The Murdoch Empire at Bay

20 July 2011

The Murdoch Empire at Bay

By Gwynne Dyer

Panic makes people stupid. It would be very stupid, for example, for the former editor of a British national newspaper, facing probable criminal charges for bribing policemen and illegally accessing the voice-mail of several thousand people, to put her computer and various incriminating papers in a large plastic bag and dump them in a garbage bin in a parking garage within a few metres (yards) of her London home.

It would be even stupider if, having done such a foolish thing, she sent her husband over to the garage to retrieve the incriminating evidence before it fell into the wrong hands. Rebekah Brooks, a former editor of the News of the World, the paper that did the bribing and phone-hacking, is not a stupid woman, so she cannot have done such a thing.

That means that we must accept her husband Charlie’s explanation instead. It was actually his laptop, he said, and he had lent it to a friend. The friend was returning it by the curious method of putting it in a bag and leaving it in the parking garage. Alas, he left it in the wrong part of the garage. By the time Charlie got there, his spokesman explained, some cleaner must have put it in the bin, where it was found and handed in to a security guard.

Charlie tried to get it back from the guard, but could not prove that it was his. The guard called the police, who arrived in three vehicles and took charge of the bag. They are now examining CCTV footage taken in the car park to see who actually dropped the bag there. The footage will doubtless vindicate Charlie’s story.

Alas, Rebekah Brooks was arrested anyway on Sunday, on suspicion of conspiring to intercept communications and of corrupting police officers. The website called that was set up last week is now redundant – but the same people have now launched a site called

James Murdoch is the son and heir of Australian-American media tycoon Rupert Murdoch. He is the current head of the European and Asian operations of News Corporation, the “global vertically integrated media company” through which the senior Murdoch controls assets like Fox News, the Wall Street Journal, HarperCollins Publishers, Dow Jones, and three British national newspapers including the London Times.

It used to be four British national newspapers, and that is the source of the problem. The News of the World, the scandal-mongering tabloid that the Murdochs closed down two weeks ago as a damage-limitation measure, hacked thousands of people’s phones over the past decade in pursuit of stories, and paid policemen for many others. This was criminal behaviour, and now it is coming home to roost.

Another former editor of the News of the World, Andy Coulson, who went on to become Prime Minister David Cameron’s public relations adviser, has also been arrested, as have half a dozen other employees of the now defunct paper. The two most senior policemen in Britain have already been forced to resign. And the key question, as usual, is: who knew what, and when did they know it?

With Rebekah Brooks down, the legal inquiries move up the food chain to the next level: her immediate boss, James Murdoch. Rupert flew over to London to support his son, and found himself summoned to testify before the same parliamentary committee.

James denied all knowledge of the crimes committed in his corner of the empire in impenetrable management-speak, and more or less got away with it. The problem was Rupert himself.

Rupert Murdoch is 80 years old, and he looks every day of it. There were painfully long pauses in his answers. Perhaps it was all part of the act, for both men had clearly been intensively coached for the event, but he seemed frail and almost doddering.

To make matters worse, the strategy adopted by both men in order to avoid self-incrimination was to insist that their positions were so high up in the organisation that they could not be expected to know about the misdeeds of any single newspaper, even the best-selling Sunday paper in Britain. They had been betrayed by the people below them, whom they had mistakenly trusted, but they knew nothing about it themselves.

Well, maybe, but the downside of this strategy is that they have to portray themselves as hopelessly out of touch with the business they are supposed to be running. Either they were part of the cover-up, which went on for at least two years, or they weren’t paying proper attention. And that means it is not just a story about a scandal in Britain. It is coming to embrace the whole Murdoch empire.

There is something called the “Murdoch discount.” It is the gap between the market value of News Corporation as it is, and the considerably larger sum that it would be worth without Rupert Murdoch at the helm. (Bloomberg estimates that it would be 50 percent higher.)

So this is all playing into the hands of those shareholders who think that it’s high time Rupert Murdoch retired. And although James will probably escape criminal charges, they don’t see him as a suitable replacement for his father, either.


To shorten to 725 words, omit paragraphs 4 and 8. (“Charlie…story”; and “Another…it”)