News Corp hacking scandal costs rise to $512m

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The cost to News Corp of dealing with the phone-hacking scandal at the News of the World has risen to $512m (£332m).

The figure is included in the latest quarterly results for the US-based owner of News UK, which publishes The Sun, Times and Sunday Times.

The costs date from 1 July 2010, a year before the closure of the News of the World, to 31 March 2015 and comprises the “aggregate fees, costs and expenses related to the U.K. Newspaper Matters… net of costs that have been or will be indemnified by 21st Century Fox”. It includes $38m (£25m) paid out in settlement to civil claimants 

"UK Newspaper Matters" broadly relate to issues resulting from the hacking scandal at the News of the World.

This has included paying out some 377 legal settlements to victims of voicemail interception and a further 341 payouts through a voluntary compensation scheme, which was set up as an alternative to litigation.

The $512m figure does not include hacking-related costs paid by sister company Twenty First Century Fox since January 2013 as part of an agreement which was made when News Corp split its news and entertainment divisions into News Corp and Twenty First Century Fox.

News Corp said: “Twenty-First Century Fox agreed to indemnify the company for payments made after the separation arising out of civil claims and investigations relating to the UK Newspaper Matters, subject to the company’s compliance with certain agreements regarding Fox’s control over such matters.”

The continuing fallout from the hacking scandal cost News Corp $42m in the nine months to March, down from $56m in the same period a year ago.

These included $15m of fees and costs in the last three months,down $5m year on year.

Overall, News Corp reported turnover for the last three months down 1 per cent to $2.062bn and profit (EBITDA) down 7 per cent year on year to $163m.

Former chief executive of News International (now News UK) Tom Mockbridge was secretly taped speaking to arrested Sun journalists about the financial impact of the hacking scandal on the company in November 2012.

He said: “If NI wasn’t a subsidiary to News Corporation, this company would be bankrupt now. There wouldn’t be a Sun, a Times, a Sunday Times. There’s no way this company, as a stand-alone operation, could afford to financially sustain the exposure it’s taken…

"There’s a shitload of just financial expense – across the civil cases. The hacking probably, by the time it’s all over, is going to cost News Corp minimum of £500 million, if not a billion.”

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