It’s been a bad week to be a Murdoch. Even ever-smiling Sarah, who married into the clan via Lachlan, seemed so paralysed by the revelations over the past five days that she confessed to Nine News that she couldn’t make up her mind which infant to vote for as a judge of the Australia’s Loveliest Baby competition. That it has come to this …
News Corporation suffered three hefty hammer blows in the space of as many days. First, the BBC current affairs flagship Panorama revealed the bones of what looks to have been a secret worldwide strategy to sabotage their competitors in the pay-TV market. The following day, The Australian Financial Review put some meat on those bones with exhaustive detail. On Wednesday, The Independent (UK) published a strong news feature that tracked how similar hacking/piracy techniques had been employed in Italy, where News International also has a major interest in pay TV. The Independent described its revelations as another chapter in the “uncomfortable scrutiny of the Murdoch empire”.
There’s a delicious irony here. Just weeks ago Murdoch was protesting to the world how his competitors were all helping themselves to content on the internet sites of his major titles. It was outright and unconscionable “theft”, declared Rupert. Now it looks very much as if businesses either owned by, or associated with, News have been encouraging code hackers to steal access to the pay-TV services of their competitors, thereby robbing them of income and making them vulnerable to takeover — often by News.
Like the wounded bull elephant he now resembles, Murdoch spat back venom on Twitter: “Enemies many different agendas, but worst old toffs and right wingers who still want last century’s status quo with their monopolies.” Murdoch complaining about right-wingers and monopoly power is a tad piquant to say the least, but there was more: “Seems every competitor and enemy piling on with lies and libels.” Anyone who’s been done over by a Murdoch tabloid, or been the target of The Australian’s long, vengeful attack campaigns will find the hypocrisy of Rupert’s bleat breathtaking.
After a day or two struck dumb by shock (or maybe waiting for their riding instructions), News outlets in Australia have circled the wagons. Page two of today’s Australian is a classic of confected outrage. The common theme is that NDS, the News-owned company accused of running the hacking/piracy operations, had done nothing “illegal”. That may well be so, but it’s hardly the point. Nixon kept declaring “I am not a crook”, but he still had to go.
What’s important here is that the stench of underhand, possibly illegal News Corporation business practices is no longer just confined to the News of the World phone-hacking outrages. Indeed, the stink now emanating from Murdoch’s TV and associated electronic media ventures may soon overpower the original bad smells from Wapping and New Scotland Yard.
Curiously, these new revelations have so far attracted a tiny fraction of the coverage of the NotW scandal. Why? Because newspaper reporters and editors still tend to think of media power in terms of traditional print. Any story about Murdoch’s tabloid shenanigans gets huge coverage in the broadsheets because it reinforces old assumptions about the Dirty Digger and his dreadful deeds. The lazy, under-resourced electronic media then follow print’s lead and amplify the story beyond sensible proportions.
Yet what’s really happened following the News of The World scandal? A few showy parliamentary inquiries, a few non-custodial arrests without charge, a few sackings and resignations. One of Rupert’s London red-tops closes to be replaced a few months later by another. In hindsight, all the hyperventilating coverage of Murdoch’s UK phone-hacking embarrassments has been disproportionate.
What we’re getting now, with the Panorama/Fin Review/Independent investigations, is far more significant for the long-term health of News and the Murdoch family. It hits them hard where they now make most of their money. What truly matters to them are the new rivers of media gold — pay-TV subscriptions in high-population markets.
At last count, print represents about 20% of News revenues, and probably even less of its net profits. Sure, Rupert loves to wield power and influence through his newspapers — they’re what get him in the back door of No.10 and front gate of Kirribilli House — but the profits from one mega hit Fox movie swamp anything his newspapers can deliver. Another indicator of this relative scale is the pending sale of NSD, essentially a software company, to Cisco for $5 billion. You could probably buy most, if not all, of Rupert’s print mastheads around the world for less than that.
The real story here (and the one that’s likely to do significant long-term damage to News) is that we now have evidence of an apparently widespread culture of Watergate-style “dirty tricks”. This is a corporation that apparently finds it difficult to see any distinction between robust competitive business behaviour and sabotage.
Rupert’s fight for survival won’t be waged in the UK or Italy but in the US, where the business establishment has always seen him as an uncouth interloper. They’re patient men, quite happy to let the British and Australian media make the running until their quarry is weakened. Eventually, one of the myriad American agencies with a stake in local media regulation will pluck up the courage to assemble all the evidence and put Murdoch to the “fit and proper person” test. Which is where the real fun will start.
Meanwhile, the sudden departure of John Hartigan as boss of News Limited in Australia might now make more sense. Either he knew there was some very unpleasant stuff barrelling down the chute towards him, or the international Murdoch heavies realised they needed a fresh cleanskin in the CEO chair so he could run the “it-all-happened-before-my-time” defence.If the fallout does reach Australia, Hartigan’s successor Kim Williams may not be so lucky. Initially he could deflect any fresh allegations with an “I know nothing” shrug, but his recent long tenure as boss of Foxtel may now not seem such an impressive line on his CV.
There’s another interesting Australian connection. When Rebekah Brooks had to be dumped last year as News International CEO in London at the height of the phone hacking dramas, Murdoch drafted in his veteran Australian fixer Tom Mockridge as the new boy with no bad backstory. But that strategy may now unravel as it emerges from The Independent investigation that Mockridge was at the helm of Sky Italia when it may have been involved in yet more shady dealings with encryption-card hackers.
Through it all, Murdoch and his lieutenants around the world have persisted with the inverted morality that’s become almost style-of-house for the News empire and its outlets. They run the largest commercial media conglomerate in the world, yet portray themselves as victims. They complain of being unfairly attacked by their enemies (those damned “elites” again) while never hesitating to use their power to push agendas and pursue vendettas. “Easy to hit back hard, which is preparing” Murdoch posted yesterday.
Indeed, Murdoch increasingly looks like the King Lear of Bel Air, tweeting against the tempest while his wives and children furtively position themselves to snaffle up whatever may be left of his crumbling empire. Last night he was still at it on Twitter, damning the AFR expose as “Proof you can’t trust anything in Australian Fairfax papers, unless you are just another crazy”.
Still crazy after all these years? This will get ugly before it’s over.