How one night at Rupert Murdoch’s London townhouse changed the course of the phone-hacking scandal:
“Red wine in hand, Rupert Murdoch chatted with guests at his London townhouse on what would be one of the most important nights to the future of his company. Gathered for cocktails were Rupert’s son James, heir apparent to the family media empire; Rebekah Brooks, the chiefexecutive of News Corp.’s U.K. unit; and Chase Carey, the New York-based president and chief operating officer. Joining the executives were a pair of legal heavyweights: Joel Klein, former New York City schools chancellor, and Brendan Sullivan Jr., the well-connected Washington lawyer brought into the Murdoch fold at Klein’s request.
“It was May 19, 2011. The senior Murdoch had flown in two days earlier for a whirlwind of meetings with his top London executives. He had called the dinner party to hash out once and for all how to handle the phone-hacking scandal that had been hanging over the company for months and was suddenly spinning out of control.”
After 50-plus product recalls in 15 months, the $60 billion company is fighting to clear its once-trusted name. “Not only is J&J bigger and more decentralized; it’s also much more profitable. Its operating margin in 1990 was 17.7 percent; in 2010 it was 26.8 percent. ‘Where did that increase in margin come from?’ asks Sucher, the Harvard business professor. When J&J acquired Pfizer’s consumer health-care division in 2006, it predicted cost savings of $500 million to $600 million. Sucher says numbers like that suggest cost-cutting may have gone too far.”