Murdoch's World: The Last of the Old Media Empires

by David Folkenflik

  The Murdochs were vague about the questions at the heart of the hearings. James Murdoch had not registered that the payment to settle Taylor’s hacking complaint indicated any wider problem. James said he had not been told of an email that contained transcripts of voice mail messages of various targets of the tabloid’s hacking that carried the legend “for Neville”—Neville Thurlbeck, the paper’s chief correspondent. That email indicated that hacking was not an aberration. It was standard operating procedure.

  Watson could not believe that James Murdoch could think the enormous payment (for a British case) was reasonable without knowing of the “for Neville” email.

  WATSON: “But you paid an astronomical sum and there was no reason to.”

  JAMES MURDOCH: “There was every reason to settle the case, given the likelihood of losing the case and the damages that we had received counsel would be levied.”

  In a separate secret settlement in 2010, News International paid one of London’s leading public relations executives, Max Clifford, a total exceeding $1 million after he started litigation against News International for mobile phone hacking. Rupert Murdoch said he knew nothing about it. James Murdoch said Rebekah Brooks made the decision to pay Clifford, which he only learned about later.

  No party gave the Murdochs any quarter. Tory MP Philip Davies pressed both father and son on the payments. In 2008 News International had lost in a court case filed by the motor racing official Max Mosley after News of the World reported he had participated in a Nazi-themed orgy. Mosley had taken part in a sex party with several women. But the Nazi theme was said to be an embroidery on the part of Thurlbeck, who could be heard on a tape goading one of the participating women to make a Sieg heil salute. As Mosley’s father was a noted Nazi sympathizer who had founded the British Union of Fascists, the association was particularly damaging. That was the story on which Thurlbeck was found to have blackmailed a woman into putting her name as author of a fanciful account of the party that he had written.

  The questioning briefly gave way to spectacle when Jonathan May-Bowles darted toward Murdoch and attempted to slap him in the face with a platter of shaving cream. One of Murdoch’s lawyers stepped forward to block him. Wendi Deng Murdoch, who had played volleyball competitively as a schoolgirl, leaped above the lawyer and slapped May-Bowles, knocking him, the lawyer, and herself to the ground. “Mr. Murdoch, your wife has a very good left hook,” Watson said. Whittingdale cleared the room of all but the MPs, parliamentary staffers, witnesses, their legal team, and the security guards, whose incompetence at allowing the stunt to unfold led to whispers that News Corp’s PR advisers had choreographed the event to gain sympathy for the media mogul. The Telegraph sent one of its foreign correspondents to profile the middle school instructor in her hometown of Xuzhou who taught Deng Wen Ge (her given name) how to play volleyball.

  May-Bowles, a twenty-six-year-old stand-up comic and activist who performed under the name Jonnie Marbles, pleaded guilty later in the month to charges of assault and causing harassment, alarm, and distress. He faced his charges stoically, invoking a familiar phrase: “I’d just like to say that this is the most humble day of my life.”

  In New York, some executives were questioning whether it was time to coax Murdoch to allow his hired hands to run the company he had worked so hard to build. Chase Carey, notable among reporters and fellow executives for his handlebar mustache and his evident lack of hunger for the spotlight, had worked for a generation at News Corp helping to guide one division after another. Investors trusted his judgment.

  But Murdoch made his verdict on himself clear: he was not ready to yield control of News Corp—especially not to a non-Murdoch.

  A NEW legal front was beginning to open in the States. An allegation stated that the actor Jude Law’s mobile phone had been hacked when traveling through JFK airport in New York City. Even though the incident involved reporters for Murdoch’s British tabloids, and not the New York Post, it would show that the tainted practices had jumped the Atlantic. Since the Federal Corrupt Practices Act criminalized payments to government officials abroad, News Corp moved swiftly to hire many top lawyers—among them former US attorney general Michael Mukasey, former US attorney for New York City Mary Jo White, and Mark Mendelsohn, the former top Justice Department official over federal corruption cases involving American companies. “News Corp has pretty much assembled a dream team of all-star foreign corrupt practice litigators,” Columbia University legal scholar John Coffee, one of the nation’s foremost authorities on corporate governance, told me. “You don’t put all that investment into this without having some serious concerns about what might happen.” The company established a new “management and standards committee,” reporting to Joel Klein, who would in turn report to Viet Dinh, the former assistant US attorney general and News Corp director who had been godfather to one of Lachlan Murdoch’s children. The MSC was seen as running damage control. In time, however, it would hand police material damning dozens of News International employees. Klein had to prove to US authorities that the company was being fully cooperative.

  Those not in the family—those who were no longer “mates”—no longer exhibited “mateship.” The editor, Colin Myler, had seethed over the closing of the News of the World. He had been recalled from the New York Post to clean up the mess, and yet the company folded the paper under his editorship. “Of course, I didn’t close it,” Myler said after publishing the paper’s final edition several days earlier. “This is not where we wanted to be or deserved to be, but as a final tribute to 7.5 million readers this is for you and the staff.” He led more than a hundred staffers, many of them openly weeping, all cheering, out of the cavernous atrium of the News of the World offices at Wapping, around the block to a nearby pub.

  Many others had aired their grievances behind closed doors. But along with Tom Crone, Myler decided to make a public break. They issued a joint statement: James had known about the “for Neville” email, they said, before approving the big secret payment to Taylor. The younger Murdoch knew that hacking was rife. The Murdochs did not just own the company; Myler and Crone’s actions would ensure they owned the scandal too.

  17

  THE JEWEL IN THE CROWN

  WHEN RUPERT MURDOCH BOUGHT THE Dow Jones Company in late 2007, he did so to acquire its prized title, the Wall Street Journal. The Dow Jones newswires covered the world of business at a feverish pace, competing with Reuters and Bloomberg for scoops. But the Journal had global reputation and reach. It was prominent and widely circulated; it had among the most subscriptions of any paper in the US. Murdoch, like the other people populating the Forbes list of billionaires, relied on it religiously for news about business, finance, and the regulations that could affect commerce. The Journal became the jewel in the crown of Murdoch’s media empire. He loved owning it. And yet Murdoch did not much like the Journal itself.

  Murdoch’s first editor at the Journal, Marcus Brauchli, had been installed less than a year before. Compact, fit, smart, with a sly smile and a deceptive wit, Brauchli had come up through the ranks at the Journal, making his mark in China and rising within the editing ranks to win the competition to replace the beloved Paul Steiger as managing editor. (The term “managing editor” for the paper’s most senior news executive was a relic, peculiar to the Journal, for the job that elsewhere would be editor in chief or executive editor.) Even before getting the top spot, Brauchli had been setting about to modernize the place, energize the paper’s digital offerings, and make a greater push globally.

  Murdoch had his own ideas. He told Brauchli that readers resented setting aside editions with long pieces to digest later in the week because they felt rebuked by piles of unread papers. The feature called the “A-hed” had been a defining element of the Journal for decades—a front-page story that provided a great read about a development that was often of little or no immediate consequence. It was an innovation of the legendary Barney Kilgore, who reinvented the paper amid the chaos of the Gr
eat Depression. It was one of two narrative stories placed every day on the front page. The other often generated a behind the scenes look at corporate infighting or malfeasance. Murdoch seemed to suggest that both the A-hed and the daily in-depth piece should disappear.

  Moreover, Murdoch had little tolerance for the “paywall” that required people to purchase a digital subscription to get access to the paper’s full site. Murdoch wanted anyone anywhere in the world to be able to read Journal stories at any time, on any device. What’s the point of doing all this fine journalism if people can’t see it? he wondered. The Journal’s paywall was the envy of other newspaper owners, who felt they could not replicate the Journal’s value to entrepreneurs and investors. Executives at Dow Jones braced for the loss of revenue.

  Early on, at a banquet dinner with bureau chiefs who had traveled to New York from all over the world, the chairman sketched out how he thought a story should be told: in “as few words as possible.” Murdoch underscored that these changes originated with him. His pick as publisher, Robert Thomson, told bureau chiefs that some projects celebrated in Journal’s newsroom had the “gestational period of a llama.” (Eleven-and-a-half months, if you were wondering.) Consequently the Journal moved away from stories that deconstructed how business and the markets work—what editors called “how-why-will” stories. Investigative reporting, often strong, still arrived each day, or at least each week, but Thomson put less urgency on it. Thomson saw many reporters on the Journal staff as complacent, trapped in a mind-set defined by intellectuals and liberals on the Upper West Side and the Columbia Journalism Review.

  Thomson’s opinions mattered. For though he had been named publisher of the Journal, rather than managing editor, it became clear that his editorial vision would guide the paper—which is to say, Murdoch’s vision would guide the paper. Thomson even took a second office on the newsroom floor. It was a break in tradition for Wall Street Journal publishers. Fighting up a rear-guard and ultimately futile defense, Brauchli made sure it was located in a no-man’s land near its sister publication, Barron’s.

  Thomson was born to parents without means in a small town several hours away from Melbourne. He showed verve as a rookie reporter for the Melbourne Herald, the paper once run by Murdoch’s father, and rose to become a reporter in China for the Associated Press and the Financial Times. Lean, with a stoop caused by a severe back ailment, Thomson favored black pants and thin ties, and he adopted a spiky hairstyle. He wrote memos littered with such obscure phrasings that they stumped even the Journal’s hyperliterate staff; he twitched at the scent of stories that were intriguing, devoted more to color than exacting precision, though his reporters would later find he could trip them up on the fine points of their stories, too.

  Murdoch saw in Thomson a kindred spirit, and it didn’t hurt that the younger man had been slighted by a rival. Thomson had been the US editor of the Financial Times, but was hired away by Murdoch to be editor of the Times of London after being passed over to become the FT’s next executive editor. The two men shared a March birthday separated by precisely three decades; they both married Chinese-born women. (Thomson’s wife, Wang Ping, was actually a few years older than Wendi Deng Murdoch.) The two families periodically vacationed together, with the Murdoch girls frolicking with the Thomson boys. Murdoch became not just Thomson’s employer and mentor, but by some accounts his best friend as well.

  In summer 2007, as Murdoch put the final touches on a package to induce the controlling Bancroft family to sell him the Wall Street Journal and Dow Jones, he had to address the Bancrofts’ notions of editorial independence. Given the paper’s tenuous finances, the sale made financial sense but he had to overcome the Bancrofts’ pride. “They weren’t able to grow the company and lost interest in running it,” said Beijing-based reporter Ian Johnson, a Pulitzer Prize–winning chronicler of events in China for the Journal. He called the deal a Faustian bargain and campaigned with a small group of reporters against it. The Bancrofts saw their detachment as principled.

  To ensure the newspaper’s integrity, Murdoch’s lawyers created a five-member panel, the Special Committee. It was to be constituted without any existing entanglements with News Corp or the Murdoch family. Chairman Thomas Bray had been a staffer for the Wall Street Journal, leaving in 1983, an affiliation that raised no hackles. MIT digital futurist Nicholas Negroponte, another member of the panel, however, had received $2 million from News Corp for the foundation he ran that gives laptops to needy schoolchildren. Those Journal reporters who opposed the sale to Murdoch seized on Negroponte’s affiliation as a sign the panel would be compromised. The veteran Journal reporter E.S. Browning told me at the time, “Murdoch clearly has no intention of creating a board that would be independent. He’s going to try to assault it with his lackeys.”

  The Special Committee also included the former CEO of the Associated Press, the former editor in chief of the Chicago Tribune, and a former Republican congresswoman. News Corp expressed confidence that Negroponte had enough independence to act independently. Given that News Corp and Murdoch were functionally the same, reporters and editors put little stock in the statement. But managing editor Marcus Brauchli vouched for Negroponte and the entire Rube Goldberg arrangement. We can work under Murdoch’s system, he told his staff. We can work with Murdoch. We need his riches to weather the storms slamming the economy and the industry.

  A similar board established a generation earlier to protect the Times of London and the Sunday Times proved an occasional bureaucratic irritant to Murdoch and not much more. Questions over the Special Committee’s composition passed almost as soon as they surfaced, unnoticed except in journalism circles.

  The acquisition of the Wall Street Journal went through in late 2007. Murdoch named Les Hinton CEO of Dow Jones. Less than five months later, Hinton told Brauchli that he and Thomson felt he should leave. Brauchli yielded in the face of insurmountable logic: Murdoch, the paper’s real editor in chief, wanted him gone. Brauchli consoled himself with a departing payment worth more than $6 million and became executive editor of the Washington Post.

  The Special Committee had authority to approve the hiring and firing of managing editors. Formally Brauchli’s departure was voluntary and did not involve clashes over journalistic integrity, so the switch did not automatically trigger the Special Committee’s mandate to act. The members expressed vexation that they were told after the fact. But they approved the appointment of Thomson as managing editor of the paper. Les Hinton slid smoothly into the publisher’s seat and, with an apology, publicly defanged the panel charged with defending the paper.

  “It was the end of any doubt over who was in charge, and of what Murdoch thought of the old paper,” one former Journal reporter recalled. To staffers, he said, “the whole special committee just felt like a cynical joke.”

  By early 2008 the Wall Street Journal was under Murdoch’s full control. Literate yet accessible, the Journal set the standard for reporting business and finance. It was not written to impress the friends of its reporters, as Murdoch believed of the New York Times, but for entrepreneurs, Rotarians, investors, ranchers, innovators, and school-teachers west of the Hudson and east of the Rockies. Yet Murdoch wanted to run the nation’s leading general interest newspaper, not its most respected financial publication or “second read” of the morning.

  Under Murdoch and Thomson, the Journal took a heightened interest in domestic politics and foreign news without explicitly financial components. The paper’s daily news metabolism quickened and its tone lightened. Thomson pushed for attention-getting headlines that stretched across the page, for big photographs, for shorter stories, and for reimagined lifestyle sections. The paper reflected that day’s news, not waiting until a day or two later to write a lyric assessment. An Associated Press article about mass shootings at Virginia Tech was the top-read story on the paper’s website in 2007. The paper had not assigned anyone to cover the story as it broke. Thomson thought that was madness.

 
The digital age, not just the new owner, dictated major shifts in how the paper operated, concluded Rebecca Blumenstein, a veteran senior editor who flourished under Thomson. “The pace of news changed,” she told me. “You have to have a front page now that people feel compelled to read every morning. If people don’t feel they have to pay for the Wall Street Journal, then they’re not going to pay.”

  Some old hands took these shifts as deliberate steps to unravel Kilgore’s legacy and feared, taken together, they would undermine the paper’s distinctiveness. One former executive argued that the paper’s coverage the day after the Fort Hood shootings in 2009 offered the same kind of breaking news coverage available on any other news site.

  “What [the reenvisioned Journal] does is reflect Murdoch’s intentions, which I think he was clear about from the beginning,” said William Grueskin, who served as the paper’s page-one editor, managing editor of WSJ.com, and deputy managing editor for news but left in 2008. “Whether that was a good strategy is, I think, still being sussed out.”

  Another former editor said the ambition of the place simultaneously weakened. “They don’t try to take you inside boardrooms,” he claimed. “They simply tell you what happened.” Added a former Journal executive, “Thomson made the Journal more good and less excellent.”

  Once Thomson was in place as managing editor, however, things began to ease up a bit. Murdoch had already authorized more money to add pages to the front section. Mass layoffs, widely feared, never occurred. Instead, Murdoch repeatedly demonstrated interest in the trade of journalism.