Posted by: John Elliott | July 21, 2011

Wait for the aftershocks from Murdoch’s earthquake

British members of parliament have gone into their summer recess and Rupert Murdoch flew home to the US yesterday after being grilled by a parliamentary committee. He left the country while David Cameron was doing an amazingly robust job in the British parliament, defending his far from transparent role in the media-police-government crisis that has engulfed his administration and Murdoch’s empire.

Anti-Conservative Party 2010 General Election poster

Neither man’s job is entirely secure. Cameron obfuscated enough in parliament yesterday to indicate that he is hiding something sensitive about his conversations with Murdoch over the tycoon’s (now withdrawn) bid for control of the UK’s BSkyB television business.

It is also inconceivable, despite Cameron’s protestations, that his former press spokesman and former News of the World editor, Andy Coulson, did not know about the newspaper’s phone hacking that led to the crisis – and that Cameron did not know this.

So Cameron will be pursued as more facts emerge from the astonishing total of ten  police and other inquiries that are under way. The opposition Labour Party sees a chance severely to weaken him and his government, and maybe, improbable though it seems, force him to resign. What Cameron did do yesterday, however, was win the support of his own party, which was beginning to doubt whether he had a grip on affairs – though there are still some who would like him to have to resign.

Murdoch, aged 80, must surely be on the brink of being eased into a graceful gradual retirement, even though the group is producing record returns from a complex network of holdings. When he appeared at yesterday’s parliamentary committee in London, he demonstrated that he has not got a grip on his worldwide News Corp’s affairs – unless he was play-acting and feigning ignorance of events that he should have known about.

His departure will be welcomed by journalists across the world, even though it is sad for someone of his age. While he has brought some good to media organisations that he has acquired, and to newspaper industries, he led the decline in British newspaper standards and has been brutal is his commercial operations. He also acquired an excessive influence over governments and their presidents and prime ministers around the world.

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Only in Beijing did he fail to bully his way into the top echelons of government and did not get the market openings he has tried to obtain for some 20 or 30 years – for once, the intransigence of China’s leaders has to be admired.

There have been some suggestions that his 42-year old Chinese-born wife, Wendi Deng, (middle of this photo, with James and Rupert Murdoch, at the parliamentary committee hearing) might have been able to help with lobbying. However, she does not come from an elite or well-connected background, so seems unlikely to have had the status to gain top-level access in Beijing on her own account .

Sadly, Murdoch was feted whenever he visited India, having instant access to the prime minister and others, even though foreign control of newspapers is not allowed.

It is appropriate that it is his domineering power that has exposed him across the world in the past few days as a weakened tycoon. If he had not been so assiduously courted by Cameron and two Labour prime ministers (Gordon Brown and Tony Blair), who were all in thrall to his power, it is arguable that this crisis would not have escalated so far.

I was on a television panel in India last night where we discussed all these issues. We  had heated arguments about the possible impact on India’s far from perfect media, which has not, experts say, hacked phones – though there was a massive scandal last year over publication of leaked official tapes containing private phone conversations of politicians, journalists and others.

It would not surprise me if hacking did start here because there is a deplorable line of thinking among some editors and journalists that they are above the law and that the end justifies the means when stories are being pursued.

I don’t see the current crisis leading to significant and long-term positive changes in the way that the media operates, even though an important inquiry has been set up in Britain.

Restrictions are needed in the way that a prime minister and others handle bullying intrusive Murdoch-style pressures from media owners.

But a free media needs to be free, and that would be at risk if there were government-linked controls on editors and journalists. There should however be a strengthening of the way that the media regulates itself, with powers to curb excesses such as phone hacking – and secret “stings” that are used too widely in India to obtain stories.

Murdoch’s media empire needs drastic governance reforms, both in terms of its corporate ethics, and the action it takes when problems arise. Evidence of phone hacking emerged years ago but was not acted on – either because Murdoch thought it a minor problem that had the benefit of attracting readers or, more probably, because executives down the line in the UK (maybe including Coulson) were able to bury the problem.

That, in lawyers’ terminology, is wilful ignorance and makes both father and son culpable. There also seem to be governance lapses in other areas  that might now gain fresh attention.

The most significant result of the crisis should be that the Murdoch dynasty no longer dominates the News Corp group. The positive spin that News Corp has received on the New York stock market in the past couple of days is more to do with stopping a share crash and looking forward to Rupert Murdoch’s departure than confirming his position and that of his son James, whose  handling of the crisis has shown that he is not a viable successor. Public opinion is building up against both men in the US.

This surely means that professional executives will gradually take over, despite the family’s effective shareholder control. Dynasties, in business life as in politics, thwart the development of an organisation and block able people from promotion to the top. And it will be good if a man who exerted such excessive power, and his son who allowed appalling journalistic ethics to bloom in the UK, move aside.


Responses

  1. You are 100% right when you say that talents gets suppressed in a dynastic business and often these persons compromise. And forget about India. We get mesmarised by the presence of any white skin like Warren Buffet even. Though he is better than our Mukesh Ambani.

  2. There are an incredible number of strands to this story. The backlash against Murdoch is all the stronger for his extraordinary success and image as a bully – btw this week’s Spectator is striking for its mutiple defences of Murdoch. But one net conclusion is clear: that, as in India and many other countries, politics (which appears to include the police) and the media are so tightly inter-twined that it is difficult to escape the conclusion that the media need to be more heavily regulated, however repugnant that seems.
    For all this, it would be disastrous if the UK’s now-polished skill at self-flagellation led to the PM going down over this – there are plenty of other things of far more immediate interest to the voter which need attention.


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