Murdoch Agonistes

Michael Hedges July 12, 2011 Follow on Twitter

The hourly revelations, charges and retorts about News Corporation have rapt the media world. Rupert Murdoch is facing, arguably, his greatest challenge. The seeds run deep and, as is said, one reaps what one sows.

Inevitably there came last week comparisons to another great scandal of media and politics, power and desire, lies and cover-ups. The Watergate melodrama that played out in the United States in the early 1970’s was at once journalisms finest hour and, following a brief fling with morality, the beginning of a ruthless brand of politics that endures today. US President Richard Nixon, facing impeachment, was forced to resign in disgrace.

 “All our liberal values track back to a mystique of the earner,” wrote Garry Wills in 1970 biography of Richard Nixon – Nixon Agonistes: The Crisis of the Self-Made Man. For many in the private media sector Rupert Murdoch embodies those liberal values and that mystique, the hard-charging competitor, bold investor, champion of private enterprise. We remember that he faced down bankruptcy in the 1990’s to build arguably the most powerful media business in the world. We forget that he inherited the Australian newspaper business that gave him a leg up.

The tabloidish travails of UK tabloid News Of The World have become, some believe, Rupert Murdoch’s Watergate. After simmering half a decade the tittering story of hacking telephones of politicians, footballers and pop stars turned incandescent. As with that legendary tale of misdeed and coverup this story passed through the scapegoat phase – competitors are enemies and are morally guileless – to pure damage control.

UK media dutifully reported Mr. Murdoch flying to London, first Saturday then delayed until Sunday, to “take personal control” of the problem. His previous trips to London received the same billing. The damage keeps piling on. Hacking the phones of errant celebrities and politicians extended to thousands of phones, fishing for dirt. Payments may have been made to police officials to limit a deeper investigation. “What was Watergate?” asked Richard Nixon as storm clouds turned nasty. “A little bugging.”

The turning point for News International (NI), the News Corporation subsidiary owning the UK newspapers, came when the hacking of a phone belonging to a missing 13 year old had been hacked and messages deleted. The child’s parents were given false hope she’d be found alive. Then it was revealed that phones of family members of British soldiers killed in Iraq and Afghanistan had been hacked, fishing for dirt. The survival instinct of UK politicians kicked in.

After the unprecedented debate in the UK Parliament (July 6) where Prime Minister David Cameron was forced to take umbrage at the scandal further charges of illegal activities by persons associated with News Of The World drew attention to the tabloid’s owner, News International, and, ultimately, Rupert Murdoch. “Politicians,” said commentary in the Independent (July 6), “ are finally free from Murdoch’s tyranny.”

Suddenly the leverage held over UK politicians, great and small, dissipated. The Murdoch owned UK newspapers “wot won it” for Conservative John Major in 1992 and continued to wield influence of all others since found themselves without friends in the seats of power. The fable of the scorpion and the frog comes to mind.

“What did the President know and when did he know it?” asked US Senator Howard Baker during the Senate Watergate Committee investigations in 1973. News Corporation and News International executives have steadfastly denied any knowledge of the phone hacking and other potentially illegal activities. It was the “rogue reporter.” Questions of who knew what and when will inevitably be asked by a senior judge once UK Prime Minister David Cameron negotiates the least potentially damaging terms.

The risks for News Corporation and the Murdoch family have grown steadily. Each time a hurdle needed jumping, it was. With focus on News Corp’s bid for complete control of TV broadcaster BSkyB, concerns about media plurality were met by a company offer to spin-off UK news channel Sky News to an independently managed company. It was a red herring. When the News Of The World story dipped into the surreal last week (July 5) with revelations of hacking phones of missing children and dead soldiers families, the company abruptly closed the newspaper. It was a PR move.

The whole of News International might be sold off, suggested Murdoch biographer Michael Wolff, interviewed by the BBC (July 11). “The whole world changed for News Corporation last week. Up until then they thought: "OK, we can manage this … It doesn't compromise our business, we don't lose any money, no one named Murdoch is at risk" … Last week that suddenly changed.”

Risk now is beyond the BSkyB deal. Political pressure makes inevitable a regulator consultation on whether or not News Corporation, its directors or executives are “fit and proper” to take complete control of the television broadcaster. The delay will cost News Corporation dearly.

Questions of corporate malfeasance, both in the UK and the US, could pose legal and financial risk beyond anything Mr. Murdoch has faced. “I think Rupert Murdoch for one of the first times in his life has absolutely no idea what he should do,” said Michael Wolff to the BBC.

In the depths of the Watergate revelations, Richard Nixon turned to his inner circle for advice. Mr. Murdoch, it appears, is turning to family members, extended as they are, each with vested interests. Son-in-law and PR whiz Matthew Freud is said to have suggested the News Of The World closure to James Murdoch. The younger Murdoch’s are far less attached to newspapers but, like the hapless Bancroft family from whom News Corporation bought the Dow Jones Company and the Wall Street Journal, money and succession are top of mind.

An indirect association between Rupert Murdoch and Richard Nixon come from Fox News chairman Roger Ailes, A 1970 memo obtained from the Richard Nixon Presidential Library appears to detail Ailes’ plan for a “pro-Administration” television channel to presidential advisor H.R. Haldeman. Fox News, a division of News Corporation, unabashedly supports the teabagger element of the American right-wing. Haldeman would spend 18 months in jail for his service to Richard Nixon’s obstructing justice.

Fears News Corporation would clone Fox News and its right-wing bent in the UK under the Sky News name led to consternation and ultimately an agreement to spin the news channel into an independently managed entity. As Culture Minister Jeremy Hunt announced a decision (July 11) to refer the BSkyB deal to the UK Competition Commission News Corporation withdrew its offer to spin-off Sky News. The referral will delay any deal for BSkyB for months if not forever.

Under the guise of setting up an education division last January, Mr. Murdoch hired and gave a board seat to former US Deputy Attorney General Joel Klein, an anti-trust specialist. Klein, as an independent director, is now charged with sorting out company liabilities in the on-going story. He’s likely the one who will give Rupert Murdoch and family the bad news.

Some of that news could be very bad, indeed. As a US registered corporation News Corporation directors and executives can be prosecuted under the US Foreign Corrupt Practices Act if a conviction is reached for paying to or accepting bribes from foreign officials. If any person in the company is convicted of, for example, paying a bribe to a police officer, company directors and executives receive jail time and, arguably, worse. All assets of the offending director or executive can be seized. US sources say James Murdoch as News International chairman could be at particular risk. So much for that succession plan. Six months ago, James Murdoch threatened to pull News International and News Corporation out of the UK if the BSkyB deal was further delayed.

A group of News Corporation’s institutional investors, small be significant, filed suit in the US state of Delaware (July 8), where the company is registered, complaining of “a culture run amuck within News Corp and a board that provides no effective review or oversight.” Rupert Murdoch, said the filing, “has treated News Corp like a family candy jar, which he raids whenever his appetite strikes. Ignoring the distinction between public and family business, the board has repeatedly permitted Murdoch to: intertwine rampant nepotism in the conduct of company business; undertake actions designed to maintain his control over News Corp; use News Corp resources for his own personal and political objectives; and reward himself handsomely with excessive compensation.”

Of potentially broader consequence was UK Prime Minister Cameron’s call for more media regulation. Those dastardly newspapers and television channels must be prevented from dastardly deeds, presumably including reporting those of corrupt politicians. “All too often,” writes International Press Institute director Alison Bethel McKenzie (July 8), “governments and others who strive to suppress the media point to shoddy journalism and the need to protect the public as reason to limit media rights.”

“Well, I screwed it up real good, didn’t I,” said Richard Nixon, when it was clear to all.

See also in ftm Knowledge

Rupert Murdoch and News Corporation

News Corporation is a highly competitive media giant a global, multi-media footprint. From paywalls and pay-TV to tabloid troubles and new ventures the media industry watches Rupert Murdoch. Update includes family ties, succession plans and other News Of The World. 172 pages PDF (April 2011)

Order here