The News Corp board met for more than 10 hours over the past two days in Los Angeles  in what was the first opportunity for a face-to-face discussion about the hacking scandal and governance crisis that has engulfed the company.

In an unusual leak, which further demonstrates cracks in the Murdoch family’s famed loyalty code, the Los Angeles Times today revealed details of what happened at the traditional summer dinner Rupert hosted for the board and executive team in his Hollywood mansion on Monday night.

The 16 News Corp directors then met on Tuesday and Wednesday in LA to sign off on the full-year accounts and the proxy statement for this year’s AGM in October. (See last year’s 75-page version here.)

After arguably the biggest global governance and reputational scandal to hit any multinational, the hacking fiasco will undoubtedly have been thoroughly discussed as well.

The results of this may become clearer at tomorrow morning’s earnings conference call with these analysts who follow News Corp. The media might also get a chance to ask questions and members of the Crikey army, just like any other punter, are welcome to go here at 6.30am AEST tomorrow and listen in live.

Rupert has traditionally been more transparent than his major US media competitors by fronting this quarterly conference call, webcasting it and even allowing separate sessions for analysts and journalists to ask questions.

However, the ageing mogul has skipped the past three conference calls, leaving it to deputy chairman chief operating officer Chase Carey and long-serving finance director David Devoe to answer questions. He may also ban questions from journalists tomorrow.

The key PR question for the company is whether Rupert should completely avoid tomorrow as well. If he does, it will look like a cop-out.

The better strategy would be to include one of the three leading independent directors to answer questions and demonstrate that non-Murdoch shareholders have a voice at the company.

However, the three leading candidates all have questions marks over their objectivity.

Viet Dinh chairs the News Corp governance committee but is also godfather to one of Lachlan Murdoch’s children.

Sir Rod Eddington is chairman of the audit and risk committee but was paid more than $10 million when serving as a full-time News Corp executive.

And billionaire venture capitalist Tom Perkins may have led the independent director coup at Hewlett-Packard but he recently owned up to being a “great friend” of Rupert’s.

The Guardian is claiming News Corp sources have revealed the following plan for tomorrow’s conference call:

Insiders said he (Murdoch) will make a prepared statement, but analysts will be warned that questions about allegations of phone hacking and illegal payments to police in the UK will not be accepted on the grounds they could prejudice a later trial. Sources said Murdoch’s statement will not be as contrite as the ones he made in July in London.

Banning specific questions on hacking won’t be such a big deal, as it still leaves wide open the opportunity for questions about newspaper losses and the arguments for jettisoning the troubled publishing division.

Similarly, future plans for the aborted BSkyB takeover bid will undoubtedly be covered, as will the risks that News Corp could be declared “not fit and proper” to retain its 39% stake in the lucrative UK pay-TV monopoly.

Details on the FBI probe will also be relevant, especially the issue raised by Murdoch’s biographer Michael Wolff in this fascinating piece for Adnews as to whether News Corp’s “Mafia-like culture” will see US authorities pursue it using the powerful Racketeer Influenced and Corrupt Organisations Act.

As for the numbers, this is what the last News Corp quarterly earnings release revealed about how each division was performing on the operating income measure, which excludes interest and tax:

  • Global cable TV: $US2.13 billion with Fox News a key driver
  • 20th Century Fox film division: $US717 million
  • Newspapers, magazines, books and inserts: $594 million
  • Free-to-air US television: $US418 million
  • BSkyB: $US354 million (39% share of declared profits)
  • Sky Italia: $US87 million
  • Other: $US477 million loss reflecting rising Myspace losses

It is clear that News Corp is primarily a global pay-TV and screen content production business.

The ugly newspaper division has imperilled the crown jewels from a probity perspective given that they require regulatory support through government-issued licences to operate.

On top of this corporate risk to the licensed broadcast business, there is also Rupert Murdoch’s illogical loyalty to loss-making newspapers such as The Times, The Australian and The New York Post, which is coming under increasing scrutiny from investors who have suffered substandard financial returns for the past 15 years.

*Stephen Mayne is attempting to raise enough funds for one last trip to New York for the News Corp AGM in October.  Click here to make a donation and help make this happen.