The crumbling of the Murdoch dynasty
Dec 07 2012
Rupert Murdoch is running out of time if he wants to direct who will get to run the company
Then last month, the political party he supports and largely owns, lost the election. When you have Sarah Palin, Mike Huckabee, Roger Ailes, Karl Rove, John Bolton, Liz Cheney, William Kristol, Dick Morris, Oliver North, Rick Santorum, and Newt Gingrich on the books and have all your media properties conduct a virulent, ad hominem campaign against the president, then watch the Republicans lose so convincingly, it must be hard to know where you went wrong.
Then on Monday, Murdoch announced his reluctant splitting of News Corp. in two, dividing the company between News Corp.— containing the mostly hard-copy waning press properties he dabbles in as an expensive hobby — and Fox Group, made up of the money-making media properties, like the Fox movie studio, the Fox TV network, and Fox News, that the company’s non-family and therefore, non-voting shareholders prefer. The restructuring was forced upon Murdoch in the wake of the revelation that phone hacking had become quotidian at his British newspapers, a crime of which, despite his addiction to editorial micromanagement, he has always denied all knowledge. Had he not taken the initiative and divided his company, the report by Lord Justice Leveson on corruption in the British press might have demanded a more painful remedy. To stem the damage being done to his company’s profit centres, and to appease one of his biggest sleeping shareholders, Saudi Prince Alwaleed bin Talal, Murdoch closed the News of the World, the scandal rag he used to intimidate those who did not toe his line, and he lost his chief executive in London, Rebekah Brooks, who awaits trial for interfering with the course of justice, among other charges. Almost all the other 86 arrested so far, except those they are accused of bribing, are former Murdoch employees.
There is more fallout from the split. Tom Mockridge, who was successfully running Murdoch’s Sky Italia satellite TV business when he was hastily asked by Murdoch to replace Brooks in London, was called in to urgently clean the stables. Perhaps, he did too good a job, because when it came to finding a head for the new print division, the spot was given to Robert Thomson, who as senior editor at the Wall Street Journal has been administering the conversion of the once-unimpeachable business paper to the Murdoch culture.
This Monday’s announcement about News Corp.’s forced bifurcation at least allowed Murdoch to smother news of the closure of his latest brainchild, The Daily, the iPad only news publication that failed to find a readership. Murdoch has never really understood business in cyberspace, as his disastrous purchase and mismanagement of the once burgeoning online social media property MySpace attests, but since owning an iPad he has taken to tweeting, which offers a window into the sort of half-baked outmoded bombast his editors daily have to endure. His failure to understand why The Daily was unlikely to work so long as it remained confined solely to the iPad shows that Murdoch still does not get the digital world.
Perhaps, most devastating of all recent events, though, was the broadside from his daughter Elisabeth, this week in a New Yorker profile, which makes plain that the widespread use of phone hacking by Murdoch’s journalists and private detectives not only deeply damaged his already battered reputation for honest reporting, but revealed that the Murdochs are a family at war.
At one stage, Murdoch and Elisabeth did not speak for nine weeks — perhaps, not surprisingly, as Murdoch had let her know he thought she and her husband, the London public relations whiz Matthew Freud, should divorce — and it finally took Thomson to persuade Elisabeth to break the silence. Elisabeth and James Murdoch, the son summoned home to New York from London in disgrace after a half-hearted and lacklustre attempt to cover up the hacking scandal, have “not had a personal conversation for many months.” Lachlan, the third and oldest child of Murdoch’s marriage to Anna Torv, has few remaining links with his father’s company, except to sit on the board as a shareholder, after he left New York in 2005. He now lives in Australia.
This week’s Black Monday held more horrors. A British MP, Chris Bryant, himself one of a number of lawmakers who were hacked by Murdoch apparatchiks, cast fresh light on the Mockridge resignation when he accused the company’s internal enquiry into the wrongdoing, headed by Mockridge, of doing a deal with police. “They provided the material about some of their journalists as long as they made sure that the ship still floated and the proprietor’s feet didn’t get wet,” claimed Bryant. “I would suspect that at some point there will be charges brought against senior directors quite possibly including James and Rupert Murdoch.”
Bryant also raised the prospect of an American prosecution of News Corp. under the Foreign Corrupt Practices Act, which forbids an employee of an American company from bribing a foreign official. Although, at the urging of Senators Barbara Boxer and John Rockefeller, the Attorney General and Securities and Exchange Committee have been encouraged to investigate whether Murdoch’s company broke any American laws, it is thought no American prosecution will start until the trial of Rebekah Brooks has reached a verdict some time in late fall next year. Far easier, it is thought, to prosecute with British evidence in the bag than to mount an enquiry from across the Atlantic.
What Bryant was hinting at was the purchase by executives at Murdoch’s breast-laden tabloid The Sun of humiliating pictures of Saddam Hussein in captivity, showing the fallen dictator in underpants. The pictures graced the front pages of both The Sun and Murdoch’s American equivalent, The New York Post. The fact that News Corp., always quick with the disavowal, has not yet denied that it paid for the pictures, amid reports that a Sun photographer was flown to San Francisco to make the deal, suggests that money did indeed change hands.
According to Bryant, with information from “two well-placed people inside News International,” “in 2005 The Sun and the New York Post paid a substantial sum to a serving member of the US armed forces in the US for a photograph of Saddam Hussein, and a much larger amount was then paid via a specially set-up account in the UK to that same member of the US armed forces.” Whether that transaction was enough to trigger a prosecution is for the American authorities to decide.
So, after an especially awful 2011, this fall has been just as wretched for Rupert Murdoch, with the promise that next year will be even more torrid. The 81-year-old magnate waves away suggestions he might retire and endures a stern diet and exercise regime under the watch of his third wife Wendi to ensure that the News Corp. succession stakes remains moot. But if he wants to direct who will get to run the company he has built up, he is running out of time. When he meets his eventual demise, the Murdochs may have become as disparate and dispersed as the Bancroft family, who used to own The Wall Street Journal. And we all know what happened there.
(Nicholas Wapshott is the former New York bureau chief of The Times