Murdoch's World (22 page)

        
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The wife of a prime minister Murdoch's papers supported at elections three times; the wife of the godfather of Murdoch's young daughter Grace (both Cherie Blair)

        
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The mayor of London, who did not pursue a claim against the company (Boris Johnson)

        
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The pop star who sang at Rupert Murdoch's third wedding without charge (Charlotte Church)

        
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The priest of the pop star who sang at Murdoch's third wedding (Father Richard Reardon of Cardiff)

        
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The former star of a Fox broadcast network prime-time show in the US (Sienna Miller)

        
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The former star of a Fox Studios movie (Hugh Grant)

        
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The brightest star of British soccer leagues, to which Murdoch's BSkyB held broadcasting rights worth billions of pounds (Wayne Rooney of Manchester United and the English national team)

        
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The grieving mother of a slain schoolgirl who had been given the mobile phone in question by Rebekah Brooks (Sarah Payne)

In an Escherian touch, among the hacking targets were at least two former Murdoch news executives. Tony Blair remained close to the Murdochs, even after the revelations. Cherie Blair sued News International. The logic held: everyone is fair game. The comedian Steve Coogan understood. “Strangely, I don't think it was a malicious personal vendetta against me. My feeling is that it was
a dispassionate sociopathic act by those who operate in an amoral universe where they
are never accountable. It has become a mind-set of those who work in tabloids, as a result of the environment and working culture that has been created.”

In 2005—six years before the summer of scandal—Coogan learned from his cell phone provider that his messages had been compromised. News International would later pay approximately $66,000 to settle the case out of court. (Judgments in British courts are typically far lower than they would be if brought in the US.) Infuriated that his privacy had been invaded, Coogan testified against the Murdochs, but
in commerce he accepted the rules. Coogan appeared in five movies produced by Fox-owned studios after discovering that his phone had been hacked. His comedic hit TV shows featuring him in the role of Alan Partridge ran on a Sky cable channel in the UK. And his book,
I, Partridge: We Need to Talk About Alan
was published in the UK, Canada, and Australia by Murdoch's HarperCollins publishing house. Its British publication date was in September 2011, less than three months after the Dowler revelation. It was hard to do business without the Murdochs.

12

SKY'S THE LIMIT

IN ENGLAND, RUPERT MURDOCH HAD been seeking to achieve in television the kind of inescapable presence that he had earlier attained in newspapers. To do that, he sought to compete against the BBC on what he considered to be a more equal footing. He had always resented the government subsidy it received.

The BBC had been the dominant UK broadcaster since
its first radio transmission in 1922 from Marconi House in the Strand, at the center of London, just blocks from the seat of government and Piccadilly's theater district. The first words: “This is 2-L-O, the London station of the British Broadcasting Company calling. 2-L-O calling.” Fifty-odd years later, the satellite television industry had evolved to the point where it envisaged dishes that were affordable enough and small enough for individual consumers to mount on their roofs. The Brits received five satellite channels. British officials allocated two satellite channels to the BBC and invited private broadcasters to submit plans to control and program the other three. Murdoch's News International joined a consortium to bid.

One catch: the plans required launching a satellite. A rival alliance of investors that proposed the British Satellite Broadcasting system won the channels. The investors included Richard Branson's Virgin and Pearson, the owner of the
Financial Times
and Penguin Books.

Murdoch had been shut out, but he already had a modest Sky channel in Europe. So he set up his British TV business in Luxembourg, outside the reach of UK regulators, though he kept studios in an industrial suburb of London. He contracted to broadcast a multi-channel service from a midsize satellite called Astra based in the tiny European principality. Thanks to those small dishes, the television programs could be beamed into British homes with no meaningful intervention by the British government. Murdoch had taken a buccaneer's path—circumvention as innovation.

The BBC had set the industry standard in so many ways, first in radio, then television. It created a superstore of television and radio programming, offering news, soap operas, serious theater and music, and children's and educational shows. The BBC was home to the world's leading news service, soccer coverage, Monty Python,
Brides-head Revisited
and more. But it had run for years without serious competition. Murdoch considered it sclerotic.

Murdoch's Sky TV made its debut in 1989, but dish sales and revenues lagged badly behind projections. Yet British Satellite Broadcasting struggled too, launching its actual service more than a year after Murdoch's Sky TV. Sky was counting on lower costs—no need to launch its own satellite and no spending on the pricier movies and sporting events.

“He basically stole a march on them, the way that Murdoch has often operated,” said David Gordon, the former CEO of the independent television news service ITN and of the Economist Newspaper Ltd. “Entrepreneurially, courageously, breaking the rules and just plugging along.”

But both sides were losing millions of pounds a week. Increasing debt loomed with little likelihood of relief.

Sky and British Satellite Broadcasting merged just seven months after the latter's debut in late 1990. Renamed BSkyB, the satellite TV service achieved financial stability after a few shaky years, making strategic investments in sports, premium TV shows, and movies. Sky (as the blended company became known) served as the driving force behind the creation of the English Premier League in 1992, broadcasting the games of the nation's leading soccer teams. Murdoch had to issue and publicly trade shares in BSkyB to pay off debt accrued for the costs of satellites and everything else—hence his share dropped to just under 40 percent. But he operated as though it was his own.

Newspapers remained Rupert Murdoch's joy. But as the first decade of the 2000s came to a close, the people leading the British part of News Corp—from Rupert to James to Rebekah Brooks on down—focused on one priority above all: to swallow Sky whole.

Rupert Murdoch likes to portray himself as a creative corporate force who seizes opportunities where others cannot perceive them, and in the case of Sky that is certainly true. But his most recent effort to build on that record at Sky proves both the drive to succeed under Murdoch and the important role government officials play in aiding or frustrating his ambitions. In this case, the cabinet minister ultimately assigned to assess the merits of News Corp's drive to acquire Sky was the same person who most avidly lobbied inside the government for its success.

Sky served as a proving ground for
the succession games Rupert Murdoch played. He had four adult children. Prudence, his only child by his first wife, wanted little direct part of corporate intrigue, though her husband held senior executive positions in Australia in News Ltd for many years. Rupert's sons Lachlan and James were as competitive with each other in their careers as they were in sports, no doubt, but at no point did it appear as though they were vying for the crown at the same time.

In 2000, Lachlan, the oldest son, was the anointed one, then the head of News Ltd, the corporation's Australian wing. He moved to
New York City to oversee News Corp's American television and newspaper holdings, a springboard to the top. He resigned five years later amid Machiavellian machinations, unconvinced that his father would protect him against the power plays of News Corp president Peter Chernin and Fox News chief Roger Ailes.

Lachlan's father saw the son's retreat as a sign of weakness. Dame Elisabeth had
tossed the five-year-old Rupert into the deep end of a pool on an ocean liner pitching back to and fro to force him to learn how to swim. She would not allow anyone to rescue him, even though he was screaming for help, he recalled as an adult. Rupert effectively repeated the lesson with his son Lachlan at the headquarters in New York: sink or swim. Lachlan did not want to play anymore; he returned to Australia to set up his own media company there.

The boys didn't seriously entertain the idea that their older sister Elisabeth posed any threat. She was a girl, after all, and proved an ambivalent figure from the outset, alternately dipping in and out of careers within the company. She had married (much against her father's wishes) the son of a Ghanaian investor she met at Vassar.
Elisabeth Murdoch worked at News Corp's basic cable channel FX in Hollywood, and then the couple briefly bought and ran two NBC stations in central California, with a loan secured by Rupert Murdoch. The stations were sold at a profit less than two years later.

Elisabeth Murdoch moved to London in the mid-1990s to work for BSkyB, rising to become the number two to Sam Chisholm. Chisholm referred derisively to Elisabeth in private as
“the management trainee.” Rupert Murdoch made clear his daughter would not succeed Chisholm at Sky, and while she won credit for several ventures, her handling of the broadcaster's failed bid to acquire Manchester United, the most famous soccer team in the world, counted against her.

“She's ambitious, she's aggressive, but she's simply not as good as she would like to be, and she's not as good as Rupert would like her to be,” Jim Hytner, a former BSkyB marketing director, said in 1999.
“She wants to impress her father. I don't blame her, everybody has those desires. . . . The more she doesn't impress him, the more she wants to impress him.” Elisabeth Murdoch left her husband for public relations executive Matthew Freud, who would become her second spouse and greatest champion.

The younger boy, James, had grown up on New York City's Upper East Side, though he spent long stretches in his parents' homes in California, Australia, and the UK.
He had been a gawky youth, awkward with girls and trying fitfully to connect with his father. As a teenage intern for his father's papers in Australia, he famously fell asleep at a press conference, camera in his lap. (
A photographer for the rival
Sydney Morning Herald
immortalized that moment by snapping a picture that ran in the next day's paper.)

James found a circuitous path to his acceptance. He dropped out of Harvard (kicked out, according to
the wedding toast of his college friend and later
New York Post
publisher Jesse Angelo), got two tattoos and an earring, and in the mid-1990s provided the funding to establish a rap label, Rawkus Records. Initially seen as the dilettante move of a billionaire's son, Rawkus earned street cred by cultivating Mos Def and other emerging hip-hop stars. Rupert Murdoch awarded him oversight of News Corp's fledgling Internet operations.

James had lost the earring and adopted a highly managerial mien, with closely tailored suits and thin-rimmed glasses. Over time he perfected a bureaucratic techno-speak that suggested a more professional generation of the family was on the rise. More than one News Corp executive described him to me as the Murdoch most likely to have made an excellent consultant for McKinsey & Company.

Others believed the younger Murdoch had much to learn. At one of the annual conferences convened by Rupert Murdoch, a News Corp newspaper editor found James insultingly dismissive. Conversation turned to how the newspapers would come to terms with the implications of the Web—by this point, functionally two years old as a
widespread consumer convenience. The walled-off email and content service AOL was cresting in its popularity but beginning to face challenges from free search engines and other sites.

Newspapers had to give away their articles for free
, James told the assembled editors. It was the only way to ensure the continued loyalty of their readers. His family's editors argued back that giving away articles priced their value at zero, they said. It was a bad precedent.