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

Page 36

by Michael Wolff


  She’s at the center of the center. Every after-hours e-mail to Rupert Murdoch about the Dow Jones deal comes through her. Because her husband still doesn’t get e-mail.

  THIRTEEN The Ecology

  JUNE 25–26, 2007

  It is the New York Times Murdoch is really after, more than even the Wall Street Journal. He is a man with almost no sense of, or interest in, historical context, but things stick in his head. Meaning accrues. Sore points persist. Issues fester. Enemies remain. Don’t get mad, get even. To persist, to justify, to avenge, to have his way, maybe to even impress someday—this is his long-term game. His takeover of his father’s old company in 1987 was such a resolution. Now there is the issue of the New York Times to resolve.

  Keith Murdoch set it up. Rupert was nineteen when father and son made a Sunday pilgrimage out to Hillendale, the Sulzberger family estate in Connecticut, on a visit to New York. His father was making the clear point: The Sulzbergers were the First Family of newspapers. There was a further, subtler message about measuring up, a way of establishing what it means to be a newspaper proprietor family, a setting of horizons. (His father, he came to understand, did not actually own newspapers—and the Sulzbergers did.)

  There was his first business hash with the Times. During the 1978 New York newspaper strike—little more than a year after he’d taken over the New York Post—he came to believe that the Times, with vastly more economic muscle than he had, was prolonging the dispute with the unions precisely to put him out of business. (He broke from the publishers’ association and made a separate labor deal—getting the Post back to press before the Times and the New York Daily News.)

  Then there was the Times’ earliest personal attack on him (its first profile of him, on the other hand, was a laudatory item in 1969—the Times called him a “boy wonder”—which appeared in a special editorial section about Australia and New Zealand clearly designed to pick up some targeted advertising). He had acquired a controlling interest in an Australian airline, Ansett, and, to increase his clout in U.S. business and political circles, decided to switch a big order for new planes from Airbus in Europe to Boeing in the United States, but he needed the U.S. Export-Import Bank, which was to provide the financing, to give him the same rates as he could get in his Airbus deal. The Times revealed that, as a precursor to getting the favorable deal, he’d had lunch at the White House with President Jimmy Carter and met with Ex-Im Bank president John Moore, a Carter appointee, on the same day; what’s more, shortly before the deal was approved, the New York Post endorsed Carter over Teddy Kennedy in the hotly contested New York presidential primary. The Times story landed Murdoch in front of a Senate investigating committee (which absolved him of any conflict or impropriety). The New York Times, he told Thomas Kiernan, an early biographer, was out to get him. “I’ll have my day with the Times” was his promise to Kiernan.

  There has been, over more than thirty years, very little respite for him from the Times’ treatment. First he was characterized as a guttersnipe, then as an outlaw and pirate, and finally now as a threat to our way of life—culminating during the battle for Dow Jones, on June 26, in the first part of an “investigative” series meant to demonstrate his unsuitability to own the Wall Street Journal.

  One of the severest charges against Murdoch is that he runs a pitiless attack machine whose primary purpose is not journalism but the defense of his own interests—that not since the heyday of the Hearst organization, with its vendettas and passionately vindictive columnists, has there been a major American news organization so willing to prosecute its opponents as Fox News. The irony, therefore, cannot be missed that the people on News Corp.’s eighth floor are as outraged by the New York Times’ naked attack on Murdoch as Fox’s opponents are by its naked attacks.

  The first part of the series goes after Murdoch for his regulatory dealings. The Times is partisan enough in this campaign not to mention that in the specific instance of lobbying for the relaxation of television ownership rules the Times has also been lobbying the government to relax those same rules.

  The next part is about Murdoch’s dealings in China:

  Many big companies have sought to break into the Chinese market over the past two decades, but few of them have been as ardent and unrelenting as Rupert Murdoch’s News Corporation.

  Mr. Murdoch has flattered Communist Party leaders and done business with their children. His Fox News network helped China’s leading state broadcaster develop a news Web site. He joined hands with the Communist Youth League, a power base in the ruling party, in a risky television venture, his China managers and advisers say.

  Mr. Murdoch’s third wife, Wendi, is a mainland Chinese who once worked for his Hong Kong-based satellite broadcaster, Star TV. Her role in managing investments and honing elite connections in China has underscored uncertainties within the Murdoch family about how the family-controlled News Corporation will be run after Mr. Murdoch, 76, retires or dies.

  The Times turns out to be quite an inept attack dog. Its team of reporters has, at great expense, failed to turn up anything new. What’s more, News Corp.’s own response—in a statement drafted by Ginsberg—so cows the Times that it cancels the rest of its planned series. All this supports Murdoch’s view of the Times: While it is, in this attack, “using its news pages to advance its own corporate business agenda,” it cannot even do that well. So what will become of it?

  Murdoch, after all, is promising the greatest and perhaps final newspaper war. He is going to take the Times down—or, not impossibly, he is going to take the Times over. If he is to actually become the dominant news proprietor in America, he has to unseat the Times.

  And now seems to be the moment to do it.

  2007: THE TIMES

  By late June 2007, the New York Times Company share price has fallen by more than half since 2002. The Times seems only marginally less weak than Knight Ridder, the second-largest U.S. newspaper company, which was forced into a sale by its disgruntled shareholders, or the Tribune Company, the country’s third-largest newspaper company, owner of the Los Angeles Times and the Chicago Tribune, which will also shortly go on the block. The Times is having not just a business crisis but a full-scale identity blowout. The familiar Times reader, the Eastern establishment reader—as dedicated and loyal and homogeneous an audience as few newspapers have ever had—has, in some sense, disappeared, or, growing old, has been abandoned by the Times.

  The Times’ strategy—a doomsday scenario, foreseeing a one-newspaper nation, a last-man-standing paper—has been to make the paper national. Hence, the New York Times is no longer principally a metropolitan paper. With a daily circulation of 260,000 in the five boroughs, it is no longer even credibly a New York paper. (Its two tabloid competitors, the Daily News and the New York Post, sell a million more copies between them than the Times in New York City.) It has become a second-read paper across the country—if you are among that fast-shrinking population of people who actually read a newspaper, then you read your local paper and, after that, the Times. It has become an add-on.

  The Times is a jittery place—far from sure about its own standing and virtue.

  Its two big scandals—the first in 2003 about Jayson Blair, the reporter who made up an impressive catalogue of vivid stories, and the second in 2005 involving Judy Miller, who, with the Times urging her on, went to jail for protecting her sources in the Valerie Plame affair, whom the Times subsequently decided she should not have protected so much—were notable not just for the structural weaknesses they revealed in the Times’ journalistic operation but also for what they revealed about the Times’ tendency to panic under pressure. Howell Raines, the Times executive editor whom the publisher, Arthur Sulzberger Jr., appointed to turn the Times into a national paper—it was on Raines’ watch that Blair wrote his fabricated stories—had the publisher’s absolute support until the day he didn’t and was forced to step down. Judy Miller likewise had the publisher’s absolute support until it was clear that PR consideratio
ns and the court of public opinion called for the opposite position.

  Murdoch has been watching the Times’ strange behavior and spastic reactions with as much interest and appetite as he has for anything in the media business. The Times is his favorite train wreck—as well as, perhaps, his ultimate opportunity.

  The Times’ own insecurity about itself encourages Murdoch’s own tenacity in pursuing the Journal—and, through it, the Times. Murdoch, as it happens, is no small cause of this insecurity. The rattled, humiliated, second-guessing Times has become a leitmotif at the Fox News Channel. Fox News has helped turn the Times into a caricature, a joke.

  There may be something more that bothers Murdoch about Sulzberger. While he tends to associate the boyish Arthur (even though he is, at fifty-five, far from a boy) with his own children—taking great satisfaction in this comparison—Arthur in fact resembles Rupert himself. Like Murdoch, Arthur has been desperate to emerge from the shadow of his father; he is determined to speak his mind (at any cost); he is determined to be in personal control; and he is desperate to be larger than he is—to be bigger than fate has made him. Arthur is the cautionary tale—what Rupert himself, with just a slight alteration in tone and mettle, might have become.

  Indeed, the Murdoch family’s control over News Corp.—with its voting and nonvoting shares—apes the Sulzbergers’ corporate model. Arthur—attention-seeking, immature, verbally out of control—is a vivid example of what can happen with such no-recourse governance. That worries Murdoch.

  Oddly, it is Arthur himself who has most consistently, and, to Murdoch, pathetically, articulated the fragility of the Times—its being-and-nothingness struggle in the changing media world. Arthur seems to want something more than the Times, wants to make it into some new information age contrivance. It isn’t a newspaper, it’s an information brand, blah blah.

  There is a sense, actually, in which Arthur seems to see himself as a would-be Murdoch—which, even in Murdoch’s eyes, makes him all the less dignified and credible.

  Arthur wants to be some New Age media mogul; Rupert wants to be a newspaper proprietor.

  FOX NEWS

  In its panic about Murdoch, the Times is quite possibly missing the larger story about him. The epochal tale may not be, as he pursues the Journal, about Murdoch’s bullying, but about his growing squeamishness about bullying. The Times is continuing to champion the case that Murdoch is a corrupter of journalism, just as Murdoch is trying to make himself, relatively speaking, its upholder. Indeed, Murdoch may be the last guy to believe that he can actually make it as a respectable journalist—whereas at the Times more and more people are doubting that respectable journalism is a viable profession.

  Murdoch’s dream of the Wall Street Journal and of supplanting the Times as the nation’s blue-chip news organization is not so much (or not merely) about the Times as it is about Roger Ailes. Murdoch may be pursuing the Wall Street Journal to deal with Fox News.

  Everybody else’s Fox News problem, is, as it happens, his too.

  Ailes is Murdoch’s profoundly mixed message—one that he sometimes despairs of making any sense of.

  He might be television’s deftest practitioner, but Ailes is also its strangest. Using the lessons he learned as a political operative for Nixon and Reagan, his basic tactical philosophy continues to be about how to devastate or at least neutralize his opponents. Arguably, this is exactly what enlivens his network. Personally, he is a man of overriding obsessions, including his belief that he has been earmarked by Arab terrorists, which costs News Corp. a considerable premium for his 24/7 security apparatus. Delivering Ailes to work, his driver and bodyguard call from the SUV so that a second security team can fan out on the plaza in front of the News Corp. headquarters for Ailes’ arrival. (This too, this paranoia—even a sense of approaching Armageddon—has arguably turned out to be a programming plus.)

  Ailes, no matter how strange he may be, has created one of Murdoch’s greatest successes. In the end, so much of News Corp. is just not very memorable. It is a company that has refined the profit margins on the third-rate. But Fox News is original. It has taken the News Corp. formula of the on-the-cheap and the third-rate and turned it into a culture-changing, paradigm-altering, often jaw-dropping spectacle. About this, Murdoch is proud.

  Ailes is Murdoch’s monster—but a very profitable one. If media success is its own justification—the essential principle Murdoch’s own career has been built upon—then Ailes is not only justifiable but untouchable.

  He is the one person within News Corp. whom Murdoch will not cross.

  And this is not because he’s blind to what Ailes is doing, or to what Fox News is. In steady, constantly discomfiting ways, Murdoch shares the feelings about Fox News regularly reflected in the general liberal apoplexy. Everybody outside Fox News and inside News Corp. suffers Fox News. Everybody outside Fox News and inside News Corp. is afraid of Roger Ailes. Further, everybody outside Fox News and inside News Corp. thinks that there’s a bit of insanity at Fox News. Murdoch, Chernin, and Ginsberg are routinely—as often as every day—peppered with complaints by friends, family, business associates, and people of great influence about Fox, and none of them can do anything. It is some bizarre testament, really, to editorial freedom. It is uncontrollable.

  Even within Fox News, under Ailes, there are people who have become so powerful that they can’t be controlled. It is not just Murdoch (and everybody else at News Corp.’s highest levels) who absolutely despises Bill O’Reilly, the bullying, mean-spirited, and hugely successful evening commentator, but Ailes himself who loathes him. Success, however, has cemented everyone to each other. Within Fox News, the two PR executives Brian Lewis and Irena Briganti—famous through the media business for the violence with which they attack anybody who attacks Fox News—are themselves feared by everybody else, even the most senior people at Fox and at News Corp. Lewis is one of the few people who scares Ailes because he has notes of many conversations that should never have occurred.

  Murdoch—and this is not a point lost on Ailes—has come to occupy two opposing worlds. There’s the world to which he has largely been introduced by Wendi; if this world has any one guiding cultural agreement, it’s stark antipathy to Fox News. And then there’s the world in which his most significant brand association is with Fox News.

  What’s more, the wind is changing. Democrats, who in 2006 took both houses of Congress, have started to refuse to appear on Fox. As the Journal battle is getting under way, so is the presidential primary season—the most closely watched in history. The Democratic candidates in March 2007 all refuse to participate in a Fox-sponsored debate because of a joke made by Ailes to a group of radio and television producers: “It is true that Barack Obama is on the move. I don’t know if it’s true that President Bush called Musharraf and said: ‘Why can’t we catch this guy?’” Indeed, at the same time that Ailes and Fox are pretty steadily portraying Barack Obama as a possible Muslim terrorist, Wendi Murdoch is having dinner with him.

  Even Murdoch’s desire—a long-held one—to launch a business news network has been frustrated by Ailes’ own agenda.

  He needs Ailes to take charge of the business news channel because he believes that nobody else is as good at cable television as Ailes. But Ailes has been vastly ambivalent about, even resistant to, doing it. There is the elevation of Ailes within News Corp., as part of his negotiation, into the office of the chairman with all the other top News Corp. administration executives. He even got Lachlan Murdoch’s office on the eighth floor as soon as he left the company.

  It should not be underestimated how much Murdoch does not want himself or News Corp., in his or its legacy, forever yoked to Ailes and Fox News. It is not just that he wants respectability—that is some of it, but perhaps the least of it—but that he doesn’t want to give up authorship.

  Ailes and Fox News have, unexpectedly and disproportionately, come to be the voice and identity of News Corp. Clearly, the way to balance it, to reassert Murdoch�
�s own primacy as the grand designer, as the maker, is to buy something else that outweighs what he wants to diminish.

  Hence the Wall Street Journal. That, as a point of identification for News Corp., will rival Fox News.

  And Robert Thomson. Thomson is the new Ailes. He’s the new Murdoch alter ego. He’s the new instrument through which Murdoch is going to make his mark.

  And the New York Times—either to supplant it or buy it.

  THE POST

  If Ailes is going to be diminished in the balance here, so might Murdoch’s beloved New York Post. The Post is sidelined during the Journal pursuit. In some sense, virtually silenced. There is something like an eerie quiet. And, too, there is the growing question about what the value of the Post will be to Murdoch if he has the Wall Street Journal.

  This is the most confounding part. Of all the businesses and past lives that Murdoch has jettisoned, it seems that, suddenly, he might be getting ready to shed his most elemental identity: his tabloid soul.

  EARLY JULY 2007: THE DUE DILLY

  The collapse of the newspaper business, which is having devastating consequences for every other proprietor, is in fact turning out to be great for Murdoch. It is giving him the opportunity to buy a blue-chip news organization that would never before have considered selling to him.

  The logic here is clear to him, if not to anyone else. Indeed, there is a strange disconnect among the economic views in play. There is Murdoch trying to pay as much as he can possibly pay. There are the people at the Journal hoping that he will find out how little they’re worth. And there is Wall Street, which, oddly, is thinking he’s buying something entirely different from what he is so obviously buying.

 

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