Murdoch's World (24 page)

THE SWITCH from Labour to Tory inspired a widespread conviction that Murdoch insisted on an act of fealty from his new political allies. “The perception is that,
in return for Rupert Murdoch's support for David Cameron before the last election and subsequently . . . his Conservative government would pass through his bid for BSkyB,” the
Independent
's then editor in chief, Simon Kelner, told me later, though suspicions surfaced even at the time.

Murdoch biographer Michael Wolff said
News International had additionally extracted promises to strip the BBC of some of its subsidy and to rein in regulators. Officials inside the company say there was never any such deal, merely an understanding that the government and the country's most powerful media company were philosophically aligned.

As the 2010 elections approached,
Kelner's
Independent
ran a marketing campaign to underscore its identity supposedly free of outside influence. In its first full-page ad, the paper singled out the News Corp chairman: “Rupert Murdoch won't decide this election—you will.” After a meeting in the same office complex, James Murdoch strode unbidden into the paper's offices with Brooks by his side, sought out Kelner and berated him as a “fucking fuckwit.” As it happened, Elisabeth Murdoch's husband, Matthew Freud, one of Britain's leading PR executives, had advised the liberal paper on the campaign.

On May 6, 2010, Cameron and the Tories won the largest share of seats in Parliament but not an outright majority. They took office five days later after forging a coalition government with the Liberal Democrat Party. The following month, News Corp declared its intention to take over BSkyB. The business minister, Vince Cable, a Liberal Democrat not especially sympathetic to News Corp, had the role of determining the merits of its proposal to take over BSkyB.

Cable's assignment involved a decision in what was oddly called a “quasi-judicial” role that charged him to act more like a judge ruling on the merits of the case than a politician balancing competing public interests. He did not socialize with the Murdochs, as so many of his new colleagues in the Cabinet did. The company had plenty of other friends in government however. Education minister Michael Gove was a former
Times
editorialist. And James Murdoch's aides sought to mint new ones as they hoped to counter Cable's influence.

On September 15, 2010,
four months after Cameron's camp took power, News Corp's chief lobbyist in the UK and Europe, Frederic
Michel, sent a text to the culture minister, Jeremy Hunt, about a story carried by the BBC. Sixteen minutes later Hunt wrote back that he hadn't seen the report.

The BSkyB deal was the most pressing priority for Michel. Inside News Corp, the project was
code-named Rubicon, a fitting designation given how markedly it would remake the company's British operations. Hunt and his team adopted the nickname, too. An array of competitors, including the parent companies of the liberal
Guardian
and the conservative
Telegraph
newspapers, weighed in against the takeover. The BBC's director general,
Mark Thompson, joined other media executives in opposition, though he was later criticized by the board overseeing the public broadcaster for getting involved.

Cable had referred the case to the independent regulator OfCom and commissioned
an independent analysis from Claire Enders, a highly respected media industry analyst. She concluded that any takeover would lead to shared newsroom operations between Sky and the newspapers. She argued the combination would undermine, perhaps fatally, the continued existence of ITN, the third national television news operation after the BBC and Sky. (BSkyB also held an 18 percent stake in ITV, the network that was ITN's chief client.) And, Enders concluded, the unified company would control 22 percent of the nation's entire news market in print, television, and radio. This deal would create a risk, she wrote, “of a reduction in media plurality to an unacceptably low level.”

News Corp officials countered that the digital age had ushered in rafts of new voices previously unheard to readers, listeners, and viewers throughout the UK. OfCom consisted of professional meddlers, the Murdoch camp felt. Even worse, the decision could be handed to the Competition Commission and reviewed anew on antitrust grounds too. In 1998 the Labour government had referred BSkyB's £623 million bid for the legendary football club Manchester
United to the commission, where it ultimately foundered. Rupert Murdoch had been livid.

It was time for Michel, James Murdoch's top European lobbyist, to ramp up his efforts.

Lobbyists traffic in information, ingratiation, and intimidation. Michel's emails and text messages suggest he focused on the first two. By chance, Hunt's child was born in the same hospital ward as Michel's baby; Michel sent Hunt notes that were nearly flirtatious in their solicitousness, playing on their mutual fatherhood.

In public, Hunt was alternately wary and eager toward the Murdochs; he praised News Corp effusively on his parliamentary website, yet hid behind a tree from a
Telegraph
reporter who spotted him ducking into a private dinner with James Murdoch.

In private, however, Hunt gossiped readily with Murdoch's top lobbyist.
Hunt and Michel kibbitzed back and forth after the BBC's Mark Thompson defended the BBC's big government subsidy and criticized the Murdoch media. Hunt texted Michel not to worry: “because trained his guns on u he failed to make his case to me!”

On October 5, Michel and News International CEO Rebekah Brooks sat down with the media minister, with Michel recording that it was
“a very useful meeting.”

Michel also lined up government officials to attend various functions involving News International executives, playing to their interests and weaknesses. Sometimes his largess involved invitations to major sporting events such as Wimbledon, sometimes parties, sometimes policy, as in the case of deputy prime minister Nick Clegg, the Liberal Democrat leader who was invited to participate in an environmental summit convened by James Murdoch.

Michel constantly offered help to government officials. In October 2010, for example, he wrote to a prime minister's aide to send a letter circulated among CEOs that supported the new government's proposed
budget cuts.
“I would like to be able to show it to James asap for him to consider,” Michel wrote on October 7.

But not everything was smooth sailing. That same week in October Michel wrote a worried note to Matthew Anderson, one of James Murdoch's top advisers, after meeting a senior aide to Cable. The aide had tied the company's predicament on BSkyB to the long-simmering questions over phone hacking.
“There is real unease in Libdem ranks over Coulson and the relationship to NI [News International]. Simon Hughes, [the Liberal Democrats' deputy leader] is on a mission to make this an NI issue.” The more the takeover is linked to
News of the World
and Murdoch's News International, Michel concluded, the more “toxic” it would become.

In November concern set in. On November 2, 2010, Cable asked OfCom to review the deal and set a December 31 deadline for the agency to forward its assessment. Cable's special assistant, Giles Wilkes, resisted Michel's entreaties.
“What did you have in mind as an agenda?” Wilkes wrote back. “Obviously, there are huge risks to talking about anything to do with the OfCom business, which I would rule out; but I imagine that you chaps can think of little else right now, which leaves me puzzled.”

On November 9, Michel texted an old friend.
“Hi daddy!” he wrote to Hunt. “Can you meet James tomorrow morning for a catch-up? Would be good. Even early morning.” Eventually they set a date for Hunt to meet with James Murdoch the following Monday. As it happened,
Hunt then received direct legal advice that as the minister of culture, media, and sport, he should
not
meet with the chairman of a company that had major matters pending before a fellow cabinet official. He canceled.

When James Murdoch found out, he emailed his lobbyist:
“You must be fucking joking. Fine. I will txt him and find a time.” Hunt and Murdoch conducted their conversation by phone. Michel sent a thank-you
text to Hunt the next day. But approval of Murdoch's BSkyB bid was far from guaranteed.

Inside government, Hunt channeled the News Corp cause and even lobbied the prime minister.
“James Murdoch is pretty furious at Vince's referral [of the takeover] to OfCom,” he started. “I am privately concerned about this because NewsCorp are very litigious and we could end up in the wrong place in terms of media policy.”

Hunt invoked a historic moment for the media under the last heroic Tory prime minister. “Essentially what James Murdoch wants to do is to repeat what his father did with the move to Wapping and create the world's first multi-platform media operator, available from paper to web to TV to iPhone to iPad,” he wrote, and added, “Isn't this what all media companies have to do ultimately?”

Rupert Murdoch's younger son was pushing to achieve what, in Secretary Hunt's description, anticipated an even further level of media domination. All the properties could integrate their content. Access to those properties could be tethered together, perhaps helping the newspapers to stabilize subscriptions after sustained and steep circulation losses. In that November 2010 memo, even as he envisioned this media bundling under a single roof, Hunt promised Cameron that safeguards could be put in place to ensure that a variety of voices would be audible in the media marketplace. He did so, however, by arguing that the market didn't have such distinct voices anyway. “I think it would be totally wrong to cave in to the Mark Thompson/Channel 4/
Guardian
line that this represents a substantial change of control,” Hunt argued, “given that we all know Sky is controlled by News Corp now anyway.”

The lobbied had become the lobbyist. Of course, Hunt wasn't the only one whose ear James Murdoch could bend. On November 7,
James Murdoch and his family had joined the Camerons and other guests for a quiet lunch at Chequers, the prime minister's official countryside getaway.

In confidential memos to regulators and officials, lawyers for News Corp made seemingly contradictory arguments. On the one hand, a takeover would represent no big deal. “News and Sky are already deemed to be a single media voice for the purposes of plurality,” lawyers for the company wrote, plurality being the shorthand of choice for concerns over concentration of ownership of news outlets.
“UK Authorities have assumed that News exercises material influence over Sky.”

News Corp held 39.1 percent of voting rights, but those votes enabled it to control the board. Its officials and allies sat as BSkyB's directors.

On the other hand, the company's lawyers were also arguing that there was no coordination between the agendas set in Sky's newsroom with those of the four News International papers, as a result of the two companies' separate corporate structures. British laws requiring impartiality by its television journalists would protect Sky's news judgment against any encroachment by corporate interests or the ideological leanings of its sibling newspaper editors.

Vince Cable was unmoved. “I am picking my fights, some of which you may have seen,” Cable said in mid-December, speaking to two constituents, who were
actually undercover reporters for the
Telegraph
. “You may wonder what is happening with the Murdoch press. I have declared war on Mr. Murdoch, and I think we're going to win.”

Earlier that day, Hunt had been exchanging text messages with James Murdoch, congratulating him on winning approval from European regulators to acquire Sky outright. News Corp owned 45 percent of Sky Deutschland, the leading supplier of pay-TV services in Germany, and 100 percent of Sky Italia, which performed the same role in Italy.

“Just OfCom to go!” Hunt exulted.

The Cable recordings about Murdoch were posted and broadcast by the BBC on December 21, 2010. Peculiarly, the
Telegraph
posted
its scoop second, in the middle of that afternoon. The
Telegraph
had published other remarks by Cable the day before but had not yet made the Murdoch comments public; internally, some
Telegraph
staffers wondered whether that was because their proprietors, the Barclay brothers, wanted the BSkyB bid to fail and so editors did not seek to damage Cable's standing.

Hunt and Murdoch already had a 4:00
PM
call scheduled. Eight minutes later, Hunt texted Chancellor George Osborne: “Cld we chat about Murdoch Sky bid am seriously worried we are going to screw this up. Jeremy.” Hunt then shot off another note: “Just been called by James M. His lawyers are meeting now and saying it calls into question legitimacy of whole process from beginning ‘acute bias' etc.”