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

by Michael Wolff

  There follows a brief golden phase for Murdoch in Hollywood: a fleeting interest in stars, in accoutrements, in black-tie premieres, of him flying in newsroom guys from Australia and London to show off how glamorous he’s become.

  His daughter Elisabeth even gets a big Hollywood wedding—with the entire Murdoch family heading in from Sydney and Melbourne, while the groom’s “brightly dressed” relations fly in from Africa, including his father, a political activist let out of a Ghanaian prison only a few months before. The bride wears ivory Christos, the bridesmaids Vera Wang, in a Catholic ceremony at St. Timothy’s Church in Beverly Hills. The Reagans attend.

  The problem is, Murdoch hates Hollywood. It’s seldom happened, perhaps never happened, that Hollywood, with its charms and blandishments, fails to seduce (usually fleece and seduce). Even with all the reasons to accept the seduction—Anna is happy in Hollywood; it’s the logical center of the business—he can’t.

  Hollywood is one of the great closed communities on earth. If he felt hemmed in by London, this is much worse. Hollywood business practices are set in amber. Every deviation is tectonic. And it’s hierarchical—everyone has a place, and everyone has someone higher than him; there is always a brighter star—whereas Murdoch has only ever functioned with himself on top of a leveled organization.

  The state of play firms up pretty quickly. He hates the Hollywood people. They hate him. Not least of all because he gets on a roll telling them how much he hates them. It’s a certain sort of Hollywood currency to be able to bring out the biggest guy you can bring out on your team—that’s clout. But Murdoch, beyond even the problem of his representing some right-wing ideology that’s not cool in Hollywood, scowls when stars are brought into his presence, turns sour, irritable, charmless—he keeps reminding everybody about it being his money. He’s an inhibitor to the business—a downer.

  He is, to a degree seldom seen in Hollywood, unmoved by what motivates people here. He doesn’t like movie people. But perhaps more important, he doesn’t like movies. Worse, pop culture itself is just strange detritus to him. He’s an evident old guy. He doesn’t get it. Out in the land of going with the flow and cultural relativism and indulgences of all type, he’s crabby, mordant, dyspeptic—and most of all cheap. What he’s watching, at Twentieth Century Fox, is his money potentially going up in flames. Indeed, the fact that Titanic will make him seem like a Hollywood genius when it becomes the biggest grosser in movie history almost won’t register because it comes so close to sinking him. The $200 million that runs through his fingers on Titanic could well upset his careful restructuring of the company. Then, when it turns out to be a hit—analysts had reduced their profit estimates for News Corp. by 10 to 15 percent before the movie’s release—he has to deal with the arrogance of these people. (James Cameron, king of the world? Please.)

  His presence on the lot changes the whole tone of Hollywood. He’s not larger than life, not acting like the royalty he should be acting like—he decidedly isn’t Lew Wasserman—but is, instead, an old-fashioned headmaster, a scourge, a moralist, a grump.

  He just doesn’t work with other cultures—business or aesthetic. He doesn’t, in any meaningful way, ever adapt. He has only ever done it the way he’s done it.

  “Wipe that smirk off your face!” he screams at a senior Fox executive who has not adequately covered his reaction to one of the constant not-the-way-it’s-done-here ideas Murdoch offers in one of the endless meetings at the studio (e.g., to beef up advertising sales at the local Fox stations, why not just fire the man who’s earned the least that month?—that’s something that worked in Australia, he says). After the meeting he orders that the executive be fired.

  His tone-deafness dates back to Fox’s Home Alone, in 1990, which became the second-highest-grossing film of the year. Its $533 million earnings off a $15 million investment allow Murdoch to substantially reduce his debt to the banks. Unfortunately, Home Alone thereafter becomes his idea of what every movie should be. (Actually, that’s an improvement of sorts: Shortly after he bought the studio, he went on a kick to do another Crocodile Dundee movie.)

  The Fox Network doesn’t make him any happier. It’s a growing success, based first on the prime-time hit Married with Children, the scatological domestic comedy, followed by The Simpsons, that culturally anarchic cartoon, but it’s bewildering to him. Now, there’s a way to understand the Fox Network as a certain sort of postmodern tabloidism—except that Murdoch himself is never going to understand postmodernism in any context. Matt Groening, the The Simpsons’ creator, finds it an example of almost Simpsons-like absurdity that such a churlish, retro, can’t-get-the-joke, right-wing guy would bear ultimate responsibility for the show.

  The point about Murdoch is that you can hate him as much as you want as long as you take him seriously—as long as you see him as a threat, a power to be reckoned with, a significant personage. But in Hollywood, among the poofters and cocaine addicts, he’s regarded as somebody’s creepy old uncle.

  So he’s plotting beyond Hollywood—beyond the emasculation he feels as an entertainment executive.

  He gets his New York Post back in 1993. It’s languished without him—as it logically would, because he’s been the only one willing to sustain its great and inevitable losses. Washington, caught between causing the death of the oldest continually published newspaper in the country or giving it back to Murdoch (who has lobbied hard for it), capitulates. Without a print news operation in America for four years—during the banking crisis he’s sold all his publishing properties in the United States except for TV Guide—he’s back in business.

  And he’s focused on his other epochal obsession: his dynastic ambitions. In this, he’s been influenced by the story of the Bingham family—the better part of the century, the Binghams have controlled two papers in Louisville, Kentucky, the Courier-Journal and the Times—and of what happens to a media empire (although to compare the Murdoch empire to the Bingham empire is to compare America to Monaco) when disparate family members have other interests and desires and different emotional axes to grind. Their downfall becomes the basis for the plot of Anna’s second novel, Family Business.

  The Bingham story becomes a point of clarity, if not alarm, for him. Control of News Corp.—especially were he to precipitously exit the stage—is a mess. The most significant voting bloc in the company is controlled by Cruden Investments, which is controlled by the family of Keith Murdoch—Dame Elisabeth and her four children, Helen, Rupert, Anne, and Janet, and their children. Any one of these principals becomes, in a fight for control, a potential turncoat or fly in the ointment or spoiler. And, he’s reasoning, what have any of these others done for their supper? It’s a business that he’s singularly driven, run, imagined, suffered for, achieved—not them. Doing the thing that he does, narrowing his focus, hardening himself, becoming frighteningly distant—he makes it all a fait accompli, too late for argument, consideration, or sentiment—he goes in for the kill: He wants his mother and sisters and their families out. The price is arguably a fair one: $650 million. But the emotional price for his sisters and his mother is higher—to be kicked out of the empire, to be reminded that you’re just a satellite.

  “Rupert didn’t like it one bit that any member of the family would be anything but grateful and say anything but ‘Whatever you say, Rupert,’” Matt Handbury, his sister Helen’s son, will say. Handbury has worked for News Corp. for most of his career, and then will go on to buy a book publishing business that News is selling called Murdoch Books—annoying Murdoch with his continued use of the name. “As an illustration of Rupert’s sense of entitlement and the family being behind him, when he bought everyone out, he basically offered a future payment at a current price.”

  Rupert’s implacable “that’s the deal” position and his family’s relative helplessness—although Matt Handbury tries to hire bankers and advisors, nobody else in the family wants to see this as a negotiation—culminates in a family meeting at which his mother buries
her head in her arms on the boardroom table and says, “This is all a bit uncomfortable.”

  It is the model for dealing with family proliferation and future control: The generation’s dominant member must jettison the others.

  It’s at this point, trapped and restless in Hollywood, and yet still with a compulsion to correct it, dominate it, even exact a certain revenge on it, that he begins to rely on Peter Chernin. It’s a propitious and ultimately dangerous convergence. Chernin becomes the most successful number two or factotum in a town full of factotums—the implementer of Murdoch’s revenge. This revenge—or insight, if you will—is to upend the Hollywood conceit, which is about creativity or content. That’s the mark of Hollywood snobbery—the closer you are to what’s on the big screen, the higher you are. Murdoch’s view is the opposite: Media isn’t about the media substance, it’s about the media machine.

  Chernin, as he begins his serious rise in the company, complements the Murdoch strategy. He doesn’t bring unique experience or a substantial record of success to the table. There’s nothing in his background to give him special authority, or even much of a sense of direction. He’s a midlevel player. He comes from the back office, from a set of promotion and sales jobs. He’s a soldier, a handler, an apparatchik. In this, except for the fact that he’s not an old newspaper hack, he’s a prototypical News Corp. manager—he doesn’t have enough heft, or point of view, or confidence, or arrogance, to try to move the company in anything other than the direction in which Murdoch wants to take it. (At least not at this point.)

  And, indeed, Chernin quickly establishes himself as a yes-man to Murdoch and a no-man to anyone who might have alternative views to Murdoch’s. He’s a cipher. In fact—and this is a big virtue for Chernin, as it gives him lots of operating room—Murdoch doesn’t quite notice him. Although, more and more, everybody else does.

  It is paradoxical that Murdoch, the control freak, likes to be taken in hand. The thing is that Murdoch rather lives in his head. For a person who is suspicious of the abstract, he himself is largely an abstraction—a media nerd, if you will, always with the mental wheels spinning, his variables, the ones he obsesses about, in constant motion: audience behavior, competitor advantages, the necessity of containing the cost of content, the complication of distribution, the difficulties of production, how to do everything more cheaply and simply, how to get the politicians off his back. He’s containing this in his head, and it makes him less than socialized, isolated even. He doesn’t yield easily to the world of distractions (Anna, for one, is always trying to distract him). He’s grateful for anyone who can minimize the friction, who can lessen the interactions that he doesn’t want to have, the interactions that disrupt his chain of thought. He doesn’t want to be dealing with irrelevant details—doesn’t want to have to stop and change the lightbulb. Doesn’t want to have to think about what he doesn’t want to think about. Murdoch just wants to move in the direction he’s going and not have to stop for traffic.

  He actually doesn’t really consider Chernin very much. Or, to the extent he does, he doesn’t especially like him. There are many of Murdoch’s boys, his favorites, his pets, who have engaged him—people who have tapped into one or another of his generally passing enthusiasms. But Chernin isn’t especially like that. He’s more neutral. He’s clearing the way. He’s the hatchet man. But the secret of the good hatchet man is not at all to appear like the hatchet man—not to suggest that you’ve been doing the hard, thankless, dirty work. You merely want to leave the impression with your boss that it feels better when you’re around, less good when you’re not.

  What Chernin does is cut a path so that Murdoch doesn’t have to much deal with the issues that are most demanding and compelling and difficult and distracting and intractable in Hollywood—namely, talent, and the whole crap-shoot nature of the business—and let him get to the issues that he is more comfortable with: the mechanics, the true value creators, the big bold moves of the business.

  Murdoch, disliking the movies, has already shifted the emphasis of Fox to television, and, in a sense, ever after, the emphasis in Hollywood itself shifts to television. And, because Murdoch isn’t interested in what’s on television, except for news (of course he likes having hits, but he doesn’t watch them, and doesn’t fetishize the process of creating them), he focuses on gaining the ground or the advantages that alter the balance of power in the business.

  What you need to have is what the audience wants, and then to monopolize it.

  For instance, sports.

  Now, another distinguishing part of the Murdoch character is his general lack of interest in sports. This is about, likely, his own relative physical awkwardness; his impatience as a spectator; his disengagement from anything that he himself can’t win; and, too, a further lack of socialization. Murdoch doesn’t bond, except with a purpose. He’s not one of the guys (one of the reasons he was so eager to leave Australia with its never-ending male-bonding rituals). On the other hand, contravening his psychological quirks, Murdoch is, again, a simple machine. He likes simple solutions and he likes to repeat them.

  While sports has been a bedrock of television, at this point it’s been a relatively overlooked one—it’s niche programming. But Murdoch works the niche into the structural advantage of his networks. Sports becomes his pivotal monopoly.

  Before Murdoch, soccer teams in the United Kingdom were pauper affairs, with piecemeal and poorly negotiated television deals. Murdoch locks up the television rights to soccer in the U.K., turns televised soccer into a lavishly promoted event, and turns the new Premier League into the most watched and wealthy sports league in the world—thereby making BSkyB a fixture in British life. In the United States he snatches the NFL from CBS in 1993, changing the economics of American sports broadcasting, and further re-creating his network of stations around sports rights—aligning Fox stations with rights to local teams.

  But aside from his big sports play—which of course has nothing to do with Hollywood—Murdoch is still stuck out in Beverly Hills and still feels like he’s a governor rather than a conqueror. He finds himself—his employees find him—wandering the building looking for anyone to have lunch or dinner with. A forlorn figure.

  He’s survived the debt crisis, reclaimed the Post—the thing that makes Hollywood bearable is that he’s still on the phone with his newsrooms—but he’s stalled out. He’s a man heading for retirement age, with a deeply indebted hodgepodge of media companies. Worse, he’s in a business he doesn’t get. The business of being cool, which he is not.

  So: How do you change the story—move it from coolness, which he doesn’t do, to expansion, conquest, dominance, which he does do? And how do you do this without any money?

  He is—and this is a fundamental entrepreneurial talent—a master illusionist. It’s the essential entrepreneurial skill, to convince people you are what you have yet to become.

  If the pop-culture thing eludes him, he’s nevertheless on the business zeitgeist. He has a keen, even preternatural sense of how the conventional wisdom among the toughest business guys is going to shape up.

  Here’s what Murdoch gets—the concept that is just coming into vogue in the media business: Either you have to be big enough to control distribution, or you have to be big enough to be able to negotiate with those who do control distribution—or, ideally, both. That’s about to become the 1990s holy grail.

  He goes off in 1994 to see John Malone, the most powerful man in cable television and, arguably, the media business—the man who has jump-started the new era of distribution power by promising five hundred television channels (TCI, his technologically kludgy and underresourced system, has, however, been unable to deliver on that promise). Malone, to Murdoch, is the real media business—distribution, leverage, monopoly, and a vast new system undermining the old networks—whereas Hollywood is a thumb-sucking and pantywaist business.

  Malone, as powerful as he is, is in a bind. His deal to sell TCI—servicing one in four cable hous
eholds—to Bell Atlantic has just fallen through. With new federal regulations hitting cable earnings, Bell Atlantic tries to reduce the purchase price, and Malone walks. His stock price is in a swoon. Murdoch takes this moment of weakness to suggest that Malone should help him launch a cable sports channel and, also, a news channel—on the cheap (although Murdoch has not yet articulated his version of a conservative news channel, Malone happens to be one of the few people in the media business to share Murdoch’s unreconstructed views). Or the proposal to start a news channel is a feint, and what he really wants Malone to do is support Murdoch in his bid to buy CNN—in which Malone already holds a key minority stake.

  But Malone is too smart or Murdoch too poor—it’s hard to control distribution without cash on your books—or they’re just too suspicious of each other. Malone is not going to be Murdoch’s advantage or savior.

  Enter (or, actually, reenter) the Houdini of business machinations: Michael Milken, the junk bond promoter.

  Years earlier, Milken set up the one-two punch that got Murdoch the Fox studio and then the television stations that would form the Fox network. Not long afterward, he was convicted of various far-reaching fraudulent practices, sent to jail, and banned from the securities industry for life. This did not, however, lessen his acumen or even his reputation. He was, upon his release, just two years into a ten-year sentence, back to advising Murdoch.

  In 1994, he gets Murdoch together with the financier Ronald Perelman. Perelman, like Murdoch, is an alumnus of the exclusive club of entrepreneurs lucky enough to have been financed by Milken and to not have been indicted or gone broke. Perelman, a publicity hound and would-be media entrepreneur himself (although he will make most of his reputation from the Revlon Company, which he took over in 1985), controls a company called New World Communications, which produces television shows (notably, The Wonder Years) and owns fifteen television stations in good markets (among them Atlanta, Austin, Cleveland, Dallas, Detroit, Milwaukee, Phoenix, and Tampa)—all affiliated with networks other than Fox. Milken’s idea is a nifty one: Murdoch will invest $500 million in New World and Perelman will forsake his existing relationships and switch his stations’ affiliations to Fox—the “greatest realignment of affiliations in the sixty-year history of American broadcasting,” according to Time. This deal essentially makes Fox and profoundly diminishes CBS, which the lion’s share of the New World affiliates carried and which has just lost the NFL rights to Fox. Murdoch isn’t doing an acquisition, so he stays out of trouble with the banks; he’s not buying more stations, so he stays out of trouble with the FCC; and, at the same time, he turns Fox into a bona fide fourth network. (In 1997, he’ll buy all the New World stations outright. Four years after that, having worked the regulatory obstacles, he’ll add ten stations by acquiring the Chris-Craft group of stations, which seventeen years before had helped thwart his takeover of Warner Communications, giving News Corp. the largest stable of O&Os, owned-and-operated stations, in the nation, and making it, effectively, the most profitable television network.)