This is the summary of Neil Chenoweth’s great new book on Rupert, “Virtual Murdoch”.

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Chapter One: Voltaire’s Undergraduate

Does the Rupert Murdoch story have a Rosebud? Murdoch’s most important enduring relationship has been with his mother. The book starts with Dame Elisabeth talking about one single, cataclysmic event in his childhood, describing the man who cannot look back, in terms of a moment that he cannot look back to.

Murdoch’s mother creates a myth of a father that Rupert can never live up to. This is why Murdoch’s Oxford years are important. For three years his life is not defined by his family or the media business. With his close friend Robin Farquharson, Murdoch helps set up a bogus philosophical society as a ploy to put a bit of zip into their CVs, then they help run the Cherwell magazine. Farquharson was a brilliant bi-polar personality who went on to become one of the pioneers of game theory. Murdoch’s close friend was busy setting out the rationale for cutting corners. Farquharson was also outrageously gay . . . this in the days before Murdoch became homophobic.

Just as Murdoch ran into trouble for rigging a student election, his father died. The family was indignant as most of Sir Keith Murdoch’s legacy was taken over by the Herald and Weekly Times newspaper chain that he had built up. But how did Sir Keith find the money to buy two small newspaper chains, including an Adelaide operation called News Limited? Sir Keith’s critics believed he had arguably ‘stolen’ the newspapers. Whatever the truth of this, the family’s belief that an injustice had been done cemented Rupert’s control of the estate. His three sisters might own more of News Limited than he did, but the need to avenge Murdoch family honor meant that Rupert ended up in control.

The Murdoch biographies to date have generally travelled no further than the 1990 debt crisis. The accepted Murdoch history is that Rupert bought the News of the World and the Sun in the late 1960s, the New York Post in the mid-1970s, then in the 1980s he bought Twentieth Century Fox, launched the Fox network, did the $3 billion TV Guide deal, set up HarperCollins, overturned the British printing unions at Wapping, then finally almost went broke in December 1990 because of a little bank in Pittsburgh.

But what if it didn’t happen like that? What if Murdoch’s great empire building in the 1980s can be seen as just one really bad dream that kept coming back to haunt Murdoch, as he kept scrambling to escape from the hole in which one bad American deal had left him? Like a man carrying a flagpole over his shoulder in a glassware shop, every time Murdoch turned to address a new problem, he set off a new wave of chaos somewhere behind him.

This section originated with a discovery Neil Chenoweth made several years ago during a computer search of New York property records. He came up with a peculiar mortgage that Anna and Rupert Murdoch had signed on a New York apartment in October 1987, two days after the US stock market crash. What did it mean? Why was Murdoch in New York on that day, when by rights he should have been in Australia for the News Corp annual meeting? And how did that fit in with the strange deal over his father’s inheritance 24 hours later? The jigsaw he put together to explain this stretched in a straight line from Michael Milken in February 1985, to Wapping, England, in January 1986, to New York in October 1987, to Pittsburgh in December 1990. It completely rewrites the conventional Murdoch history.

Chapter Two: The Drunken Sailor

Murdoch’s history is framed by his decades of rivalry with Ted Turner. The chapter begins with Turner’s drunken press conference after winning the America’s Cup yachting trophy in 1977, when Murdoch’s newly acquired New York Post sends a reporter to cover it, but doesn’t cover Turner’s antics. The chapter gives the history of both men to that point, and their respective sailing exploits, both of which show their ferocious will to win. My story then goes to the 1983 Sydney-to-Hobart yacht race where a boat backed by Murdoch ran Turner’s boat ashore. The race ends with a huge drinking session called the Quiet Little Drink, during which Turner, who has won the race after Murdoch’s boat was disqualified, gives a speech in which he tears into Murdoch.

At least, that’s the way the Turner camp tells the story. Actually Murdoch’s attention was on the war that had just broken out with Steve Ross at Warner Brothers. Murdoch’s New York lawyers brought racketeering charges against Warner Brothers directors (later thrown out by the courts). Coincidentally, these charges were laid just as Murdoch’s New York lawyers’ other major client was putting together a real piece of racketeering in what became the huge Wedtech scandal, thanks to the efforts of the US Attorney for New York, Rudy Giuliani. Thirteen years later these parties will come together again in the Fox News-Time Warner battle for New York, and Giuliani lines up beside the Murdoch lawyers he once investigated.

But that’s all in the future. In 1985, Ted Turner and Rupert Murdoch both set out to buy a Hollywood studio and a television network. Turner ended up with MGM, Murdoch bought Twentieth Century Fox and the Metromedia television stations. Murdoch had to create multiple levels of reality to overcome the financial, legal and political hurdles in his way. He had to tell the Federal Communications Commission that Fox would be American-owned, and arguing the case to be allowed to keep the New York Post, while at the same time he was telling the Securities and Exchange Commission that Australian-owned News Corporation was the real owner of Fox. He had to take out American citizenship at the same time as he was assuring the Australian prime minister that he was still at heart an Australian. He had to assure his bankers that he was still within his lending limits, although effectively he had borrowed ten times more than he was allowed. Meanwhile he was working just as hard with political juggling in Britain. What Murdoch found was that reality is really all in the way you tell it.

For all the political controversy that this deal stirred up, the biggest problem was still the money: how could Murdoch avoid going broke. Both Turner and Murdoch paid for their acquisitions with junk bonds from Michael Milken at Drexel Burnham Lambert. These were both deals that couldn’t work. Milken’s junk bonds cost Turner control of his company. So why didn’t Murdoch fall over the same cliff?

Chapter Three: Wapping’s Casualties

Murdoch got himself into such a financial pickle with his Milken junk bonds that he had to move his British newspapers to Wapping to pay for them. The move was a huge success. Despite a year of worker unrest, Murdoch’s stock price went up 300 percent. Unfortunately what no one realised was that as a result of the rise in stock value, the cost of paying out the Milken junk bonds eventually would also go up 300 percent. If he couldn’t pay them out in time, it threatened to be a $3 billion blunder. So having turned US television on its head and then revolutionised British industrial relations to pay for his US adventure, Murdoch decided to take over the Australian press. It wasn’t to make money, or to buy his father’s old company, Herald and Weekly Times. Murdoch took over a country’s newspaper industry as a debt-restructuring exercise.

Unfortunately it went horribly wrong. Murdoch had planned that most of the News Corp stock that he was issuing to pay for the Herald and Weekly Times takeover would end up in the hands of associate companies of the Herald and Weekly Times group, which he would control. It was an ingenious scheme which meant that after the takeover, rather than seeing his control of News Corp diluted by the huge parcel of new stock issued to pay for it, Murdoch would actually control more News Corp stock than he had started with.

But when other bidders emerged, Murdoch found himself in a furious takeover battle not only for the Herald and Weekly Times group, but also for its biggest shareholder, an associated company called Queensland Press. With his plan about to collapse, Murdoch saved the day by using the Murdoch private family company, Cruden, to buy Queensland Press-a company that was once part of Sir Keith Murdoch’s estate. The deal worked out, and Murdoch was able to repay the Milken junk debt. So by October 1987, all was well again in the Murdoch universe. The only danger Murdoch faced was if stock prices suddenly dived.

Chapter Four: The Party Line

The tale skips ahead here to Murdoch’s great 1990 debt crisis, the defining moment in his life. More specifically, Chapter Four begins with that famous evening in the middle of the crisis when Murdoch was trying to convince Pittsburgh National Bank to roll over a $10 million loan. Murdoch survived the debt crisis, and everyone talked about the Pittsburgh moment, but nobody would give any details about where the Pittsburgh loan came from. The trail leads to a $A1 billion loan involving Queensland Press, which was now a private Murdoch company. The great Pittsburgh crisis wasn’t about News Corp, it was really about saving the Murdoch family’s private fortune.

Within weeks of the end of the debt crisis, the Australian Securities Commission launched an inquiry into the Pittsburgh loan. To understand this peculiar tale, you have to go back to New York in the week of October 18, 1987. Murdoch should have been in Australia for the News Corp annual meeting. But Forbes magazine had just named Murdoch a billionaire, and Malcolm Forbes had invited Murdoch to a party in New York. Going to the party meant that Murdoch probably couldn’t get to Adelaide in Australia in time for the annual meeting. So he skipped the annual meeting and was in New York when Wall Street crashed.

The crash was a big problem for Murdoch because earlier that year, the family company, Cruden, had taken out a big loan to buy Queensland Press. The Cruden loan was secured against Cruden’s News Corp shares, but when the News Corp share price collapsed, the Commonwealth Bank of Australia and Citibank began to worry about their loan. They wanted more security. Rupert and Ann signed over a mortgage on their New York penthouse two days after the Crash. Then 24 hours later in Australia, Queensland Press bought a parcel of News Corp shares from Cruden at $16 when the share price was at $13.80, sliding to hit $8.50 the following Tuesday. Buying shares for almost twice the market price didn’t hurt Cruden or the Murdochs, but it was a different story for News Corp shareholders. News Corp owned 44 per cent stake of Queensland Press as well. Doing the deal so far below market price arguably cost News Corp shareholders up to $100 million. However, Murdoch’s lawyers have a very different account of the transaction, and say that Qld Press directors made a farsighted and courageous decision to ignore short-term market turbulence to take advantage of a unique opportunity, and point out that today Queensland Press is $A3 billion ahead on the deal.

The $1 billion loan that Queensland Press raised for this deal was syndicated, and Pittsburgh National, which had just opened an office in Queensland, ended up with a piece of it. The loan fell due three years later, right in the middle of the 1990 debt crisis. This is the real origin of the moment that William Shawcross has made famous.

Chapter Five: The Fugitive

There are times when Rupert Murdoch’s empire begins to choke on its own secrets. This chapter is about one of those times. When Murdoch announced in 1988 that he was going to launch a British satellite operation called Sky, he quickly found that he needed some way to encode the programs he broadcast. The latest Napster court decision has underlined how important trade secrets are to the entertainment industry – the ability to ensure that only paying customers can watch your programming. Murdoch got in on the ground floor by starting his own encryption company in Israel, News Datacom, using ‘smartcards’. Unfortunately the American-Israeli who ran News Datacom, Michael Clinger, was also running a major fraud.

During the 1990 debt crisis, Murdoch was keeping up a public front in public while desperately cajoling bankers in secret, while executives with his British satellite operation Sky were having secret meetings under false names to negotiate a merger with its rival, BSB Holdings, to form BSkyB. Meanwhile in New York a grand jury was issuing an arrest warrant for Michael Clinger for securities fraud. This didn’t stop Clinger, though. With everything else going on at News Corp, this was just one more secret. So for the next year, while Murdoch didn’t know it, one of the most critical parts of his empire was run by a fugitive. News Corp. executives discovered Clinger’s illegal status in late 1991 when they arranged to buy him out of the small stake he held in News Datacom. What does a major US media group do when it discovers one of its executives is a US fugitive? Does it help US police to catch him? A UK court judgement shows that what News Corp did was to beat down the price it was paying to buy Clinger out.

Chapter Six: The Pretenders

Back at the 1990 debt crisis, just when one thought even Murdoch couldn’t get any more complicated (the public debt crisis; the equally intense private debt crisis in the Murdoch family companies; the secret BSkyB merger talks; Michael Clinger on the run), in the middle of the tightest spot that Murdoch had ever been in, he was doing another deal. He was secretly negotiating to buy his sisters out of the family company, Cruden. There was a poignant moment when his nephew Matt Handbury came to see Murdoch in June 1991, when both men knew Handbury could have been the News Corp heir, but also that he never would be. Murdoch’s heirs were still in school.

The chapter goes on to look at the way Sir Keith Murdoch’s will left control of Cruden evenly balanced, but how Murdoch slowly took it over. The narrative here is interspersed with the only piece of published writing by Anna Murdoch, in which she talks directly about her own sexuality, her frustrations and the future of her children. The chapter concludes with the deal Murdoch finally thrashed out in the early 1990s to buy his sisters out of Cruden. Now how was he going to pay for it?

Chapter Seven: Herb Allen’s Porch

We skip to July 1996. Herb Allen is America’s leading merchant banker to the media. His media conference each July at Sun Valley, Idaho, is a compulsory way station on the information highway. It’s where the big deals are done, where you see all the big animals together. It’s all about appearances, Media Moguls at Summer Camp. Vanity Fair made the conference famous. The question is whether the conference means anything, whether it is just another media construct – because the media giants who gather there in 1996 have no idea about the tidal wave of change that is about to hit them. Neither Herb Allen nor Rupert Murdoch has ever touched a computer.

Amid the hype in 1996, Murdoch does a $2.5 billion deal with Ron Perelman of New York, to buy his New World television stations. Perelman has Murdoch over a barrel and forces the price up. Then the focus goes back to Los Angeles, where both Murdoch and Perelman are desperate to keep the deal secret, though for different reasons. Perelman was sure he had screwed a great deal out of Murdoch, but if the news leaked Murdoch might be able to rewrite the terms. Murdoch knew the way that the deal was set up, Perelman was going to lose money, so he needed it all signed up before the news leaked and Perelman realised what was going on.

In the end Murdoch outsmarts Perelman to force the deal price back down again. But in the process, Murdoch puts his own family buyout deal – and his succession strategy for his children – at risk. This is a bigger gamble than anyone realises, and Murdoch takes it without a blink.

Chapter Eight: The Apple Fumble

Murdoch’s other piece of business at Sun Valley in July 1996 was to sit down with Gerry Levin and agree on a deal in which Time Warner would carry Murdoch’s Fox News on its New York cable systems. But Levin changes his mind at the last minute, and triggers a turf war.

Murdoch has been trying to get back to New York ever since he sold his penthouse to fund the first leg of the family buyout after the 1990-91 debt crisis. The first battle was for the New York Post, which was about to go bankrupt until Steve Hoffenberg, who had been running America’s biggest Ponzi scheme, stepped in with a bid that turned into a spectacular gunfight with Abe Hirschfeld, an eccentric parking lot developer now in prison for conspiracy to murder a business partner. At the end of it, there was only one man who could possibly save the Post, and politicians of every stripe were begging Murdoch to take the paper back. Murdoch won that round, but lost the next one when he failed to convince Time Warner to run his f/X cable channel. So the fight for Fox News unfolded in October 1996.

The fight was already over when Murdoch had to go to Australia for the News Corp annual meeting, where he announced that News Corp was planning an IPO for its Israeli encryption business, News Datacom. This turned out to be a really bad idea.

Chapter Nine: Wired

Back in 1995, a News Corp executive had held a secret meeting at the Four Seasons Hotel in London with an Israeli lawyer who said that the old head of News Datacom, Michael Clinger, was still running a huge fraud against the group. News set off on an international manhunt to track Clinger down through the tax havens of the world. Clinger retaliated by offering to help the Israeli tax office with information about how News Datacom paid so little tax. When Murdoch announced in October 1996 that he was about to float News Datacom off into a public company that would be beyond the reach of Israeli law, the Israeli tax office panicked and within days had staged a raid on the News Datacom offices, with a search warrant that authorised them to question Rupert Murdoch. But after the furore died down, nothing more seemed to happen.

Meanwhile, News Corp lawyers seemed to know everything there was to know about Michael Clinger, and even knew details about the personal lives of journalists who wrote about Clinger. In February 1997, Clinger’s London lawyer, Audrey Sheppard, called the duty judge in the British High Court at his home to make an emergency application for an order to prevent News Corp and its lawyers from destroying any evidence they held of a wire-tapping operation . Sheppard had learned that when the Israeli tax officers searched the News Datacom offices in October 1996, they had discovered, in the office of the Israeli chief executive, audio tape cassettes of illegally made recordings of Michael Clinger talking to his lawyers – a breach of legal privilege. The Jerusalem District Attorney confirmed the existence of the tapes. Clinger in his affidavit tabled in the High Court claimed that Israeli police had also shown him a fax addressed to senior News Corp figures, which contained a transcript of the illegally taped conversations- though he was never able to produce the fax. News Corp said the tapes didn’t exist, and if they did exist, Clinger must have planted them in its high-security establishment. What was going on?

Chapter Ten: The Poker Player

Where was Murdoch while all the hubbub was going on in the British High Court in February 1997? He was in New York as the guest of the King David Society, where he had just been named Humanitarian of the Year, an award to be made at a gala dinner in May. It was the perfect counter to any unpleasantness raised by Michael Clinger in Israel.

Murdoch instead was focused on his faltering US satellite venture, ASkyB. He had promised to find a way to raise $3 billion to pay for it by February 24 when he had called an analysts’ meeting to explain his plan. Unfortunately he didn’t yet have a plan.

Murdoch in effect had ‘stolen’ his US satellite license from John Malone and the big cable operators. Murdoch’s partner, Bert Roberts at MCI, had convinced the Federal Communications Commission to take the satellite license back from the cable operators, and to put it up for auction in January 1996. MCI and Murdoch were all set to buy the license up on the cheap when they ran into Charlie Ergen, a one-time professional gambler from Denver who ran a new satellite service called Echostar. Ergen bid the price for the satellite license up to a crippling $682.5 million.

Now in February 1997, after MCI had dropped out of the partnership, Murdoch was so desperate he was ready to do a deal with Ergen to merge his satellite interests with Echostar in a much more powerful venture called Sky. Ergen and Murdoch announced the plan at the News Corp analysts’ meeting on February 24, and promised their move would decimate the cable companies. Cable operators went into shock and referred to the Murdoch-Ergen venture as Deathstar.

But to get Sky to work, Murdoch needed Congress to change US copyright law, so he headed for Washington.

Chapter Eleven: Divided Royalties

The Spring of 1997 was a bad time to be looking for favors in Washington. Speaker Newt Gingrich was facing calls for his resignation. The loudest calls came from the Weekly Standard – one of Murdoch’s own publications. The Republicans had swept to power with their Contract With America. When it came to working out policy for the communications revolution, they had turned to the right-wing think tanks, who argued that the march of technology meant that media needed less regulation than ever.

Murdoch made several famous speeches about technology in the mid-1990s. His real subtext was that Congress should cut back on the powers of the Federal Communications Commission. Coincidentally this fitted in pretty well with the corporate ambitions of the telephone companies and other media groups that were sponsoring the right-wing think tanks. Murdoch was really attacking the FCC, just at the time that the FCC was inquiring into the foreign ownership of his Fox television stations.

This happened just as the Republicans swept to power in November 1994, and Murdoch descended on Washington to lobby politicians to stop the FCC investigation. His meeting with Newt Gingrich took place just before HarperCollins bid $4.5 million for two books by the Speaker of the House.

The resulting furor forced Gingrich to give up the $US4.5 million advance (though he still had to pay his agent for the deal he had given up). The Murdoch factor cost Gingrich an enormous amount of money and also triggered an ethics inquiry that tacked on for scrutiny other matters besides the book deal. In January 1997, this led to Gingrich paying a $US300,000 fine. To pay the fine, he had to write the second book for HarperCollins. So while Murdoch was arguably the cause of his misfortunes, Gingrich was still tied to him.

But Gingrich’s loss of power meant he could not help Murdoch with the changes to the copyright law that he needed. Murdoch made a speech in Washington, but he had already conceded that the fight was lost.

Meanwhile the cable operators had regrouped and had started refusing new deals to carry Murdoch’s programming. Facing disaster, Murdoch went to John Malone to ask what could he do, ie ‘Plan B’? It turned out that Plan B was to dump Charlie Ergen at Echostar and begin talks to join forces with the cable operators’ satellite operation.

Chapter Twelve: The Testing of Pat

The same week in February 1997 that Murdoch met with Charlie Ergen to set up the Sky deal, he was also on the phone with Pat Robertson, trying to buy Robertson’s International Family Entertainment and its cable franchise, Family Channel. Robertson needed money. He had tried to branch out into new businesses to fund his televangelism operation- most controversially with diamond mining in Zaire. One night his personal bodyguard was knifed in the Kinshasa Intercontinental Hotel and robbed of $US143,000 in his attache51 case. Questions remain as to what he was doing with the money, and why an IFE employee was attacked while working for Robertson’s private business interests. But Zaire was a sore point for Robertson.

In 1996, Murdoch had set up a venture called Fox Kids with Haim Saban, the man who created the Mighty Morphin Power Rangers. Murdoch wanted to run Fox Kids on the Family Channel. In February 1997 Robertson backed away from the $US350 million deal at the last moment. Murdoch decided he could still swing the deal. Instead of offering IFE shareholders any money, Murdoch offered to pay all the $US350 million directly to Robertson and his son. The saga of the next months is of Robertson struggling with his conscience, and making further demands of Murdoch on behalf of IFE shareholders. Eventually Robertson made a remarkable offer, to give up $US150 million of his own payout, in order to raise the payout for other shareholders.

This was a great act of principle. Robertson’s change of heart also coincided with revelations in the Virginian-Pilot that planes bought to help refugees through his aid group, Operation Blessing, had been used instead to haul diamond-mining equipment. Was Robertson’s change of heart produced by the bad press?

He insisted that it wasn’t. However, within days Robertson had made a further sacrifice, announcing that he would accept no more for his super-voting shares than ordinary stockholders were paid. But with the news that this was now a full takeover, other bidders emerged to lodge counter bids – in particular Michael Eisner at Disney. Murdoch eventually won IFE, but had to pay more than $US1.8 billion, rather than the $US350 million deal he first put forward. In effect, Robertson’s conscience had cost Murdoch $US1.5 billion.

Chapter Thirteen: Man for All Seasons

In the first week of January 1997, owner Peter O’Malley had put the LA Dodgers up for sale. Murdoch, while in the midst of his many crises with Charlie Ergen, Congress, Pat Robertson and Michael Clinger, found the time to invite O’Malley to Misty Mountain, Murdoch’s celebrated home in Los Angeles, and convinced him to sell the Dodgers to News Corp.

Murdoch’s obsession with buying sports rights- from the 1992 deal to win coverage of British football’s Premier League, a deal which overnight turned around the fortunes of his BSkyB satellite operation, to the NFL etc etc – now totalled $US5 billion. But sports are not just about strategy. They’re an affair of the heart, as Super League, Murdoch’s disastrous attempt in 1995 to buy the entire sport of rugby league football in Australia, showed. At the same time that Fox was working to convince the FCC of its openness and candor, News executives including Lachlan Murdoch were travelling across Australia under assumed names, holding secret meetings to sign up rugby league football players.

It was a debacle. Lachlan was at the first meeting, where the players didn’t even sign the right piece of paper. When Murdoch’s Australian rival, Kerry Packer, mounted a counter-attack, the affair ended up in court with a judge who would never be caught dead anywhere near a sports arena. He filed a damning judgment accusing News Corp of corrupt practices. But the Appeal Court overturned the decision. Essentially it found that sports were no longer the romantic, traditional picture or shared enterprise that the judge had drawn. Modern sports were brutal. Broken promises were part of the business.

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