Friday, July 15, 2011

Tabloid bites man: Murdoch's master plan to preserve his influence

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The tabloid saga gripping Britain - a tangled tale of criminality and corruption, of politicians in thrall to the power of the press and of police in the press's pay - has elements of farce but even more of tragedy. Take Graham Foulkes, whose 22-year-old son David was one of 52 people killed by suicide bombers in London six years ago. The police have informed Foulkes that in the immediate aftermath, his mobile phone may have been hacked by Glenn Mulcaire, a private investigator working for the News of the World, a Sunday tabloid owned by News International, the U.K. subsidiary of the U.S.-based media giant News Corp. "It fills me with horror," Foulkes told the BBC. "You think it's as dark as it can get. Then you realize there's someone out there who can make it darker."

That sentiment might resonate with the family of Milly Dowler, whose phone was allegedly hacked - and some of its messages erased - during the manhunt that followed her 2002 disappearance at age 13, raising false hopes that she was alive. The eyes and ears were everywhere: parents of other murdered children were alerted that they too may have been targeted, as well as the relatives of dead soldiers and even the police who were investigating the tabloids for their tactics - nearly 4,000 people in all. Nothing was sacred; no one was safe. Getting the story was everything. (See six salacious News of the World scandals.)

For decades there have been three main forces in British politics: the Conservative and Labour parties, alternately holding power and seeking it, and Rupert Murdoch and his "red-tops," the News of the World and the Sun, so called for the scarlet mastheads that signaled to readers there would be nothing too highbrow in their pages. The tabloids are fast and raw and raunchy, a torment to celebrities who put any premium on privacy and a snarling check on the arrogance of politicians who pad expense reports or fool around on the side. So much power, so much promise - it had to be painful to issue a death warrant for the 168-year-old News of the World, executed on July 10 by Murdoch's son and heir apparent James.

The killing of the lucrative tabloid was intended to bury the scandal that threatened this extraordinary power base. Instead, it has brought Murdoch, the Australian-born founder, chairman and CEO of News Corp., to the drama's center stage.

The House of Murdoch
There are plenty in the global mediasphere who relish the sight of the great tabloid baron being pursued by the very paparazzi he'd paid and promoted. Murdoch's empire, which stretches in print, broadcast and digital media from Australia across Asia and Europe to the U.S., is more than a collection of trophies, and Murdoch is more than a media honcho. In the U.S., he expanded network television by creating Fox Broadcasting; he revalued nearly every major sport by inflating the price of broadcast rights; he rewired the circuits of political discourse by devising the right-leaning Fox News Channel. And he staked his claim to muscular journalism for the ruling class when he bought the Wall Street Journal in 2007. In the U.K. in the 1970s and '80s, he was the interloper of Fleet Street, a hated figure who bought broken newspapers and then broke the back of the newspaper unions in his effort to yank the industry into the 20th century. Murdoch won that battle and went on to pummel his rivals in an unrelenting circulation war that didn't end until he had control of the upscale Times and the downmarket Sun as well as the News of the World. (See why Britain's strict libel laws actually encourage tabloid antics.)

This makes Murdoch a cultural force the likes of which we haven't seen since William Randolph Hearst. When Murdoch calls, PMs and Presidents from Beijing to Rome answer the phone. In that respect, successive British leaders have acted no differently than their counterparts abroad, though they sprinted for the phone more eagerly. Prime Minister David Cameron admitted as much at a July 8 press conference. "The truth is, we have all been in this together," he said. "The press, politicians and leaders of all parties - and yes, that includes me."

Murdoch flew to London in time to pick up the last edition of the News of the World. He and James, News Corp.'s deputy COO and chairman of News International, smiled beatifically for the cameras. Later James defended the honor of Rebekah Brooks, News International's beleaguered chief executive. "I am satisfied that she neither had knowledge of nor directed those [hacking] activities," he told the BBC. His father refused formal interviews but answered a reporter's shouted inquiry about what his priority is by extending a paternal arm toward Brooks. "This one," he said.

Murdoch's other priority was his company's ambition to take full control of British Sky Broadcasting, the U.K.'s biggest satellite broadcasting company, of which News Corp. holds a 39% share. But in a rare show of cross-party unity, the Conservative-led coalition government agreed to back a motion proposed by Labour opposition leader Ed Miliband calling on Murdoch to withdraw the bid. On July 13, in an even rarer show of submission to public pressure, Murdoch did.

That was just the latest in a series of body blows to a mogul whose survival skills have proved epic. His company lost 15% of its value in the week after the scandal erupted, prompting News Corp. to announce a $5 billion buyback plan to prop up the stock. MPs have asked Murdoch to attend a meeting next week in what would be their first chance to quiz him since he was called before a parliamentary committee in 1981 as he prepared to buy the Times of London.

See photos of Rupert Murdoch.

It's unlikely to be the last such invitation, with two police investigations under way and a sweeping judicial inquiry launched by Cameron to examine the specific allegations relating to the News of the World and wider issues regarding relations between the media, politicians and police. Les Hinton, Brooks' predecessor as chief executive of News International and now head of Dow Jones, may also be pulled into the inquiries.

In the past, News International has shown itself more inclined to bury evidence than expose it. And until last week, many politicians and authorities seemed more intent on building relationships with Murdoch's empire than policing its reach. Last year Cameron installed as his director of communications Andy Coulson, who edited the News of the World during a period of the tabloid's worst excesses. It was seen at the time as Cameron's attempt to keep the tabs in his tent. But Coulson had to resign from the government in January, as the phone-hacking inquiries started to boil; on July 8, he was arrested. And however fast Cameron has moved to prevent more political damage, events seemed determined to overtake him. (Watch a TIME video interview with British Prime Minister David Cameron.)

The affair has left Britain wrestling with a crisis of faith so profound that it may prove to be the nation's Watergate - but with the media as the bad guy. Four out of five Britons no longer trust the press. The scandal has also undermined their confidence in the police. Nor is the public inclined to listen to politicians, who were already compromised by a 2009 investigation into abuses of the parliamentary-expenses system that has seen four MPs and two peers jailed. And now they have another scandal on their hands that's worthy of the tabloids.

Read All About It!
It's easy enough to understand the appeal of the News of the World for the 7.5 million readers it claimed at its death. The widest-circulating Sunday paper in Britain, it was entertaining, with punning headlines, amusing snatched images and irreverent accounts of Very (Self) Important People, garnished with topless "lovelies." That doesn't explain why the British establishment has been in thrall not to a moneyed elite or, as in France, to its intellectuals, but to titles that U.S. readers might expect to find displayed by the checkout counter. Britain is still class-ridden, and communications between the classes, and between London elites and the rest of the country, are imperfect at best. Britain's tabloids - not just the red-tops but also the middlebrow Daily Mail and Mail on Sunday - are conduits and connectors in this fractured society. They are not at the edge of public and political discourse; they are central to it.

Imagine President Bush clearing his calendar to attend the wedding of the National Enquirer's chief executive or President Obama stopping by the editor's country house for an intimate dinner during the Christmas holidays. The year Rebekah Brooks was appointed CEO of News International, Gordon Brown (then Prime Minister) and Cameron (his challenger) attended her wedding. Last December, Cameron and his wife Samantha dined privately at Brooks' Oxfordshire home, reportedly with Coulson and James Murdoch. Less than a month before the scandal broke, Cameron and Miliband turned out for a key fixture on Britain's social schedule, the News International summer party, "simpering" at their hosts, according to Hugh Grant in an e-mail to TIME. (See "The Hacking Scandal and the Two Faces of Murdoch.")

The actor, who describes invasions of his privacy by the British press as "too numerous to mention," has emerged as a fierce campaigner against press intrusion; earlier this year he succeeded in coaxing Paul McMullan, a former journalist for the News of the World, into discussing the range of illicit techniques deployed to obtain scoops. Grant covertly recorded the conversation and wrote about it in New Statesman magazine. "Twenty percent of [Scotland Yard] has taken backhanders [bribes] from tabloid hacks. So why would they want to open up that can of worms?" McMullan told Grant. "And what's wrong with that anyway? It doesn't hurt anyone particularly. I mean, it could hurt someone's career - but isn't that the dance with the devil you have to play?"

The News of the World was known for its swagger. Its most famous staffer, Mazher Mahmood, used to impersonate a sheik to coax indiscretions from targets, including an inebriated and cash-strapped Sarah Ferguson, slurring in her eagerness to sell access to her former husband Prince Andrew.

Admittedly, the red-tops have been instrumental in uncovering scandals as well as creating them, not least in revealing the true state of Charles and Diana's marriage when the docile broadsheets continued to report that all was rosy in the House of Windsor. (McMullan told Grant that at least some of that insight may have come from a precursor to hacking. "In the early days of mobiles, we all had analog mobiles, and that was an absolute joy," he said. "You just sat outside Buckingham Palace with a £59 [$95] scanner you bought at [discount electronics store] Argos and get Prince Charles.") If the current investigations of the News of the World lead to trials, lawyers in some cases may be tempted to argue that the tabloid had acted in the public interest. In reality, British tabloid culture rarely distinguishes between the public interest and what might interest the public.

The same might be said of the popular press the world over. The difference in Britain is that even the red-tops - especially the red-tops - command attention at the highest levels of the Establishment. If the Sun or its main competitor the Mirror alleges impropriety by a politician, the party spin machines will kick into action as the rest of the media scramble to follow up the story. In other countries, a tabloid medium more usually undercuts the message. When the National Enquirer uncovered an extramarital affair conducted by Democratic presidential candidate John Edwards as his wife battled cancer, most mainstream outlets, including this one, ignored the scoop. Although the Enquirer claims a circulation of about 1 million, nobody inside the Beltway thought to take it seriously.

See the top 10 scandals of 2010.

In Westminster, nobody thinks not to take the popular press seriously. Mass-market newspapers set agendas and presume to make or break Prime Ministers. On election day in 1992, Murdoch's Sun famously ran an image of Labour leader Neil Kinnock's face superimposed on a lightbulb under the banner headline "If Kinnock Wins Today Will the Last Person to Leave Britain Please Turn Out the Lights." The Conservatives won. Three years later, another Labour leader flew to Australia to address News Corp.'s annual conference and seek Murdoch's blessing. Backed by all of News International's titles, Tony Blair won in a landslide in 1997.

Defense Against the Dark Arts
Murdoch's magic has never been as powerful as these vignettes suggest. Even before the digital revolution eroded his circulations, politicians' success or failure rested on numerous factors, not least a strong message and a measure of dumb luck. But the Westminster elites also rely on the mass-market titles to keep them in touch with the ordinary voters they represent and only dimly understand. "Of course Tony Blair had a close relationship with Rupert Murdoch," former Labour Cabinet Minister Jack Straw told the BBC. "It is through the press that the electorate perceive politicians." He might have added that it's through the press that politicians perceive the electorate. (See "Amid New Hacking Claims by British Politicians, Can Murdoch's BSkyB Deal Survive?")

In Coulson, a product of a humble background, the upper-class Cameron found a man who combined an understanding of the people with an understanding of the tabloids. And so, newly installed in Downing Street, Cameron ignored the circumstances of Coulson's departure from the News of the World. The gravity of that misjudgment was revealed when Coulson was arrested by officers investigating voice-mail interceptions and illegal payments to police. Coulson has denied any wrongdoing. "I decided to give him a second chance," Cameron said. "But the second chance didn't work out." How many second chances voters give Cameron in the future will depend on his ability to lead in the unfolding crisis rather than just be buffeted by it.

The Prime Minister's gamble might have paid off if tabloid culture were as benign as its consumers assume it to be: just a relatively innocuous pairing of stars and paparazzi. Indeed, Brits are inclined to consider people in the public eye fair game for entrapment and muckraking. One veteran of tabloid intrusion compares Scotland Yard's failure to vigorously investigate the News of the World to its initial low-key pursuit of infamous British serial killer Peter Sutcliffe, the so-called Yorkshire Ripper, because, some people commented, his first victims were "only" prostitutes.

Likewise, the first reports that the scandal at the News of the World stretched wider than the royal household raised little interest outside circles the tabloid would have dismissed as "the chattering classes." In 2009, the Guardian revealed that News International had paid out more than £1 million ($1.6 million) in secret out-of-court settlements with victims of the hacking spree; the following year, the New York Times alleged that Coulson, who has denied all knowledge of hacking, had actively encouraged the practice during his editorship of the News of the World. Coulson resigned from Downing Street, and the world - and the News of the World - turned much as before. (See "Is This the Beginning of the End of the House of Murdoch?")

It was the Guardian's July 4 revelation that in 2002 Mulcaire may have hacked into messages left for abducted 13-year-old Milly Dowler - and deleted some of them when the mailbox reached capacity, unintentionally giving her parents false hope she was alive - that finally changed the game. The News of the World was launched in 1843, proclaiming its intention to serve not only "the middle as well as the rich" but "the poorer classes" too. Here was the people's champion exploiting ordinary people at their lowest ebb.

The revelations have emboldened some victims of press malpractice to speak out. Still, several public figures contacted by TIME wish to remain anonymous for fear of attracting reprisals or compromising future legal actions. They provided the following examples of snooping, not just by the News of the World but also by a number of other publications: a journalist claiming to be a visiting nurse talked his way into a private house to steal genetic material from a baby to establish its paternity; a nurse received a call from someone impersonating her patient, asking to be reminded of the patient's treatment plan; a reporter called the house of an actor's elderly parents, pretending to be the actor's drug dealer, in an attempt to startle them into talking; when police were called to an emergency at a celebrity's home, paparazzi arrived before the cops.

Former Prime Minister Gordon Brown recalled how he and his wife cried when they got the call from their friend Rebekah Brooks. At the time, Brown was Chancellor and Brooks was editor of the Sun. She asked for a comment on a story she was about to run that would reveal that their 4-month-old baby had cystic fibrosis. They had wanted to keep his condition private. Brown accused News International of using "known criminals" to gather information for this and other stories on him: "If I, with all the protection and all the defenses and all the security that a Chancellor of the Exchequer or a Prime Minister [has], am so vulnerable to unscrupulous tactics, to unlawful tactics, methods that have been used in the way we have found, what about the ordinary citizen?" The Sun claims to have found out about the baby's illness through a legitimate source.

Stories, whether obtained by fair means or foul, are routinely embellished. In 2009, Warrant Officer Class I Darren Chant was shot dead in Helmand province along with four other British troops by a member of the Afghan National Police. Chant's pregnant widow Nausheen, known as Sheenie, was horrified to see her wedding photographs appear in the Sun with quotes attributed to her, reinforcing the false impression that she had collaborated with the tabloid.

See TIME's photo-essay "Shooting Back at the Paparazzi.

Sheenie had caught the interest of the Sun - and of other newspapers that pestered her for interviews - because she is of Pakistani heritage; they thought this added poignancy to the manner of her husband's death. "They called me a Muslim, and then they've got a photo of me in a Christian chapel getting married," she says. "Darren got murdered. He got killed serving his country. Honor him. Don't get me involved in anything. Honor the man that died. But as I got told subsequently, it's a story, and that's what they wanted. They wanted the story."

The Feral Beast
Unlike the U.S. press, which is protected by the First Amendment, the British media are periodically forced to combat threats to restrict their freedoms by legislation. This may have made its journalists and proprietors more pugnacious, not less so, especially since British jurisprudence is more onerous for publishers too, placing the burden of evidence in libel cases on the defendant rather than the plaintiff. With newspapers under pressure to provide incontrovertible documentary evidence to back up stories, intrusion seems a safer bet than risking defamation suits, and the temptation is to resort to "covert filming and such like," says London media lawyer Mark Stephens. Some attempts by public figures to suppress stories by means of injunctions have backfired, as Internet gossips circulated them with glee. And politicians and officials with secrets to hide may be wary of taking too strong a stand on press regulation or privacy. There have always been rumors about files full of embarrassing revelations that could be dusted off if their subject proved too troublesome. (See the Great British battle between privacy and the press.)

Blair memorably described the British press as "feral." Its ferocity has increased as economic pressures have restricted its space to roam, and it has increasingly resorted to cannibalism. A covert recording of a meeting held by Brooks with News of the World staff the day after they learned their newspaper would be closed captured her revelation that she "had been not just a victim of Mulcaire" but one of his most frequent targets. For that reason, she says, she was kept out of the loop on the subsequent investigation.

To occupy three of the most senior positions at News International and remain ignorant of the unpleasant realities of its business cannot have been easy. Ian Kirby, the News of the World's last political editor, who joined the paper in 1999, speculates that journalists may have covered up their hacking by getting a source to corroborate information gleaned from voice mails. He says he didn't find out about the hacking until the arrests of Goodman and Mulcaire and rarely knew what stories other departments or colleagues were pursuing - or how they went about it. "It was an extremely secretive place. It was more like working for a police force or an intelligence agency, because everyone operated in silos."

What is clear is that rivalry for scoops had become so fierce that the News of the World was routinely intercepting the voice mails of the editor of its sister paper in search of leads. Kirby believes his mobile was hacked by a newspaper from another media group for the same reason. Britain's print press has long been among the most diverse and competitive in the world, but the rise of digital media has eroded margins and intensified the fight for market share. Coulson "was very tough because he had this mantra: We've got to get the good stories," says Kirby. He speaks of "a culture shift under Andy in terms of the kind of stories we were interested in. It started with the whole Jude Law–Sienna Miller–Sadie Frost story. There was just splash after splash on them." (See "Press and Police Shamed by U.K. Phone Hacking Scandal.")

In May, Miller settled her case against the News of the World after it admitted hacking her phone and paid £100,000 ($161,000) in damages. If the 3,870 people whose details turned up in 11,000 pages of documents seized from Mulcaire seek compensation from the News of the World, Britain's law-enforcement agencies and courts could be tied up for years to come. And there may be many more public figures and private individuals who have been targeted by other methods or by other titles. The same pressures that drove the News of the World continue to drive its competitors.

Less Love, Actually
The same pressures still drive politics too, though watching political leaders unite to attack the people whose favor they so recently sought, you could be forgiven for thinking otherwise. "In the space of a single week, the government and the opposition have both apparently turned from shameful cowards ... to competitive crusaders in the cause of unmasking and repairing the evils of News International," argues Hugh Grant. "The huge question for this country is whether they can be trusted to have really changed."

It's a fair question. There's no doubt that Murdoch's influence in Westminster has diminished. According to some rumors, he is even considering selling his remaining British newspapers. In most publicly traded companies, corporate misbehavior might compel the board of directors to step in and act independently of management. But the Murdochs run News Corp. like they own the joint. They do, to a point: the family holds only 12% of the common stock but nearly 40% of the voting stock. That's more than enough to consolidate power. There are three Murdochs on the board, as well as other inside directors, like president Chase Carey. The largest outside stockholder, Saudi Prince Alwaleed bin Talal, whose Kingdom Holding claims 7% of News Corp., has backed the Murdochs. But whatever happens next to Murdoch's empire, the underlying conditions that permitted his red-tops to occupy such a pivotal role remain. Even the shocking revelations of the past week, the anger of the public - and the horror - may not be enough to stop the political classes from jumping into bed with the tabloids to win the affection of the voters. It's the only way they know.

- With reporting by Bill Saporito / New York

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