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News Corp. tries to put Brooks saga behind it

Shareholders in News Corp. would be forgiven for being outraged at a report that Rebekah Brooks, the former CEO of News Corp.'s U.K. newspapers, has received a 7 million pound "payoff." She left her post in July last year as allegations of phone hacking engulfed the News of the World and led to the abrupt closure of the Sunday tabloid owned by the company.

The exact form of payments made to Ms. Brooks, reported in the Financial Times, is unclear, and a spokeswoman for News International, which operates the UK newspapers, declined a Breakingviews offer to give details. The precise nature of Ms. Brooks' involvement in the affair is also unclear. She has been charged with conspiracy to pervert the course of justice and conspiracy to intercept voicemails. But ultimately she may be found blameless and deserving of compensation for loss of office. The 7 million pound figure cited by the FT, meanwhile, includes unspecified sums for legal fees. It is also important to note reported references to clawbacks that might give News Corp the right to recover payments that may prove inappropriate.

On the day of her 2011 departure, James Murdoch, son of News Corp's ultimate boss Rupert, thanked Ms. Brooks for her 22 years of service, lauding her as one of the outstanding editors of her generation. "She can be proud of many accomplishments as an executive," he said, adding: "We support her as she takes this step to clear her name."

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But adjacent to these July 2011 comments, in the same message to shareholders, Mr. Murdoch junior referred to News Corp's decision to establish an independent Management & Standards Committee. "I want to emphasise its importance," he said. "The Committee has direct governance and oversight from News Corporation Board members and is codifying standards that will be clear and enforced."

Time may prove that shareholders look on Ms. Brooks' departure, and associated cost, with equanimity. They might even thank Brooks for stepping aside if, as it appears the case at present, it was one of the catalysts that sparked company-wide improvements in governance. The 50 per cent rise in the value of News Corp. shares since Ms. Brooks left the company certainly suggests that shareholders are pleased with the way the company is moving ahead without her.

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