This is the full version of one of the most revealing interviews that Rupert Murdoch has ever given. James Harding from the Financial Times in London was the lucky man given three hours by the most powerful man in the world. This is his interview which you can pick up through FT.com.
Over a three-hour lunch, where the News Corporation chairman nursed only a glass of water, picked at pepper-encrusted tuna and politely but firmly told the company butler not to bring the pear and chocolate pudding anywhere near him, he talked about everything from retirement and his relationship with God to “crazy” Ted Turner and the unsympathetic Bill Gates to the future of television, the British monarchy and the euro.
Murdoch the information junkie
Rupert Murdoch was getting restless at the Queen’s jubilee celebrations last week, so he decided to slip out of the royal enclosure for a while.The proprietor of the Sun and the News of the World, UK tabloid newspapers which have gleefully reported on the philanderings of Elizabeth II’s family, was, by his own admission, an unlikely and considerably unloved figure in the royal area set aside for VIPs. Also by his own admission, the pageant of has-been popstars and celebrity turns – Buckingham Palace was host to Sir Cliff Richard and Ozzy Osbourne – was not the shortest five hours of his life. Anyway, he had something better to do. He went to trade information.
“I’m returning your call, John,” Mr Murdoch said, talking on his cellphone to John Malone, the chairman of Liberty Media in Denver, who is a strategic investor in the world’s biggest media companies, a powerful member of Mr Murdoch’s News Corporation board (er, no he’s not) and no mean peddler of industry gossip himself. Over the next quarter of an hour, Mr Murdoch and Mr Malone chatted, exchanging price-sensitive knowledge about their businesses, rumoured titbits from inside other boardrooms and opinions on the febrile state of the global media industry.
Mr Malone, according to Mr Murdoch’s memory of the conversation, said that he had heard AOL Time Warner’s efforts to sort out the muddle over future ownership of its cable business had run into trouble. AOL Time Warner, in which Mr Malone has a big shareholding and which he plainly thinks is deeply troubled, was “fully priced” at its collapsed price of $18 per share, the Liberty chairman said. Mr Murdoch, meanwhile, was positively surprised by the recent pick-up in advertising at Fox, his US television network. And he mentioned that he was about to spend about $1bn to take control of the main pay-TV platform in Italy, a deal done over the weekend. The account of that conversation offers a glimpse of the essential Rupert Murdoch: inseparable from his business, bored by royalty, borderless in his commercial appetite, indiscreet when it suits his purpose and never lost for a disparaging tale about one of his competitors (he retold Mr Malone’s comment about the shrivelled value of AOL Time Warner with a ‘poor blighters’ smile).
But, most of all, it was Mr Murdoch doing what he does most naturally, most of the time. It was Rupert Murdoch the information junkie, who collects and dispenses the latest on the grapevine, points of view gathered from one-on-ones with heads of state and reclusive chief executives, the analysts’ word from the Wall Street and a soup of other people’s observations drawn from his worldwide network of gossipy types – the journalists, TV producers, software designers, movie-makers and publishers – who people his media empire.back to the top Murdoch on the successionMr Murdoch has no plans to retire.
“My work has been so much part of my life,” he says, “I cannot imagine spending half my life on the golf course.”In fact, he does not play golf – he plays tennis, “badly”. But he is not one who talks with much passion about taking it easy.”It is the saddest thing to see people who go out when they are at the top. Look at Clinton, what is he going to do? He is going to get bored of making $200,000 speeches,” Mr Murdoch says.Unusually, though, Mr Murdoch was willing to talk of a future offstage. “I am human. There will be a day that I run out of energy. I just hope it is before I run out of brains,” he says.
Rupert Murdoch on retirement
To many people who work in and around News Corporation, it is hard to imagine the business without him. AOL Time Warner is seen by many as a bureaucracy run by technocrats. Disney, by comparison, is more like a constitutional monarchy, defined by the cultural inheritance of Walt Disney and the management-style of the enduring company chairman, Michael Eisner. But, News Corporation is an empire with an emperor. Mr Murdoch not only makes the strategic decisions, he meddles in the detail – the last two weeks in London were spent conducting budget rounds where he talked about the cost and quality of UK newsprint in one meeting, the terms of Indian cable deals in another.
In years’ past, Mr Murdoch’s critics would say it was an evil empire. When Mr Murdoch moved his newspaper operations to a new production site in the shadow of Tower Bridge and sought to break the print unions, he became a pariah in the UK and was dubbed the Beast of Wapping. When he took up American citizenship to enable him to own a US television network, he was reviled for trading his national identity for a commercial opportunity. And when he dropped the BBC from the Star television service in China to appease the old Beijing communists who did not like critical coverage, he was ridiculed for his willingness to kow-tow.
Today, though, the critics suggest something Mr Murdoch probably finds more distressing: Not that the empire is evil, but that it is fragile. News Corp, they say, is a rag-bag of far-flung businesses without a coherent corporate logic: A clutch of newspapers in Australia and the UK, the Hollywood studio Twentieth Century Fox, the Fox TV network in the US, the Harper Collins book publishing business, Star which broadcasts a collection of channels to cable and satellite subscribers across Asia, the dominant pay-TV business British Sky Broadcasting in the UK and a handful of other interests ranging from a smart card technology company to a cash-generative coupon business. Having inherited a couple of provincial newspapers in Adelaide, no one doubts Mr Murdoch’s huge accomplishment in enduring years of criticism and competition to build a colourful, enviable collection of assets. But, the doubters conclude that News Corp will be broken up as soon as Mr Murdoch disappears from the scene. Mr Murdoch, of course, defends the company’s industrial logic: “We start with the written word. Then we get to TV, originally with the idea that it will protect the advertising base and it then progresses into a medium of its own with news, programmes and ideas. You then look at TV and you say: ‘Look, we don’t want to just buy programmes from a Hollywood studio, we’d better have one.’ Then comes the issue of people who are going to deliver your programmes. Cable is consolidating….Instead of having 20 gatekeepers, you are going to have three or four. For content providers, that is very bad news. So, you try to protect yourself in having some distribution power.
“And, if there is going to be a break-up, he says he will do it, not leave it to someone else. If needs be, “I would break it up,” adding that “we are not beyond selling something” if they feel they can get a good price for it and have worked out before the competition that the asset is set for decline. To News Corp investors, who have helped fund Mr Murdoch’s acquisitive personality for decades, such talk of break-ups and disposals may be surprising. But, if Mr Murdoch is thinking about adjusting the News Corp portfolio of assets, he is in no doubt that the thrust of the company – under his leadership or those who follow him – will be the same: “You take Lachlan [Murdoch, his elder son] and James [Murdoch, the younger son] and Peter [Chernin, president of News Corp and currently Mr Murdoch’s number two]. If any of these took charge, there might be a small change in direction. But it would be very foolish if it was a big change….it won’t change from being a pure media company.”
Rupert Murdoch on the succession
The News Corporation chairman set out the succession just over three years ago. Lachlan, then in his late twenties and at the time left to run the Australian newspaper operations, was designated the future leader of the company. Peter Chernin, the Los Angeles-based number two in News Corp, was given the Prince Regent role – in the event that Mr Murdoch was suddenly unable to lead the company, Chernin would take over until Lachlan was old enough and experienced enough to run the business. James, the youngest, the most mouthy and, much like his father, most commercially competitive of the children, was guaranteed a prominent place in the family business, but not the top job. People inside News Corp privately snigger at this succession plan. This is not just because it is one of the rare examples of male primogeniture at play in a Wall Street listed company. It is also because there seems to be an element of denial to Mr Murdoch’s vision of the future. With muscular shareholders like Liberty Media’s Mr Malone on the News Corp board (er, no he’s not), senior executives say Mr Murdoch is kidding himself if he thinks he can determine the future leadership of the company after he is gone.
“Lachlan will be the Prince Charles of News Corp,” one senior company executive said a couple of years ago, suggesting he would spend years waiting to succeed only to get a brief glimpse, if any, of the News Corp throne. Last week Mr Murdoch offered a slightly more blurred vision of the future leadership of the company. He talked equally admiringly of the executive merits of both young men: “Lachlan, he has great leadership abilities. He has shown it in Australia. James has got great business abilities. He has done a fantastic job down there [in Asia, where he has been sent to run Star]. He has not really had the love or closeness of newspapers that Lachlan has. He has not had the same experience yet. But there is plenty of time.”
Rupert Murdoch on his sons
Not everyone inside and outside News Corp is as admiring of their qualities as their father. Both have had their reputations tarnished. Lachlan’s has been quite seriously damaged by the fiasco surrounding the implosion of OneTel, the Australian telecoms operator supported by News Corp but not sufficiently overseen by the younger Murdoch. James’s credibility has been, if not damaged, then at least knocked by the collapse in value of Gemstar, the electronic programme guide business which he championed as a News Corp investment. Their father, though, does not think either of them are culpable. Lachlan did everything he could to protect News Corp’s interests, Mr Murdoch says, and James found a cash-generative business which News Corp really believes in, even if it did buy in at the height of the techno-bubble economy. So, if both are so good, why create this unnatural tension by predetermining the succession: “Well,” he pauses, “one is older.” He pauses again.”And I think they are very close and they will get on extremely well. It [the future leadership] will be more shared than they seem at the moment.”
And what about Wendi Deng, the former Star TV executive who is now his wife? What role will she play in the company? “None. We talk about business, just like with any wife. She gives her impression of people and things. They are not necessarily observations that are agreed with. Is she going to have a role in the business and a job in the business. No, I don’t think so. At least, not formally.”
Murdoch on his rivals
Rupert Murdoch is widely loathed – particularly by people who have not met him. But executives and editors who have worked with him on a daily basis generally swear by him. This is partly because he is witty, irreverent, competitive and interested – qualities which appeal to journalistic spirits. And it must also be because he is such a fine purveyor of that great journalistic currency: the personal anecdote. “I don’t dislike Bill,” he says, when the subject of Microsoft comes up, “but Warren Buffett says that Bill Gates is the kind of man who, if he saw a competitor drowning, would push a hose down his throat to be sure.”
When talking about why he is not a big collector of art or expensive things, he says: “Kerry Packer says that he who dies with the most toys wins, but I don’t agree.” Rather than buying into the accumulative thinking of his rival in the Australian media, Mr Murdoch’s wary philosophy is that possessions can end up possessing you. But the most revealing personal descriptions are reserved for competitors and rivals in the media industry. In this, Mr Murdoch is one of the few exceptions in the media business. Executives delight in bad-mouthing their rivals, off-the-record and behind-backs.
Sumner Redstone, the Viacom chairman, has a favourite put-down – “Rupert, quit while you’re behind” – but otherwise tends to bash on about the long-term upward trajectory of the company stock price. Thomas Middelhoff, the Bertelsmann chairman, is willing to tell colourful stories about himself, but clams up in an uncharacteristically formal way when it comes to talking about his rivals. Jean-Marie Messier, the Vivendi Universal chairman, whom Murdoch describes as “never having met a journalist he didn’t give an interview to”, talks a lot, but is never personal or nasty.
When asked his view of the competition, Mr Murdoch, by contrast, speaks his mind. Jerry Levin, the Time Warner chief executive who was architect of the company’s merger with AOL, is described as “the chairman of the company which made the biggest blunder” of the bubble years. “We all made blunders – but he gave away 55 per cent of his company for very very little.” Board directors at Time Warner have watched as the company’s stock price has shrunk to one quarter of what it once was.
According to Mr Murdoch, they look back at the 48-hour period they agreed to fold the world’s biggest media business into the AOL internet service and say: “‘what the hell were we smoking that weekend?'”.
Mr Murdoch’s assessment of AOL Time Warner is that it took on huge debts. It agreed a put option to buy Bertelsmann out of AOL Europe, which he says one AOL Time Warner executive described as an $8bn deal for something worth less than a cup of coffee. Several Time Warner units are performing well. But AOL, the internet service provider, is in decline. ISPs are becoming commodities, which “leaves AOL with a little bit of interesting software”.
Disney also has its troubles, at least according to Mr Murdoch: “There is a lot of interest building up about Michael Eisner. He is a very creative person, but he cannot help but micromanage things. That is OK, but it is such a big, big company that when he is trying to micromanage the network, the film company is getting no attention. You can have one man leadership, but you cannot have one man management.”
Mr Murdoch brushes over Mr Messier’s problems at Vivendi Universal, another company suffering from a crumpled share price and a crisis of investor confidence in management and strategy. He makes reference to the massive debts in the cable industry. And that leaves, he says, Viacom, the owner of the CBS telvision network, MTV and Paramount studios, “which is sticking to its knitting – they are in pretty good shape.”
By Mr Murdoch’s standards, this is a big compliment for a rival. (Although he later mentions that he thinks Viacom’s revenues are excessively reliant on advertising and that the top management, Sumner Redstone and Mel Karmazin, are headed for a bust-up which will see Mr Karmazin leave the company when his contract comes up next year.) This typical Mr Murdoch tour of the media landscape has a strategy behind it. It is intended to make News Corp shine by comparison. It deflects attention. And, right now, it is designed to dispel the idea that the likes of AOL Time Warner or Disney are in any position to sweep into the UK and, now that the broadcasting market is opening up to international ownership, start buying up the main commercial TV networks.
But, even if Mr Murdoch’s descriptions are half-fair – and, in fact, they are more accurate than that – what does he think of the outlook for News Corporation?
“We are in good shape,” says Mr Murdoch. “Our earnings are beginning to turn up quite nicely, not sensationally, but quite nicely. “This cheery summary of the News Corp state of play ignores the company’s own blunders. When asked, Mr Murdoch says he is trying to forget the more than $2bn he lost on behalf of British Sky Broadcasting and News Corp in investments and options in Kirch, the now bankrupt German media company. Executives who spent nearly £1bn ($1.5bn) struggling and failing to make ITV Digital work in the UK in the face of ruthless competition from Mr Murdoch’s BSkyB point out that not only has Mr Murdoch sunk more into BSkyB but he lost more on his fanciful and fruitless investments in Germany.There were also the internet follies, the forays into venture capital which cost several hundred million dollars and the establishment of large online operations to companion the Fox television businesses that have all since gone, swallowing up an estimated couple of billion of dollars along the way.
“They all added up,” admits Mr Murdoch. “But I have got more experience than most of them [rival media magnates]. 10-12 years ago, we went through a very frightening brush with a loss of liquidity that certainly made me more cautious. Not cautious enough as it turns out. When you add up the VC things and the internet…we had our share, but it has not been disastrous.” The biggest blow of all last year was the failure to secure the acquisition of DirecTV, the US satellite broadcaster that seemed to have become something of an obsession for Mr Murdoch. He negotiated with General Motors, the controlling shareholder in DirecTV, for over 18 months. With an army of about 80 lawyers standing by to exchange contracts and the deadline for rival offers passed, he still missed out to EchoStar Communications, the other big satelitte broadcaster. The 11am deadline passed for rival offers. News Corp appeared to have won. And, then, GM’s top executives called for a huddle in Detroit and returned to the board meeting an hour and a half later to announce a deal stitched together at the last minute – in fact, after the last minute – with Charlie Ergen, chairman of EchoStar.
It still rankles with Mr Murdoch: “A fix was on against me somewhere,” he says, recalling how things suddenly turned against him. “In the last couple of weeks, I should have got a lot more suspicious. They said we are meeting Charlie [Ergen, chairman of EchoStar], but nothing is going to happen…I should have seen through that. “Mr Murdoch tries to rationalise the outcome to himself. He says that sometimes the things you miss out on are your biggest fortunes in business. He bid once for The Observer, the British Sunday newspaper, and failed to get it. It left him room later to go after The Times, The Sunday Times and, then, make the move to Wapping, which was the launch pad for his business in the US. And yet, Mr Murdoch still thinks DirecTV was the right fit. EchoStar’s proposed deal is facing regulatory scrutiny in Washington. Mr Murdoch thinks there is a 50-50 chance of it getting approval. He has people in DC working to change those odds, in his favour.
Elsewhere, newspaper advertising in Australia and the UK has yet to pick up, but things have taken a sudden, sunnier turn in the US TV advertising market. He forecasts good things for Star, the Asian network that for years has been an annual $100m a year drag on News Corp, even before interest. News Corp has to “make our cable networks so good so they are a must see….they are so good that the gatekeepers will not be able to afford going without us”. Mr Murdoch, who is in his element around newspapers, speaks like an evangelical convert when it comes to pay-TV: “With digital you can give this enormous diversity of choice to people. You can programme to diverse interests and minority interests. Free TV has a major challenge from pay-TV, because pay-TV is able to support channels which have 1 per cent of the audience. And the channels have a dual revenue stream – [advertising and subscription income].”
In the UK, he describes the current price war with The Mirror, rival to The Sun, as a “pain”, but plainly relishes competitive newspapering. When asked about the movie studio he says it is important to provide content for TV as well as “the talent thing”, but “newspapers are a lot more fun”. The Mirror, he suggests, has gone crazy, taking on The Daily Mail by making itself more serious and The Sun by slashing the price.”I do not know what they are doing there. You have a bright editor who needs a newspaper boss,” says Mr Murdoch. Piers Morgan, a former News of the World editor, is now editor of The Mirror. Philip Graf is his boss. Would you take Morgan back? “No. He burnt too many bridges.”
Newspapers are not just what engage Mr Murdoch most, they are what give him the most enduring pride. When asked what he reckons will prove to have been his lasting contribution as a patron of the popular arts, he answers, in a heartbeat: “Saving the Times and making it a better paper than it has ever been.
“In fact, a lot of damn fine newspapers…The Sun is a good newspaper,” adding as an afterthought, “we stole The Sun…it was a start-up which we got for nothing”. Mr Murdoch’s sense of his own legacy as a champion of quality journalism – his vision for the future of The Times is to steer a course down the middle of the road politically and then win readers with “good journalism, with really, really good reporting” – will surprise some people who think that what Lord Reith did for public service, Murdoch has done for dumbing down.
While the founding director general of the BBC set the Corporation the ennobling mission of informing, educating and entertaining its audience, the News Corp chairman has traditionally been criticised for low-balling readers and viewers with Page 3 topless girls, programmes such as Temptation Island and celebrity buy-ups parading as news. The News Corp chairman, though, will have none of it: “In this country [the UK], they like to have their own niche. They don’t like someone changing the status quo. So they say he dumbs down his newspapers. That is BS,” says Mr Murdoch.
He goes on to suggest that he is disgusted by some of the stuff he sees on television: “How anyone gets away with it I don’t know…[The Osbournes] is an advertisement which says if you fry 80 per cent of your brains with drugs, you get $20m a year,” he says. “It will look like the pot calling the kettle black, but I would certainly not put on…this present series of Big Brother. Is it OK for our newspapers to write about it? Sure, 10m people are watching it.”
And, on The Sun: “The Sun is not salacious. Page 3 girls are not salacious. I have never thought that anyone should be offended on moral grounds. Things have changed so much. I do not think there is a newspaper – the FT is an exception – which has not had some variation of the joy of sex.”
In the US, there have been concerns that Mr Murdoch will bring tabloid values to US television journalism. Fox News recently sent Geraldo, the daytime talkshow host, to cover the US operations in Afghanistan. Mr Murdoch says: “Geraldo is a fantastic reporter. He is fearless. He is also a bit of a showman. He is not the first reporter to be a bit of a showman.” Just look at Max Hastings [the British journalist who made a name for himself, mud-splattered and in full camoflage-gear entering Port Stanley in the Falkland Islands in 1982]. It can be claimed that we employ prettier presenters than the ones who have been on CNN for 30 years, but we don’t do it unless they have brains. They have got to be able to carry an interview live on camera, which is not so easy. There is nothing dumb or dumbed down about Fox News.”
Rupert Murdoch on China
One of the very few areas where Mr Murdoch does not jump to his own defence is, curiously enough, China. When the subject of his investments in the Middle Kingdom come up, he would rather talk about India. When asked bluntly whether he would not end up looking like a sucker in China, when home-grown media companies prove to be the winners, he says: “We are not putting a lot of money into China…You know China: They are great at attracting capital, but not so good at seeing dividends go out.” But, then, Mr Murdoch has an eye for long-term investments – another reason why he is in no hurry to retire.
He muses: “There is so much to do in the world. It is so exciting. It is so dangerous too. It is just racing ahead. There is going to be so much change. There is almost certainly going to have to be space travel. Who is going to put the resources behind it?”
Murdoch on religion
It is suddenly a boyish moment. He has read somewhere that scientists have found 83 locations in space which could sustain life, “which makes it highly likely that there is something else out there. What if there was something else – a civilisation – out there that is more intelligent than this one?” It is an uncharacteristically spacey thing to say, but it allows for a little more soulful questioning: Is Murdoch a spiritual person? “I believe in the spirituality of human beings,” he says. “I believe in a god. I am not strictly religious. I was brought up as a protestant…I was married for a long time to a catholic wife [Anna, whom he left for Wendi] which gave me a great insight into the real strength of the Catholic church.”
“I believe in the spirituality of human beings. I believe in a god. I am not strictly religious.”
Mr Murdoch says he is considering converting to the Catholic church. Born into a Presbyterian family and educated at an Anglican school, Mr Murdoch says he now regularly attends a Catholic church on Sundays when he is in New York. He and his wife, Wendi, have agreed that their child Grace will be baptised a Catholic. “There are a lot of very, very good people, but I have lost respect for the Episcopalian and Presbyterian churches,” he says. “They have become politicised as the Catholic church has become depoliticised. You hear leaders of the church publicly questioning some of the teachings of the bible, which all my life I have been taught to accept.” He takes Communion and says he is more religious than he was 10 years ago. But, that, he says, was not very religious at all.
Murdoch on the monarchy
The day we meet for lunch, The Times was basking in the “happy and glorious” afterglow of the Queen’s Golden Jubilee. Much to the surprise of cynics in London, her 50th anniversary on the throne appeared to have been something of a hit. And, at least judging by the beaming editorial in The Times, the Queen commands – and rightly so – the unalloyed love of her people. This is good teasing territory for Mr Murdoch. Trim and cheerful, he comes striding out of his office. Rather than offer some hollow defence of The Times leader, he says: “I rather preferred the Guardian line: Nice girl, shame about the system.”
Mr Murdoch acknowledges that he is a republican. “I am not going to take to the ramparts about it. I am certainly not a monarchist,” he says and, without any reference to Prince Charles or any other royal in line to the throne, he adds, “I do not think the British monarchy would survive a bad monarch. Someone who could not hold his tongue on politics. It would be gone pretty quickly.”
Murdoch on the euro
So, if Mr Murdoch is a republican happy to entertain glowing monarchist coverage in his papers, presumably he would allow them to take a different line from his own on the euro? Well, no.”I don’t say I’d be happy about it. My feeling about the euro is there is a lot of nonsense spoken about it. The five tests etc, but it is a political decision…The central issue is one of sovereignty. If you give up control of your currency, you are going to give up control of your tax system just as night follows day.”
If Tony Blair’s government calls a referendum to seek UK approval of euro entry, Mr Murdoch will have a message: “Vote no…Europe is made up of so many diverse cultures and histories that to slam it altogether with a government of French bureaucrats answerable to nobody…The idea of Europe having one foreign policy, tying up its military in one organisation, it seems to me 100 years premature. I cannot see anything but benefit by waiting.”
There is something curious about Mr Murdoch’s opposition to the euro, a project that is essentially about dissolving boundaries and encouraging integration. For more than any other media magnate, Mr Murdoch has made his life and business an experiment in disregarding national borders and entrenched interests. But the Australian-born, British-educated, naturalised American clearly does not identify with the European project. Instead, when asked what he considers to be his identity, he says: “I am just an Anglo-Saxon.”
Still, Murdoch’s objection to the euro is based on his suspicion that the British people would not benefit.
Murdoch on the UK government
Gordon Brown, the Chancellor of the Exchequer, he thinks, shares some of his misgivings about British membership of the single currency: “I suspect he has some sympathy for that, but probably not to the point of it being a resigning issue.” Mr Brown, whom he has met several times on recent visits to London, commands his respect as a politician. The Chancellor is to the left of Mr Murdoch’s politics, “more of a redistributor”.
But, he says, they share the Calvinist conviction in the merit of work. And, when asked whether he would be content to see Mr Brown succeed Mr Blair, Mr Murdoch nods: “He is a very deep Calvinist who believes in the duty of people to work and I approve of that very strongly.”There is, of course, David Blunkett, the Home Secretary, who is also a contender, he mentions, but they have only met once. Anyway, the succession, Mr Murdoch says, “depends on Tony Blair. It is a pretty amazing person who steps down.
At the end of the conversation, he looks at his watch. “It’s ten to four,” he gasps. “I’ve got to get back to work or I’ll get killed.” In a company in which one man is so obviously the boss, though, who exactly was going to administer this dressing down was unclear.