Will Murdoch's Move into Education be Affected by the News Corp Scandal?

Another day, another story on Murdoch and News Corps.  This time is about their acquisition of Wireless Generation to get them into the field of education technology.  We will leave the pie throwing incident to the conservative media who went nuts but frankly there seems to have been a lack of security for someone to not only get a pie into the room but to get so near to Murdoch with no security around when he was testifying.  We will say one thing -- his wife was really quick.

News Corp domestic holdings include the 20th Century Fox film company, Fox’s numerous TV enterprises, The Wall Street Journal, the New York Post, and the book publisher Harper Collins.  They should be able to withstand this scandal because of the reputation of The Wall Street Journal and other holdings.  News Corp is reporting that Murdoch will not be replaced. It would not come as a shock to see the News Corp board, the 2nd largest media corporation behind Walt Disney Co., in the end remove Murdoch as CEO and  replace him with the Chief Operating Officer Chase Carey.  The stock of News Corp rose when the rumors swirled that Murdoch was going to be replaced but now with News Corp saying he is not, will the stock tank?  We are reminded of the proverbial coach that gets the praise in the NFL that there is no chance he is going to be replaced only to see him fired in a couple of weeks so the jury is still out on Murdoch.

The  attack piece in the Wall Street Journal this week did not help the News Corps credibility and was in poor taste.  Then today Bloomberg is out with the story of Murdoch’s Refusal to Take Responsibility May Undermine Credibility as CEO.  Not only does it look like he was behind the orchestrated hit piece on other news agencies from the WSJ but now he refuses to take any responsibility.  What happened to the 'buck stops here' for CEO's and others including the President.  His defense reminds me of Obama and it is never his responsibility or fault when something goes wrong.

We don't usually agree with the teacher's union and not sure when is the last time that happened, but in this case they have legitimate concerns:

Officials at Wireless Generation, News Corp.’s only education technology acquisition so far, insist they are just another in a diverse line of reputable companies to join the conglomerate. 

They dispute suggestions in the New York City media that because Wireless Generation creates and sells data systems as part of its business, education agencies should be wary of a potential data breach, given the hacking into private phone information by News Corp.’s now-shuttered News of the World and allegedly by other Murdoch newspapers in Britain. 

Why was Murdoch allowed to purchase so many media entities in NYC that overlap or doesn't the FCC and SEC care anymore.  We found the answer:

F.C.C. Votes to Relax Rules Limiting Media OwnershipBy THE ASSOCIATED PRESS
Published: June 2, 2003 

WASHINGTON -- Federal regulators relaxed decades-old rules restricting media ownership Monday, permitting companies to buy more television stations and own a newspaper and a broadcast outlet in the same city. 

The Republican-controlled Federal Communications Commission voted 3-2 -- along party lines -- to adopt a series of changes favored by media companies. 

These companies argued that existing ownership rules were outmoded on a media landscape that has been substantially altered by cable TV, satellite broadcasts and the Internet. 

Critics say the eased restrictions would likely lead to a wave of mergers landing a few giant media companies in control of even more of what the public sees, hears and reads. 

Excerpt:  Read more at NY Times

Will someone tell us when deregulation has really worked?  Or has most deregulation hurt the consumer with higher prices with mergers and smaller companies put out of business?

Having a hard time figuring out how News Corp is a good fit to move into Education.  Eventually do they want to be like the Washington Post who owns for profit Kaplan by expanding from technology into on-line for profit teaching?  Time will tell if it is a good fit, but not sure a company would want to be known as part of News Corp right now.

Published Online: July 20, 2011
News Corp. Scandal Clouds Murdoch's Move Into Education 

Joel Klein, executive vice president of News Corp., left; Rupert Murdoch’s wife, Wendi Deng; and Rupert Murdoch leave a Parliament office building after Murdoch gave evidence to the Culture, Media and Sport Select Committee on the News of the World phone-hacking scandal on July 19.
—Sean Dempsey/PA Wire/AP

When News Corp. announced last fall its entry into the education technology market, some observers said the media conglomerate led by Rupert Murdoch was a bad fit for education.
Between the ownership of conservative-leaning outlets like Fox News and a reputation for identifying opportunities to generate lots of revenue very quickly, News Corp. had a business model, they suggested, that wouldn’t mesh well with a world where public-employee unions hold influence and business development typically is gradual. 

Now, just as News Corp. had appeared set to expand its education holdings beyond its recently acquired subsidiary Wireless Generation, those concerns are joined by a deluge of legal and ethical issues surrounding the phone-hacking scandal in the conglomerate's United Kingdom division. 

At the same time, New York state and city contracts awarded to Wireless Generation have prompted questions, and critics and industry analysts are closely watching the performance of Joel I. Klein, the chief executive officer of News Corp.’s fledgling education division, who went to work for Mr. Murdoch after an often-contentious eight years as chancellor of the New York City schools. 

“They carry baggage with them,” Dick Iannuzzi, the president of the 600,000-member New York State United Teachers union, said of Mr. Klein, Mr. Murdoch, and News Corp. “They’re going to have to figure out how to overcome that baggage if they want educators to look at their work.” 

But even in a time of crisis, if any company has the resources and internal culture to prevail, media experts say it may in fact be News Corp., the second-largest media corporation in the world behind the Walt Disney Co. News Corp.’s domestic holdings include the 20th Century Fox film company, Fox’s numerous TV enterprises, The Wall Street Journal, the New York Post, and the book publisher HarperCollins. 

....

“I think everyone by this point is appalled by the allegations,” Zachary Silverstein, a senior vice president and the chief of staff of Wireless Generation, said of charges that include an unsubstantiated report of possible phone hacking stateside of victims of the Sept. 11, 2001, terrorist attacks. 

“But to try to connect them to business units or others who have absolutely no connection,” he said, “is really a stretch and frankly unfair.” 

Wireless Generation’s co-founder and chief executive officer, Larry Berger, serves on the board of trustees of Editorial Projects in Education, the nonprofit corporation that publishes Education Week.

Hiring ‘Star Power’

Analysts of the education technology industry say New York City-based News Corp. may be showing a willingness to follow a hands-off policy that leaves developing solutions—as well as trust—in the hands of individual companies like Wireless Generation. 

In addition to Mr. Klein, prominent recent hires for News Corp.’s education division include Peter C. Gorman, the superintendent of the Charlotte-Mecklenburg, N.C., schools; former New York City schools Chief Operating Officer Kristen Kane; and Diane Rhoten, the founder of Startl, a nonprofit group that specializes in linking up digital education innovators with funders.
“A company like News Corp. can afford to wait,” said Karen Billings, the vice president of the education division at the Washington-based Software and Information Industry Association, or SIIA. “Because of the people and the star power that they’re hiring, they could also afford to leave them alone for a while and let them do some really interesting innovative things.” 

But Ms. Billings underscored that education clients will need to understand News Corp.’s motivations for entering the education market, as well as its long-term commitment. Both have the potential to be undermined by the continuing scandal over its employees’ news-gathering practices, which also are said to include payments to British police officers. Even as investigations proceed in Britain, some American lawmakers have pressed for probes of any infractions of U.S. law. 

Under its chairman and chief executive officer, Mr. Murdoch, an Australian-born news tycoon who is now a U.S. citizen, News Corp. has grown its brand by letting the outlets it absorbs maintain their own identities and business structures, Mr. Silverstein of Wireless Generation said. That approach to business fits well with both Mr. Klein and Wireless Generation, he said, and has resulted in a smoother takeover than he had anticipated. 

Excerpt:  Read More at Education Week

We will be watching to see what happens in the coming months to this foray of News Corp into Education technology as we are sure they will be more to come out in the months ahead about Murdoch and News Corp.