Aug. 28 (Bloomberg) -- Even by the abrasive nature of Australian political sparring, the war of words between Prime Minister Kevin Rudd and Rupert Murdoch, who controls more than two-thirds of the nation’s urban newspaper market, is shaping up to be the most acrimonious in its election history.
Labor leader Rudd has been depicted as a bungling Nazi commandant, Kermit the Frog and a bank robber in Sydney’s best-selling Daily Telegraph, whose front-page salvo on the first day of the campaign was “Kick This Mob Out.” Murdoch’s News Corp. is “taking a club to our government,” Rudd said Aug. 23, one of at least 20 occasions he and his ministers have accused the company of bias in the 24 days since the Sept. 7 poll was set.
News Corp.’s “attacks these days are much more sledgehammer brutal and unscrupulous than before,” said John Menadue, the nation’s most senior civil servant from 1974 to 1976, who managed Murdoch’s Sydney operations for the preceding seven years.
Given Murdoch’s record of backing winners -- from Ronald Reagan in 1980 to Tony Blair in 1997 to Rudd himself a decade later -- Labor’s ripostes risk wounding the party, which is trailing in opinion polls and will lose office if Tony Abbott’s opposition picks up just four seats in the 150-member lower house. Such an outcome would draw the spotlight again to the 82-year-old Murdoch’s influence in a country where his company publishes seven of the top 10 best-selling newspapers with a combined weekly circulation of 17 million, equivalent to 74 percent of the population.
“No politician wants a powerful newspaper organization with monopoly outlets in many places to come out against them guns blazing,” Sally Young, an associate professor of politics at the University of Melbourne, said by telephone. “If you get really cynical coverage, you get really cynical voters.”
The campaign reached a new level of tit-for-tat exchanges when Murdoch attacked Rudd, 55, on Twitter and the prime minister’s daughter replied.
“Conviction politicians hard to find anywhere,” Murdoch wrote Aug. 19. “Australia’s Tony Abbott rare exception. Opponent Rudd all over the place convincing nobody.” Jessica Rudd responded by thanking Murdoch “for taking the time each day to tell us what to think.”
Abbott’s Liberal-National coalition is leading Labor by six percentage points on a two-party preferred basis, according to a Newspoll published in the Australian newspaper Aug. 26, down from an eight-point advantage a week earlier. The opposition has 72 seats in the lower house, and Labor with 71 holds power with the support of independents and the Greens party.
The race may come down to a few thousand votes in key battleground constituencies. About 700 voters need to switch sides for the coalition to win the seat of Greenway, a marginal constituency in Sydney where the Telegraph is the biggest selling newspaper.
“This is the first time that a government has really taken them on,” said Robert Manne, an emeritus professor of politics at La Trobe University in Melbourne, referring to News Corp. “They may have decided that they had little to lose.”
Since a 21-year-old Murdoch inherited two Adelaide newspapers on his father’s death in 1952, he has transformed his media interests into a global empire, encompassing television stations, film studios, book publishers and newspapers, which posted $33.71 billion in sales in the 12 months ended June 2012.
“If you wander around Parliament House in Canberra you’ll not be within coo-ee of the real center of power in this country unless you walk into the News Ltd. bureau on the second floor,” former Labor leader Mark Latham said by telephone, referring to Murdoch’s local publishing unit. Latham led Labor to defeat in the 2004 election when News Corp.’s Daily Telegraph and the Australian backed incumbent John Howard.
Sydney’s Telegraph attacked the government in a front-page editorial on the first day of the campaign, saying its time is up after “years of disunity and destruction” and “socially divisive and financially ruinous” policies.
Three days later, a digitally-manipulated front page image in the Telegraph portrayed Rudd as Colonel Klink, the vain, inept commandant of a German prisoner of war camp in the 1960s CBS comedy “Hogan’s Heroes”. He was also portrayed by the paper in a digitally altered image as Kermit the Frog in a piece about Labor’s relations with the Greens party.
“Virtually every newspaper in the free world exercises its right to editorialize its position before an election, often on the front page,” Stephen Browning, a spokesman for News Corp. Australia, said by e-mail. “The Daily Telegraph supported Kevin Rudd in the 2007 election. This time it does not.”
Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.
Other News Corp. newspapers have also criticized Rudd’s Labor during the campaign. The government’s defense of its economic record “verges on the delusional,” the Australian, the only non-business national newspaper, wrote in an Aug. 5 editorial. In Queensland state, former Labor Premier Peter Beattie was likened to a clown in an Aug. 9 front page article in the Courier-Mail reporting his decision to stand for a marginal seat south of Brisbane.
News Corp. was also critical of the government of Julia Gillard, who Rudd ousted in a June 26 party-room vote to reclaim the prime ministership. Two years ago, then Communications Minister Stephen Conroy accused the Telegraph of “running a campaign on regime change.”
There’s “a level of vitriol that we haven’t really seen before,” said the University of Melbourne’s Young, referring to Rudd’s government and News Corp. “The relationship is beyond repair.”
Murdoch is “a very, very powerful man who has already nominated the person he wants to be prime minister,” Rudd told reporters in Sydney on Aug. 23.
Senior local editors were issued a directive by Col Allan, editor-in-chief of News Corp.’s New York Post tabloid, to “go hard on Rudd,” the prime minister told reporters Aug. 9. He didn’t say where he obtained the information.
“When a politician fights the media they generally come off second-best,” said Greg Turnbull, a senior media adviser to former Labor prime minister Paul Keating. “There probably aren’t votes in letting this skirmish run every day.”
News Corp.’s Browning said the company’s share of the newspaper market was a result of consumer choice. “All of this ignores television, radio and the myriad online news sources which offer more diversity in opinion than at any time in history,” he said.
The company’s reputation globally has been tarnished by a U.K. phone-hacking scandal in which the now-defunct News of the World, a Sunday tabloid, listened to messages on the mobile phone of a murdered teenager.
Alastair Campbell, former media adviser to Blair, says that gives Rudd the chance to go on the offensive.
The former British prime minister eschewed conflict with the “right wing press” as he “felt we had enough fights,” Campbell, who worked for Blair between 1994 and 2003, said by e-mail. “People are much more media savvy now. They’re more willing to hear messages that it’s the media who are the manipulators, not the politicians.”
Attacking Murdoch carries risks for Rudd, according to Adam Connolly, an ex-News Corp. journalist who worked as a media adviser to former prime minister Howard.
“The big risk he plays in doing this is that he looks like he’s panicking and trying to blame others for his government’s slide in the polls,” said Connolly. Howard “never complained and ended up with the media’s respect,” he said.
Gaining influence through media has been part of Murdoch’s strategy at least since he established the Australian in 1964, said Rodney Lever, who managed the broadsheet’s Melbourne edition at the time.
Before setting up the newspaper, Murdoch feared he wouldn’t be able to win a television license “because he did not have enough political muscle,” Lever said by e-mail. The Australian has since been “a major weapon in Rupert’s political armory,” he wrote.
In the U.S., former White House communications director Anita Dunn described Murdoch’s 24-hour cable channel Fox News as the “communications arm of the Republican Party” in an October 2009 interview with CNN.
Murdoch’s British tabloid the Sun boasted of its role in Conservative Prime Minister John Major’s victory in the 1992 general election with a front page proclaiming “It’s the Sun Wot Won It”.
That headline was “tasteless and wrong,” Murdoch told an April 2012 hearing of the U.K.’s Leveson Inquiry into press ethics. “We don’t have that sort of power.”
Murdoch said in a witness statement that he didn’t dictate or delve into the editorial stances of his British newspapers.
Since the phone-hacking scandal, Murdoch has spun off News Corp.’s less-profitable publishing assets from the film and television units that now make up Twenty-First Century Fox Inc.
Income is falling at Murdoch’s Australian newspapers, Justin Diddams, a Sydney-based analyst at Citigroup Inc., wrote in an Aug. 1 note to clients. Earnings before interest, tax, depreciation and amortization at the papers next year will be 89 percent lower than in 2011 amid an estimated 34 percent decline in revenue from advertising, Diddams wrote.
“There’s a view that the Murdoch star is waning fast,” said Menadue, a former ambassador to Japan who was also chief executive officer of Qantas. “They have become more extreme so they’ll be noticed.”
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