All in the Family

It takes a special kind of ability to make us feel sorry for an a global media mogul, but the idiot at the Select Committee hearing, on Tuesday last, with the fake custard pie may just have done it. This is quite a remarkable turn of events, at least for people here in the UK. Since Rupert Murdoch first expanded his newsprint holdings into the UK in 1969, with his acquisition of the News of the World, the English-speaking world’s biggest selling newspaper (a title that it still held when it was closed down two weeks ago), he has achieved a place as a hate – figure for the left that few others have been able to match. I’m sure that I cannot have been the only one to have watched his faltering performance before the Select Committee hearings this week to have thought “is that the great media tycoon ?”. Still, looking on the bright side – I doubt that there is a single heterosexual man of my age or older that dosnt envy him for his choice of wife.

It wasn’t always that way. In his heyday he had a famously complete control of his brief – a man who could strike terror into the heart of even the most hardened Fleet Street editor by always seeming to know more about their newspaper than they did themselves. He first burned into the consciousness of the British Public in the 1980’s when he tried to modernise the four titles (News of the World, Sun, The Times and Sunday Times) on Fleet Street that he owned by demanding an end to the union’s closed shop and the introduction of new technology. Despite the introduction of computer controlled electronic typesetting and offset-litho printing, with Journalists entering their copy directly into a computer system, in many other parts of the world, the UK still used the old fashioned hot metal and linotype system – slow, cumbersome and very labour intensive. His attempts to introduce the new technology in 1986 led to a showdown with the famously powerful, and famously militant, print unions who went on strike in protest. In a dramatic move, he switched production of all four of his titles away from Fleet Street to new premises in Wapping and sacked 6,000 of the striking workers. This led to the infamous “Battle of Wapping” as the sacked workers, and other sympathisers from the British left, picketed the new plant leading to violent confrontations. The strike finally ended a year later, with many of the strikers having gone a whole year without pay – a complete victory for Murdoch’s News International. Within a year, virtually every major UK national newspaper had copied Murdoch’s example and abandoned their traditional home on Fleet Street.

His reputation for right –leaning politics is also part of the legend, but this part is less well deserved. That might seem a strange thing to say for a man who took who famously cosied up to Thatcher during both the print workers and miner’s strikes. A businessman who’s first action on acquiring the Sun in 1971 was to convert it from a Labour supporting broadsheet into a Conservative supporting tabloid and who, of course, gave us the right wing US TV channel Fox News. The reality however, is more complex. Murdoch, in fact, has no strict political affiliations – his only true loyalties are to his family and his business interests. In the 1960’s and 1970’s in Australia he was most closely associated with the Labour government of Gough Whitlam, lending him considerable support. Similarly in the UK, although was once a supporter of Thatcher he switched to Labour in 1997, throwing the weight of his titles behind Tony Blair, before switching back to the Tories when Gordon Brown’s premiership became unpopular. He also switched the Scottish edition of the Sun away from the Tories and turned it into a pro – independence paper. Had he suddenly become a Scottish Nationalist ? Hardly. What he really is, more than anything, is an opportunist. Very early on in his publishing career, he discovered that affiliation to a popular political movement was a powerful marketing opportunity for a newspaper. He consistently shows an ability to identify gaps in the media market where a significant strata of opinion in society feels under-represented and then fills that gap by giving them what they want. He used that tactic to great effect in the 1990’s by giving right – wing opinion in America, which had long regarded the traditional media as too left wing, its own TV channel – Fox News. Hated with avengeance by the American left, it is nonetheless one of the most popular and commercially successful channels on US cable TV.

Times change however, and people change with them. At eighty years of age, Rupert Murdoch is plainly no longer at the height of his powers. True, having to answer questions before a parliamentary select committee is not an experience that he is used to, and one that I am sure that he won’t care to repeat. Even so, when he said that it was the most humbling day of his life, I for one, was inclined to believe him. Although still both the chairman and the CEO of News Corporation, he is obviously no longer the power in the company that he once was. There is also some truth to his statement before the Select Committee that the UK media market is no longer the significant part of his empire that it once was. It is his television and film interests in the USA that are the real bedrock of News Corporation’s business and it is that that attracts most of his attention. It was clear from watching the Select Committee hearings that the game plan had been for James to do most of the talking, but this was derailed right at the start by Tom Watson’s insistence on making the CEO, Rupert Murdoch, answer the corporate governance questions. It was the lack of knowledge of some pretty fundamental parts of the affair that was perhaps the most telling part of his testimony.

His son James, by contrast, had plainly been the most briefed and, to be fair, gave an effective and polished performance. Having spent my entire working life in large government and corporate organisations, I recognise his type of executive. A slick corporate operator, he is used to high pressure meetings and performed well, the committee barely landed a glove on him – apart that is from the at end, when Labour MP Tom Watson, the real hero of this affair, finally managed to get under his skin and put him under pressure to give undertakings to lift confidentiality clauses and allow certain parties to speak freely. James plainly looked uncomfortable, and had no slick answer prepared.

Although a corporation (or a PLC as we say here in the UK), News Corp is very much a family business. On the face of it, Rupert Murdoch and his immediate family are only minority shareholders on the board, holding just 13% of the total available stock. However, due to a complex arrangement where most of the remaining stock consists of non – voting shares he has managed to engineer a situation where, in fact, he and his close family members are able control the board with the shares that they have. The Financial Times reported weeks ago that it rated the effectiveness of the News Corp board as “F”, the lowest rating possible – and it only got that because there is no lower mark available. In other words, News Corp is completely the creature of the Murdoch family, a family business no matter what its status as Corporation may say legally. And therein lies a major problem – there is a temptation for a family business to be run as if it were one big family. If you are running a corner shop or a small haulage company with a few trucks where everybody really is related to everybody else, then that trust based model can work. In a vast global corporation with many diverse interests, and critically, with political connections something more than trust is required – it is in such companies that strong effective corporate governance matters more than anywhere else.

And now we can begin to see why it is the current situation has got as bad as it has. The British press is some of the freest in the world, operating in one of the most cut-throat markets in the world where the pressure for scoops is at its most intense and the temptation to bend the rules is at its greatest. Add that to a company with a weak culture of oversight and corporate governance and you have the makings of a disaster waiting to happen – with middle managers breaking the law, UK level executives trying to cover it up, including lying to Parliament, and the News Corp level executives in the USA belatedly learning of the true facts and fighting to keep the lid on the whole thing.

There are clear signs now that a tipping point is rapidly approaching. Now that Mulcair has had payment of legal fees stopped, he may be a lot more willing to reveal just who ordered him to carry out the phone hacking and who else knew about it. Don’t get me wrong – it would not have been Rebekah Brooks or Andy Coulson who ordered that, it would have been a middle – manager who did. But once their names are revealed, they may be much more willing to give up more senior executives who, the suspicion is, tried to cover it up afterwards. Also, the law firm Harbottle and Lewis who have been holding the results of a 2007 inquiry by News International, but have been prevented from revealing its contents by client confidentiality, have now been freed to talk. They have been bursting to do this for some months, since they are a reputable firm (their clients include Prince Charles) and have been accused of incompetence in not coming forward before; remember that the former DPP Lord McDonald, when he examined the files, said that they contained “blindingly obvious evidence of Police corruption”. Those files are now with the Police.

Finally, and most damningly, former News International executives have all but accused James Murdoch of lying to the Select Committee by saying that he didn’t know of further evidence of phone hacking when he signed off the inflated damages paid to Gordon Taylor, a payment that is widely believed to have been made to make him keep quiet about what he knew.

I dont have any privileged information on this subject, but my gut is telling me that, with former senior colleagues now apparently starting to turn on each other and other parties now free (or freer) to speak out than they were before, that we may see a rush of fresh revelations over the next few days. My gut is also telling me that we have been given far from the full story on exactly why it was that Les Hinton (the former CEO of News International, before he moved to Dow Jones in New York) resigned when he did, and for that matter we may start to wonder whether Sir Ian Blair really did resign from the Met in 2009 just because of a spat with Boris Johnson.

News International, the British Enron ? Watch this space.

Copyright ©Savereo John 2011

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2 thoughts on “All in the Family

  1. I am writing a thesis with the hope that it will be applied to better the world we live in. This thesis is on Public Trust in WikiLeaks, the Media and the Government and need to know what your opinions are. The online survey is anonymous, multiple choice and will take approximately 10 minutes to complete. Please follow the link: http://www.kwiksurveys.com/?s=​ILLLML_9669e09d. Would be great if you would encourage others to do the survey also.

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