The Man Who Owns the News: Inside the Secret World of Rupert Murdoch

by Michael Wolff

  If there is a moment of dangerous grandiosity in his career, it’s in the late eighties. His dealmaking frenzy represents the triumph of Reaganism and Thatcherism and the free markets and the collapse of so many regulatory impediments—and it represents his own triumph. Indeed, his conservative politics track the manicness of his dealmaking. The more deals he makes, the more conservative—the more strident, pugnacious, out there—he becomes. It’s his free market and he’ll make the rules for it.

  But News Corp.’s banking crisis in 1990, his being-and-nothingness moment, changes him. It’s a personal ending of the eighties for him. He’s forced into a vastly more conciliatory and accommodating mood. Humility in all walks is part of the price of his bailout. The crisis brings new discipline not just to his business but to his political views. He isn’t an independent state after all—he learns that he can’t function like one. In a way, he’s getting a grip.

  Also, he sees the fate of Reaganism (it turns into George Bush–ism) and particularly of Thatcherism (an ignominious end for her, and then the shift to John Major–ism)—not to mention the fate of so many of his eighties cohorts, including Michael Milken, who’s off to federal prison. He’s running scared. He has to not just escape his own financial predicament but survive a zeitgeist shift.

  Not only does he not like George H. W. Bush or John Major very much, they don’t like him. What’s more, they owe him little. If they’ve been made by the forces he’s helped create, he hasn’t helped them directly. He’s distant from them.

  And so he turns—if not on a dime, in a wide swing.

  He may be losing his ideological fire, but he’s still left with one of the best political organizations outside of politics. All CEOs tend to have a lower-level function that they’re most comfortable with and which becomes their point of management style and emphasis—so your CEO might be the real CFO, or real marketing chief, or real operations guy, or real M&A person. Murdoch, at News Corp., is the government affairs specialist. (It’s one reason he’s become so close to Gary Ginsberg—because that is what Ginsberg does.)

  Murdoch’s good at government relations—a rare talent. There is just something about the process here being so character-focused, and about the system being so basic and mechanical—you apply pressure here and yield a result there; weakness responds to power; you scratch my back and I’ll scratch yours—that fascinates him. “He spends a few days in Washington and he gets full of energy,” says the Republican pollster and consultant Frank Luntz, who has advised News Corp. and accompanied Murdoch on Washington visits (and gone on to be an on-air commentator at Fox News). “He’s in his element. He knows who everybody is and everybody wants to meet him.”

  Again, it’s not ideology. It’s all function—it’s all craft. It’s the investment that he’s made over so many years in politics and in politicians paying off.

  Indeed, in the nineties, post-Reagan-Thatcher, he begins to play a profoundly nuanced and plastic game: He figures out that a right-wing guy with even the mildest possible suggestion of moderation can have incredible clout with the liberal guys.

  He really can’t stand the Clintons. This is partly because they can’t stand him and partly because they seem so sloppy, so unfocused, so undisciplined. On the other hand, he gets results from them; they jump. He gets the federal waiver he needs to get the New York Post back. He manages to have the Clinton FCC close its eyes to the fact that Fox television stations are actually, and contrary to the law, owned by a foreign company. (He has also assiduously courted the Republican Speaker of the House Newt Gingrich, including arranging for HarperCollins, the News Corp. book publisher, to give him a rich book advance.)

  But it’s in Britain that this ironical fluke of ideology—that the left can be more responsive to him than the right—really pays off. His working of Tony Blair is quite a thing to behold (as is, conversely, the Blair working of Murdoch).

  The diaries of Alastair Campbell, Blair’s communications chief, present an almost step-by-step primer on the art of submission to Murdoch—how much you need to give up, how much you can hope to retain. It’s a hard, humiliating business that shapes the Blair candidacy and defines New Labour. The Murdoch in the diaries is an implacable presence: You come to him, and only when you’ve given enough does he give. It begins with Blair coming to address a News Corp. conference in 1995 at a gathering on Hayman Island in Australia. The event is distinguished not just by Blair’s Murdochplacating talk but by everybody in Australian politics warning him about the difficulties of dealing with Murdoch. “Murdoch,” says Paul Keating, the Australian prime minister, whom Murdoch has supported, “is a hard bastard and you need a strategy for dealing with him.” There are the difficulties of dealing one-on-one with Murdoch: “I tried to prise him open a bit about what he was thinking,” says Campbell, “but despite the twinkle in his eyes, and the general warmth, he was very guarded. Any attempt at big talk was reduced to small talk pretty quickly.” And on Murdoch’s address to his own editors: “Chilling, to watch all these grown men, and some women, hanging on every word, and know that an inflection here or there would influence them one way or the other.”

  It’s a leitmotif of dealing with the Murdoch media: “In the end, they [Murdoch editors] would do what they were told.” Recounting a meeting at the Sun: “Afterward [Blair] said that was not a good meeting and they are not very nice people…I said did you notice the portrait of Murdoch in the room where we had lunch? It was one of those in which the eyes followed you round the room. Hilarious. But they were all a bit Moonie-fied.”

  It’s a further irony, which Murdoch enjoys, that his most powerful political statement in the United States, when he becomes most publicly and vividly identified with the right wing and the “vast right-wing conspiracy”—which the Clintons will see themselves as martyrs of—comes just at the point where he is the least committed to the fervent right: Fox News.

  Just as Fox News is taking the mantle of Clinton-Lewinsky and crafting its rambunctious, propagandized, intolerant, bar-stool conservatism, Murdoch has become involved with a junior staffer. Not only is his lover vastly younger and more liberal than he, but she will shortly cancel out Anna’s influence. He actually has to mollify now in the opposite direction—he’s got to be more liberal to foster peace at home. What’s more, Peter Chernin, the News Corp. house liberal, continues to gain importance in the company—and importance to Murdoch.

  But Fox News is a perfect reflection of Murdochian what-the-market-will-bear politics. It reflects, too, Murdoch’s very odd combination of mischief and sanctimony—that perfect tabloid formula.

  Fox is, in so many ways, the ultimate Murdoch product—all the lessons are combined and they all work. He produces, finally and successfully, his American tabloid. Up against CNN, a much larger, much more established, much more respectable competitor, he counterprograms. Fox is self-consciously downmarket, rude, loud, opinionated. This not only defines a lower-end, secondary news market, but does it in a way that’s much cheaper than how the other guy does it. Lack of respectability is cheaper than respectability. That’s tabloid.

  It’s all about torturing the other guys too. Your marketing premise is that you’ll push it until you get a rise out of them. The establishment makes the anti-establishment possible. This is simple. CNN is Keith Murdoch and Fox is Rupert Murdoch. This is what he’s learned.

  On the other hand, he could not have done this alone, because he’s too respectable; he might even be too liberal by this point.

  Hence, his alter ego: Roger Ailes.

  In a sense the success of Fox is random, or kismet: almost entirely dependent on the fact that Murdoch lucks into a television guy whose affect—bumptiousness, irascibility, succinctness, obvious outsiderness—entertains him. What happens to Murdoch is that he gets a crush on Ailes. For a very long time, having dinner with Ailes is the most galvanizing thing in Murdoch’s life—it makes him feel in the game, it’s pure pleasure. Indeed, he gives Ailes what he has never given any
of his editors—never given the Times of London, even though his pledge has the force of law, and likely never will give the Wall Street Journal, although he’ll swear he will: fundamental editorial independence. It is understood that Murdoch can’t go behind Ailes’ back and talk to the talent and executives at Fox News without him first talking to Ailes, and that Ailes himself can’t be overruled about what goes on the air.

  There is, of course, an exceptional reason for this: It’s television, not a newspaper, and Murdoch doesn’t know from nothing when it comes to television news. At a newspaper, he’s confident about his ability to meddle; with television, he’s, with good reason, not at all confident (he doesn’t even like television all that much). And it’s also a calculated business decision: He needs Fox to be pushed further than even he might naturally go.

  Indeed, the apoplexy that Fox News regularly arouses in liberals is aroused too within News Corp. It may be one of Murdoch’s measures of how successful Fox and Ailes are—how much they’re getting to the News Corp. liberals, not least of all Chernin and Ginsberg.

  (Ginsberg is Murdoch’s ever-present example of what fun it is to mess with liberals. Ginsberg, practiced in his acquiescence and tolerance, could also be Murdoch’s best indication of going too far. One Christmas, Murdoch, to bedevil the Jewish liberals at News, not least of all Ginsberg, pays for crèches to be placed on every reception desk throughout News Corp. Thereupon transpires a two-hour meeting with Murdoch, Ginsberg, and two rabbis. Ginsberg, being no fool, has evoked the two things that might always be used to counterbalance Murdoch mischief: middle-brow high-mindedness and piety, those quintessential newspaper values.)

  In some sense, Ailes is a reflection more of contrariness than of politics. Everybody at the highest reaches of News Corp. shuts their eyes to Ailes. He is a piece of mischief that has gotten out of hand. Without Murdoch, there would be no tolerance for him within News Corp. But Murdoch has to live with him—because Murdoch’s odd piece of mischief, his bit of counterprogramming, has become a success.

  As Fox News is rising, it is significant to point out, so is Sky News as a core part of the BSkyB operation in Britain—it is an almost comical mirror image of Fox News. In fact, if you’re used to Fox News, you watch Sky News and wait for the people on air to somehow acknowledge that they’re kidding around by playing it straight and reputable and agenda-free.

  And that is exactly the worry at the Wall Street Journal editorial page—that Murdoch’s politics aren’t actually politics, or at least not structured, charted, formal beliefs, but some more or less picaresque adventure in which they can only look forward to becoming bit players. Indeed, he might see editorials as part of the adventure. “I’m a very, very curious person, but I couldn’t sit down and write a learned article on the Middle East—but I can write a pretty good editorial about it!” Murdoch will say in one of our interviews, staking his claim to the rhetorical flourish.

  JUNE 2007

  Rob Kindler, a voluble investment banker at Morgan Stanley, believes that he and Morgan Stanley should have been hired as co-advisors to the Dow Jones board with Goldman Sachs. From early on in the process he became a negative, carping, almost jeering voice about how Dow Jones’ advisors are shepherding the company to an inevitable sale to Murdoch.

  He’s never known a company to be sold for its first bid, he keeps saying as no higher bids emerge to challenge Murdoch.

  His none-too-veiled suggestion is that Dow Jones’ advisors—Goldman; Merrill; Wachtell, Lipton; Simpson, Thacher—are in Murdoch’s pocket, or want to be.

  The four firms, for their part, perturbed but tolerant, point to the $60—that it is just off the charts—and to the family. By bringing in every Tom, Dick, and Harry, they have demonstrated that there are no other serious bidders. So what can they do?

  And yet there is something to Kindler’s fulminations. A sense that ranks are closing around Murdoch. Surely, the ranks are irritated with the family—there’s an underlying sense of Good riddance and This is what you deserve.

  Not only are Leslie Hill and Chris Bancroft still rushing around the country, churning up all kinds of dust—duly reported as significant developments by the reporters they’re blabbing to at the Journal—but they’re dragging their heels on the editorial agreement.

  The Dow Jones board is starting to call Elefante every two minutes, asking where the agreement is. The way the family has set it up, the board can’t start having a substantive talk with Murdoch about a deal until they’ve come to terms on an editorial agreement, so the whole process is stalled. The eyes of the business world are on them (as are the eyes of the arbitrageurs who have bought up the stock—potentially litigious shareholders), and all the board can do is twiddle its thumbs.

  The Wachtell, Lipton guys and Michael Elefante are now beginning to suspect that Hill and Bancroft are using the editorial agreement as a big stalling tactic.

  Chris Bancroft has been contacted by Stuart Epstein, a banker at Morgan Stanley, who is acting as the chief advisor to Thomson in its merger with Reuters. Bancroft is flown to Toronto to meet with W. Geoffrey Beattie, the president of the investment vehicle for the Thomson family. (As a point of gentle irony, these are the same Thomsons who owned the Times of London and sold it to Murdoch.) What Bancroft is told is that Merrill Lynch, with its dire prognostications, is feeding the Bancroft family a lot of nonsense about how bad the Reuters-Thomson merger will be for Dow Jones. In fact, Bancroft is reassured just how good it will be. If the Bancrofts can only hold out until the Thomson-Reuters deal is closed, Thomson will be back to Dow Jones with an offer a helluva lot better than $60.

  Sure.

  Indeed, there’s a creeping sense of worry among the advisors and among some people on the board that if they don’t behave themselves, Murdoch will get pissed off and lose interest. The push-pull of all this has actually forced many of the people involved with the deal to clarify their feelings: They have to admit, they’re drawn to Murdoch.

  For banks and law firms representing Dow Jones, as well as for the free-market dogmateers at the Journal, Murdoch—say what you want about him—represents the free market. He is the ultimate capitalist achievement. Everybody else, even GE, is not so ready, not so pure, not so alive. If you’re actually part of the free market (even if Rob Kindler is saying this market isn’t so free), you’re partial to Murdoch—you get him. His politics, the politics of success, are your politics and the Journal’s politics.

  On June 21, Pearson and GE, receiving little encouragement from the Dow Jones and Bancroft advisors, daunted by the Murdoch offer, and without the temperament to deal with the Bancroft family’s psychological issues, end their consideration of the deal.

  It’s clearly only Murdoch—take him or leave him.

  ELEVEN The Nineties—The Amazing Mr. M.

  JUNE 16–24, 2007

  Sometime over the weekend of June 16, a water pipe in the ceiling of the eighth floor of the News Corp. building at 1211 Sixth Avenue—housing the management nerve center of the company—will break, dumping almost a foot of water across News’ executive offices.

  This is generic corporate space that reflects the News Corp.’s make-do ethos, or its patch-it-together sense, or even a bit of living above the store. (Fox News, with its fetid greenroom, is in the basement. The New York Post is crammed in here too. And in his mind, Murdoch is already shoehorning the WSJ into 1211.)

  The reception area on eight has some none-too-chic furniture, a flat-screen monitor tuned always to Fox News, and a British receptionist. Murdoch’s office suite is just off the reception area (he often sweeps out to pick up visitors). You go first into a secretarial area—where seventy-something Dot Wyndoe, from Australia, who’s been his secretary since 1962, sits in a frozen-in-time hairdo with two other assistants—and then around the corner into Murdoch’s office proper. With its central desk and separate seating area, various television monitors, and computer sitting mostly unused on the sideboard, the office is entirely unremarkable
. Now, media-conglomerate CEOs’ offices tend to be pharaoh-worthy monuments to self, to power, to visualizations of strength, to seizing the day. Peter Chernin, in a new executive building erected on the Fox lot in Los Angeles, has built himself a true media-lord spread. Hushed, vast, meticulously designed, off-putting for any visitors (off-putting, in fact, to many people at News Corp.), Chernin’s office implies that it’s above work, beyond function, its occupant having risen to the level where will and desire alone make things happen.

  A spilled cup of coffee might cause paralysis in Chernin’s office, but at 1211 Sixth Avenue on the eighth floor, the flood—after it gets drained and more or less mopped up by the maintenance guys—won’t be the sort of mess that anybody here can’t work in. Even the mossy smell won’t interrupt business as usual.

  Oddly, what happened since the May 1 news of Murdoch’s bid for Dow Jones is that the eighth floor has turned into not just a war room, but in some more or less unintended way a rump organization. Within a company the size of News Corp. the way a deal, even a big one, is normally conducted is that a project team is assembled, but it’s sort of off to the side so that the bosses can continue their stewardship of the larger affairs of the company.

  But with Dow Jones, top executives at News have become the project team. That is, all except for Chernin, who, out in Los Angeles, has for all practical purposes become the operator of this global company, while Murdoch and his little band—DeVoe, Nallen, Jacobs, Ginsberg—fret about their junior-size deal.