DOVER, Del. (AP) — Attorneys for News Corp. asked a Delaware judge on Wednesday to dismiss a shareholder lawsuit alleging that company directors allowed a damaging cover-up of the phone hacking scandal in Britain.
The plaintiffs claim the board, in blind deference to CEO Rupert Murdoch, ignored several red flags about the extent of the hacking, dating back several years, and failed to act until the scandal exploded last year after British authorities reopened an investigation into the Murdoch-owned tabloid News of the World.
The shareholders say the damaging financial fallout included the folding of the best-selling News of the World after 168 years and News Corp. being pressured to withdraw its $12 billion takeover bid for satellite broadcaster British Sky Broadcasting Group PLC.
Investigations into the hacking scandal have resulted in more than 40 arrests. Among those facing criminal charges are Rebekah Brooks, the former chief of News Corp.'s British operations, and Andy Coulson, a former tabloid editor and the former communications chief for Prime Minister David Cameron.
Attorneys for the shareholders argued that the extent of the hacking should have been clear to News Corp. directors no later than July 2009, when The Guardian newspaper, a News Corp. rival, published an article suggesting that the problem extended far beyond a single rogue reporter, as News Corp. had previously claimed.
Shareholder attorney Jay Eisenhofer said News Corp. directors took no action in response to the Guardian article but instead stood by as News Corp.'s British newspaper subsidiary, News International, engaged in a systematic cover-up that included destruction of e-mails and computers