Rupert Murdoch has always had two fascinations: the first is what he calls ‘a spiritual calling towards journalism’; the second, the vision of science fiction writer Arthur C Clarke who, in 1945, imagined that a satellite placed in geosynchronous orbit would solve the ‘global broadcast distribution problem.’ Both of these primal impulses – the business of news and the animal urges of television – have combined with a third, the inexorable urge for corporate expansion to land News Corp in the mess that it is in right now.
The phone-hacking tabloid News of the World has ‘died of shame’, as one British newspaper put it; there is a big question mark now over Murdoch’s bid to buy 100% stake in Britain’s largest satellite broadcaster BSkyB; and British politics is seeing its greatest debate in twenty years over the cosy equation between politicians, the media and the police.
It is a churning that could have far-reaching implications not only for Britain, and Prime Minister David Cameron, but also for the wider Murdoch empire and global media.
In the 1980s, Murdoch changed the face of the British press when he broke the power of the unions, single-handedly changed its prevailing culture and found common ideological cause with Margaret Thatcher who was breaking up unions in other sectors.
It wasn’t just ideological. Even Tony Blair’s ‘Cool Britannia’ was based so much on an alliance with Murdoch that Lance Price, a special advisor at 10 Downing Street at the time, thought that he ‘seemed like the 24th member of the cabinet’.
A Conservative government is now in power, but it is even cosier with Murdoch – James Cameron’s former communications chief Andy Coulson has just been arrested in a police investigation into corruption and phone-hacking from his time as editor of News of the World and like the 2G scam, the longer the investigations continue, the more questions will be asked of the Prime Minister. At the very least, his judgement is in question.
The unexpected decision to kill News of the World, Britain’s largest selling newspaper, has once again shown Murdoch’s ruthless instinct to see the bigger business picture.
It also seems unfair to many because the alleged phone-hacking (including that of a murdered teenage girl) happened years ago, and most of its current staff, from the editor downwards, is new.
With nearly 7.5 million readers, the paper was a cash cow but its revenues accounted for only a fraction of News Corp’s global empire which earns about $32 billion a year, with assets totalling $56 billion.
By closing it down, Murdoch is trying to keep the shadows of the scandal from affecting his real game – the politically controversial battle to buy out the 61% of shares in BSkyB that he doesn’t already own. BSkyB made $2 billion in profits last year; this will be Murdoch’s biggest acquisition, if it goes through; and it could change British television forever.
With at least three investigations underway, there is probably much more muck that could come out and
Mr Murdoch seems to be cutting his losses. Killing the masthead that was responsible may take the sting out of the criticism. But he has raised eyebrows by sticking by his Chief Executive in London, Rebekah Brooks, who edited News of the World from 2000-2003.
She has denied knowing anything about phone-hacking but some of the wrong-doing happened under her watch. Politicians have been demanding her head and sacrificing an entire paper but sticking by her opens up charges of cynical pandering.
The biggest long-term impact of this crisis could also be on the long-term succession stakes within News corp. Mr Murdoch is 80 years old and three of his six children have at various times have been seen as the heir apparent in a group where the family commands over 38% of the voting stock.
Some talk of how the now-threatened BSkyB deal would have strengthened the stature of James Murdoch, who took over a newly created role as Deputy COO and Chairman and CEO, International, at New Corp earlier this year. Said to be the current first among equals, he has handled the London affair so far.
His older brother, Lachlan, gave up his executive position at the company some years ago, and his sister Elisabeth, who left as well, has recently been involved in talks that could bring her own production company closer to News Corp.
At its heart, the current crisis is about questions of governance in the world’s most powerful media group and this could well have a bearing on its future directions.
Whatever way the current crisis plays out, Mr Murdoch is not one to back away from a fight.
His detractors should read former Australian Prime Minister Paul Keating’s reading of the media baron. As he reportedly advised Tony Blair: ‘He’s a big bad bas**** and the only way you can deal with him is to make sure he thinks you can be a big bad bas**** too. You can do deals with him, without ever saying a deal is done. But the only thing he cares about is his business and the only language he respects is strength.’