified beyond its core publishing business with the $950m acquisition of Move, a US-focused online property company.
“It has done a very good job of moving from being a newspaper publisher to becoming a broader publishing and services company,” Mr Nollen says.
Ms Brooks will almost certainly seek to diversify beyond News UK’s core print products, insiders say. The closure of the News of the World during the phone-hacking crisis lost the company about 500,000 readers, who never came back to its successor title, the Sun on Sunday. During her four-year absence, the Sun’s circulation has fallen by nearly 1m copies a day — to 1.86m.
The News Corp statement confirming Ms Brooks’s reappointment said her role would include “added responsibilities for the acquisition and development of digital properties”.
There is urgency around this digital effort, according to one industry insider. “They’ve got no growing digital revenue streams. They’re going to have to buy one.”
Ms Brooks has already taken a big step to try to improve The Sun. Together with Robert Thomson, News Corp’s chief executive, she persuaded Tony Gallagher to join the paper as editor and give up his perch as deputy editor of the Daily Mail.
The Sun has increasingly focused on celebrity coverage. The expectation at News Corp is that Mr Gallagher — “a brilliant tactician”, according to one insider and a man of “almost Victorian ethics”, says a friend — will lift the paper upmarket into Mail territory with more of the political campaigns that were common when Ms Brooks was editor.
In recent months The Sun has placed only a fraction of its content behind the paywall, following the approach of the German tabloid Bild. More free content is likely to be made available to claw back ground ceded to MailOnline, the Daily Mail’s digital operation which is the world’s most visited English-language newspaper website.
The competitive landscape has shifted while Ms Brooks has been out of the picture. But while much has changed, many things have stayed the same. News Corp remains a Murdoch company: James Murdoch no longer has an operational role, having swapped News Corp for the chief executive job at 21st Century Fox, but his elder brother, Lachlan, was last year named co-chairman. Their father, Rupert, continues to call the shots as executive chairman.
It was the elder Murdoch’s decision to bring back Ms Brooks and entrust her with The Sun. “The big question is: can she turn it round?” says one person familiar with the situation.
Difficult decisions lie ahead for Mr Murdoch if she fails.