Murdoch Goes From Darling to Pariah in Watershed Moment

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Rupert Murdoch, the chief executive officer of News Corp., is driven from his apartment on July 12, 2011 in London, England. Close

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Photographer: Oli Scarff/Getty Images

Rupert Murdoch, the chief executive officer of News Corp., is driven from his apartment on July 12, 2011 in London, England.

At the News International party last month, Rupert Murdoch got the reception he’s used to in London, with political figures of every stripe and from the prime minister down paying court at the Kensington Palace event.

When he returned to the city two days ago, the 80-year-old was jostled by camera crews and faced shouted questions. Asked if David Cameron was likely to speak to Murdoch during this week’s visit, an official in the prime minister’s office struggled to answer over laughter at the idea.

Allegations last week that News Corp. staff hacked into the phones of murdered schoolgirls and terror victims and paid police for stories prompted Murdoch to close the 168-year-old News of the World tabloid on which his U.K. media empire was founded. Politicians from all parties have called for his planned purchase of British Sky Broadcasting Group Plc (BSY) to be scrapped and some question whether his company is fit to own a broadcasting license at all.

“The days of Rupert Murdoch as a man that people will fly halfway around the world to see, whose phone calls get taken, are over,” said Tim Bale, professor of politics at Sussex University and the author of “The Conservative Party From Thatcher to Cameron.” “All the party leaders have been distancing themselves.”

Photographer: Simon Dawson/Bloomberg

Rupert Murdoch, chief executive officer of News Corp., left, and his daughter Elisabeth Murdoch, centre, are driven from his apartment in London, U.K., on July 12, 2011. Close

Rupert Murdoch, chief executive officer of News Corp., left, and his daughter Elisabeth... Read More

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Photographer: Simon Dawson/Bloomberg

Rupert Murdoch, chief executive officer of News Corp., left, and his daughter Elisabeth Murdoch, centre, are driven from his apartment in London, U.K., on July 12, 2011.

Thatcher Backer

U.K. prime ministers have felt the need to curry favor with Murdoch since he was allowed by Margaret Thatcher’s government in 1981 to add the Times and Sunday Times to his stable of newspapers, which already included the Sun and the News of the World. He was the only newspaper owner invited to a lunch to celebrate Thatcher’s decade in power in 1989 and was more than once invited to spend Christmas with her family, according to John Campbell’s biography of Thatcher.

(For a related story on News Corp. (NWSA)’s market value slump, click here. To read a story on the BSkyB review, click here.)

Cameron’s predecessor, Gordon Brown, also courted Murdoch and is now the victim of the latest twist of the phone-hacking scandal. Brown today accused News Corp. newspapers of using criminals to get stories about him whilst he was in office and said he was reduced to tears when the Sun tabloid phoned him to say it was going to report his son Fraser’s diagnosis of cystic fibrosis.

Brown Allegations

“The level of criminality involved, which is going to be exposed, meant that there were links between that newspaper, and that group of newspapers, and well-known criminals in this country,” Brown said in an interview with BBC television broadcast today. “This is an issue and will become an issue about the abuse of political power as well as the abuse of civil liberties.”

News International said in a statement today it is satisfied that the Sun obtained the story from a legitimate source and pledged to look into the allegations made by Brown.

Despite his upset over the reporting, Brown still invited Murdoch to a dinner for historians during U.S. President George Bush’s last visit to the U.K. Brown’s wife, Sarah, had Murdoch’s wife, Wendi Deng, for a “sleepover party” at their Chequers official country residence, the Telegraph reported in 2008.

Also entertained by the Browns at Chequers was Rebekah Brooks, the former editor of the Sun and News of the World, now chief executive officer of News International, the publisher of Murdoch’s British papers. Cameron, whose house in his Oxfordshire electoral district is close to Brooks’s, has followed suit, attending a drinks party she held at Christmas.

Courted by Cameron

It was Tony Blair who did fly halfway around the world, visiting Australia when he became Labour Party leader in 1995, two years before he became Prime Minister. After the vilification Murdoch papers, especially the tabloid Sun, had poured on his predecessor as Labour leader, Neil Kinnock, the decision was controversial within his party.

“People would be horrified,” Blair wrote in his memoir “A Journey,” explaining the decision. “Not to go was to say carry on and do your worst, and we knew their worst was very bad indeed,” he wrote. “No, you sat down to sup; or not. So we did.”

Cameron has been assiduous in courting Murdoch, hiring former News of the World editor Andy Coulson as his press adviser. Coulson took the fall for the original phone-hacking scandal, resigning in 2007 after one of his reporters was jailed for intercepting voicemails of members of the royal household.

Coulson Connection

At the time, he insisted it had been the work of a single rogue reporter and that he had known nothing. Even when News Corp. executives in 2009 said James Murdoch, Rupert’s son, had approved payments to other phone-hacking victims, both the company and Cameron stuck to the line that the activity hadn’t been widespread.

That line broke at the start of the year, when, under a weight of lawsuits, News International said illegal behavior had been more widespread. Shortly before that announcement, Coulson quit his post in Cameron’s office.

Since then, the government and News Corp. have followed diverging paths, culminating last week in Cameron insisting nothing had been proved against Coulson. James Murdoch had put out a statement the day before saying that, during Coulson’s time at the News of the World, “wrongdoers had turned a good newsroom bad,” and closing the paper. Coulson was arrested and questioned on July 8.

‘We Are Afraid’

While standing by Coulson, whom he said remains a friend and has yet to be charged or convicted, Cameron said he had been wrong to focus on “courting support” from the press, turning a “blind eye” to claims of wrongdoing.

Tom Watson, the Labour party lawmaker who has pursued the phone-hacking scandal for two years, on Sept. 9 offered his fellow lawmakers an assessment of why it was being ignored.

“In this House we are all, in our own way, scared of the Rebekah Brookses of this world,” he said. “The barons of the media, with their red-topped assassins, are the biggest beasts in the modern jungle. Prime Ministers quail before them, and that is how they like it. We are afraid.”

The balance from fear to outrage shifted July 4, when the Guardian newspaper reported that a News of the World employee intercepted messages left on the phone of murdered schoolgirl Milly Dowler.

Distress Signal

Cameron was in Afghanistan at the time. As they prepared for a press conference with President Hamid Karzai in Kabul, one of Cameron’s staff spotted that the union flag behind the prime minister was flying the wrong way up -- historically a distress signal.

It was appropriate. Aides traveling with the prime minister said the story had stopped being something of interest only to media-watchers and opposition politicians, and would arouse public fury. What one aide described as their hands-off attitude to the BSkyB deal would not help them to deal with what was to come.

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To contact the reporters on this story: Thomas Penny in London at tpenny@bloomberg.net; Robert Hutton in London at rhutton1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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