155 9 Reaping the rewards Murdoch and government action I bet if I was going to be shot at dawn, I could get out of it. 1 Rupert Murdoch ‘I’ve never asked a prime minister for anything.’ 2 Rupert Murdoch’s testimony to the Leveson Inquiry was emphatic. ‘I take a particularly strong pride in the fact that we have never pushed our commercial interests in our newspapers … I never let my commercial interests, whatever they are, enter into any consideration of elections.’ 3 Leveson was probing – and Murdoch was denying – the trading of editorial support for policy or regulatory favours, the transac- tion, either explicit or implicit, that many suspected was the key to Murdoch’s power in Britain. The news media are unique in that their output affects the political fortunes of policy-makers directly. While media owners share with other large corporations the abil- ity to donate money and lobby in traditional ways, they have this crucial added leverage. Murdoch’s reputation for wielding great power had been pro- moted by both his supporters and his opponents. Former News of the World journalist Paul McMullan declared that ‘every political leader since Margaret Thatcher in the 1970s has had to “jump in bed with Murdoch”’. 4 Charles Douglas-Home, editor of the Times, said in 1984: Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 156 Rupert and Mrs Thatcher consult regularly on every important matter of policy … especially as they relate to his economic and political interests. Around here, he’s often jokingly referred to as ‘Mr Prime Minister’. Except that it’s no longer all that much of a joke. In many respects, he is the phantom prime minister of this country. 5 A spin doctor in the Blair Government, Lance Price, said: I have never met Mr Murdoch, but at times when I worked at Downing Street he seemed like the 24th member of the Cabinet. His voice was rarely heard … but his presence was always felt. 6 Similar claims have been made about Murdoch’s influence in Aus- tralia, and his denial seemed more geographic than political: ‘It’s wrong to say I’m the most powerful man in Australia. I’m not even there.’ 7 In America, Murdoch asked, ‘Power? What power? I have no power. No more than any American. This myth that I have some influence up there on Capitol Hill is baloney.’ 8 In contrast to this picture of innocence and powerlessness, Bruce Page concluded that on ‘most of the critical steps’ in his expansion Murdoch has ‘sought and received political favours’ and that his success has depended on these. 9 But this is perhaps too sweeping in the other direction. Rather, two conclusions stand out: • The 1980s were the key period where policy decisions were im- portant to Murdoch’s growth. Murdoch became a giant in newspaper publishing without any special help from governments, and there were no impor- tant cases of governments assisting him before the 1980s. In that decade, as he changed his citizenship, launched into TV in the US, took over the Times in Britain, became the dominant player in Australian newspapers, and launched the Sky TV satellite ser- vice, his relations with governments were crucial to his ability to develop as he wished. Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 157 • Since the 1990s, Murdoch’s veto power has been more important than his initiating power. Over this long period, Murdoch has almost constantly been a controversial figure, and there have been calls for his power to be curbed – by stronger anti-monopoly measures, for example – but there are few cases of governments adopting policies that ran strongly counter to his interests. ‘No government,’ said Leveson, ‘addressed the issue of press regulation, nor of concentration of ownership.’ 10 On the other hand, he has not always succeeded in gaining legislative measures he wanted. For example, as a partner in the pay TV operator Foxtel, he has long fought the Australian anti-siphoning rules that give the free-to-air stations first choice at major sporting events, but the power of the free-to-air net- works and of public opinion have protected the status quo. Murdoch’s relations with three governments – Thatcher, Hawke- Keating and Blair – have been particularly crucial, and are consid- ered below. Thatcher and Murdoch As Shawcross commented, after the Sun swung its support to Thatcher in 1979, for the next decade and a half it ‘remained aston- ishingly loyal to her, and that loyalty was rewarded’. 11 It was in the Murdoch-Thatcher relationship that the politics of mutual patron- age reached its strongest expression, and produced the worst abuses in policy-making. In 1959 Roy Thomson bought the Sunday Times and in 1966 he bought the Times from the Astor family. Under Thomson there was a high degree of editorial independence. The Sunday Times thrived both commercially and editorially, maintaining high standards of journalism and attracting the best talent, especially under the edi- torship of Harold Evans. However, by 1980 Thomson’s ownership of Times Newspapers had ‘become commercially disastrous’, 12 due Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 158 principally to industrial problems. Publication had been suspended for 11 months in 1978–79. The journalists, who had been paid for that entire period, then went on strike in August 1980. In the face of continuing unrest and large losses, the Thomson organisation decided to sell; if no buyer could be found, it would cease publica- tion. It was keen to find a buyer, however, as closing the titles would result in severance payments of around £36 million. 13 There were several potential bidders, including groups organ- ised by the editors of the two papers. Lord Rothermere offered £20 million, but Thomson was concerned that his company intended to close the Times once he got control, so Murdoch’s lower bid, of £12 million, prevailed. The policy issue was whether the acquisition would be referred to the Monopolies Commission, as Murdoch already owned one national daily and one Sunday national. Any seller would prefer a purchase to be consummated without having to face an inquiry, and this was clearly Thomson’s wish. Equally, any buyer would also prefer an immediate decision. Murdoch, quite reasonably, told the Secretary of State, John Biffen, that if there was an inquiry he reserved the right to renegotiate the price – the paper could well be bleeding money in the interim. 14 However, there is little reason to believe that an inquiry would have endangered the sale. It is also unlikely that Thomson would have closed the titles: he would then forfeit the purchase price, and face the large severance payments bill. At first Biffen indicated that he would refer Murdoch’s purchase to an inquiry, but then he announced that he would not. There was immediate controversy. John Smith, later leader of the Labour Party, said the acquisition would produce a concentration of newspaper power probably ‘unprecedented in our history’. 15 Some Conserva- tive backbenchers were also opposed to the lack of due process. As Belfield and his Channel Four colleagues observed, ‘Yet again, Murdoch had demonstrated his brilliance in waltzing past the regu- Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 159 lators. The key to his fancy footwork was that he was not danc- ing alone.’ 16 Murdoch and Thatcher were ‘ideological soulmates’. Murdoch described himself as ‘a great admirer’ of her and on the ‘same page politically’, 17 and she felt she owed ‘a real debt of grati- tude to him’. When one Sunday Times journalist spoke to a Thatcher adviser about blocking the sale, he was told to stop wasting his time – ‘You don’t realize, she likes the guy.’ 18 Murdoch’s friend and confi- dant, Woodrow Wyatt, was also keen to claim credit. Twice in later years, after he had started keeping a diary, entries referred to having arranged ‘through Margaret’ that ‘the deal didn’t go to the Monopo- lies Commission which almost certainly would have blocked it’. 19 The law required that there must be a reference unless both papers were making a loss. In justifying his decision, Biffen said he was satisfied that neither the Times nor the Sunday Times was a going concern, and therefore a referral was not necessary. 20 He also pre- sented figures which showed both papers were making a loss. 21 The impact of industrial disputes would have given him some backing for such calculations. However, according to Thomson’s finance group director, and most other analysts, the Sunday Times was profitable, and if the two titles were taken together the company overall was still profitable, even though the Times was making a substantial loss. 22 Murdoch did have to give a series of guarantees. The most important related to editorial independence. This would be enforced by there being a group of national directors who would have sole power over the appointment and dismissal of editors. Murdoch’s guarantees were widely applauded. The outgoing editor of the Times, William Rees-Mogg, said they are ‘very far reaching and there is no reason to doubt that he will abide by them’. 23 The incom- ing editor of the Times, Harold Evans, whom Murdoch had lured across from the Sunday Times, and who was a journalist whose stat- ure gave comfort to all who wanted to believe the new ownership arrangements would work, said, ‘No editor or journalist could ask for wider guarantees of editorial independence on news and policy Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 160 than those Mr Murdoch has accepted.’ 24 The guarantees seemed empty a year later, on 9 March 1982, when Murdoch demanded Evans’s resignation. Murdoch has continued to assert his observance of the edito- rial independence guarantees. He told the Leveson Inquiry in 2012, ‘I never gave instructions to the editor of the Times or the Sunday Times’, 25 and in 2007, when reassuring the owners of the Wall St Jour- nal that he would observe guarantees given to them, declared, ‘I have [never] given any sort of political instructions, or even guidance to one editor of the Times or the Sunday Times.’ 26 He described Evans as the only Times editor ‘we have ever asked to leave’. 27 However, only months after telling Leveson this, he dismissed another, James Harding. 28 He must also have forgotten that he forced Charles Wilson to resign in 1990. 29 As well as the editorial dismissals, there was other Murdoch interference in both papers. This became more acute from early 1982. An obvious case was on the Sunday Times, when he told the editor, Frank Giles, that he wanted to appoint two new deputy edi- tors. There was no pretence of consulting Giles, let alone getting his agreement. Giles complied and announced the new appointments, even though he knew that ‘what [Murdoch] was now demanding was in complete breach of [his] undertaking’. 30 One of the former deputy editors, Hugo Young, wrote, after he left the paper, that Murdoch did not believe in neutrality: Indeed, rather like politicians themselves, he had difficulty comprehending it. As far as he was concerned, journalistic detachment was a mask for anti-Thatcherism. 31 According to Evans, ‘It soon became obvious that nothing less than unquestioning backing of Mrs Thatcher on every issue would sat- isfy Rupert.’ 32 These editors’ views were supported by Tom Kiernan, who recalled a New York dinner party, where the papers’ criticism Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 161 of Thatcher was galling to Murdoch. He: characterized Giles and his wife as Communists. Evans, he called worse. Then he went on to blast the two papers as being ‘lily- livered’ and ‘straining my patience’. No one at the dinner who heard Murdoch’s diatribe had any doubt of what was about to happen. 33 The pressure to force Evans out gathered pace. On 8 February 1982: Murdoch provoked an atmosphere of crisis by sending a letter to all employees of Times Newspapers, warning them that the daily and Sunday would close within days rather than weeks, unless 600 jobs were shed. 34 One of Evans’s ongoing frustrations was that Murdoch never gave him a budget: 35 he was told he was exceeding a budget whose con- tent was never revealed to him. The prospect of closure and of hun- dreds of jobs being lost heightened the insecurity and discontent among all employees. Evans ‘was under pressure from his proprietor above and an increasingly discontented staff below’. 36 Soon afterwards it was revealed that – contrary to the guar- antees he had given – Murdoch had transferred the titles of the Times newspapers to News International. If Murdoch closed the papers, he would retain the titles, and be free to reopen them later. Former editor Rees-Mogg initiated the public outcry. 37 Evans also denounced the move, observing that the national directors had not been informed. 38 Once the issue became public, Murdoch trans- ferred the titles out again. As events moved to a climax, Murdoch offered the editorship to Evans’s deputy, Charles Douglas-Home, who accepted. However, Evans refused to resign immediately – to show that ‘editors of the Times were not to be as casually discarded as had the 13 editors in Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 162 15 years at the Australian’. 39 The standoff continued for some days, but then he resigned: ‘I was so absolutely disgusted, dismayed and demoralized by living in a vindictive atmosphere.’ 40 ‘Nothing in my experience,’ he wrote, ‘compared to the atmosphere of intrigue, fear and spite inflicted on the paper by Murdoch’s lieutenants.’ 41 The home editor of the Times, Fred Emery, said he was told by Murdoch, ‘I give instructions to my editors all around the world; why shouldn’t I in London?’ When Emery reminded him of his undertakings to the Secretary of State, Murdoch replied, ‘They’re not worth the paper they’re written on.’ 42 (Two decades later, Mur- doch denied to Leveson that he said this.) Evans later came to: agree with Murdoch that editorial guarantees are not worth the paper they are written on … [In reality,] the national directors are incapable of monitoring the daily turmoil of a newspaper … Arbitration is impossible on the innumerable issues which may arise in many different ways every day between editor and proprietor. 43 There was a further case where the Thatcher Government failed to refer a Murdoch purchase to the Monopolies Commission even though the purchase gave him a third daily title. Murdoch bought the loss-making Today for £38 million in July 1987. 44 The daily, launched by Eddie Shah, had pioneered the use of colour and more efficient printing techniques, but had failed to make a profit. Shah first went into partnership with another prominent British business- man, Tiny Rowland, but then both became interested in selling the paper. Maxwell and Murdoch were the two interested buyers. Max- well thought he had succeeded, and in a typical case of ego beating strategic judgement, telephoned Murdoch in the US to tell him. Murdoch realised that Maxwell in fact did not yet have crucial sig- natures; he moved quickly, and beat Maxwell. 45 Both seller Rowland and buyer Murdoch were keen to avoid an inquiry, and advised the Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 163 government that if there was not immediate approval, the paper would close. The government agreed. 46 The outcry was only a small fraction of the public controversy surrounding the sale of the Times. First, Today, only a few years old, lacked the Thunderer’s iconic status. Second, Prime Minister Thatcher had much more political latitude at this time. She had just won her third election, in July 1987, and was in undisputed command of her own party and of a parliamentary majority. Third, the main alterna- tive to Murdoch was the unscrupulous Maxwell. Fourth, the title was clearly making a loss, which meant that it was not mandatory to refer it. Finally, there was perhaps a sense of fatigue and inevitabil- ity that the Murdoch-Thatcher axis would prevail. Nevertheless, none of this seems sufficient grounds for not referring an unprecedented acquisition of a third national daily newspaper to the Monopolies Commission. Wyatt’s diaries were quite open about the political nature of the decision. In 1986, he and Murdoch had wanted a referral because, as he said to Thatcher, ‘we don’t want Today to fall into the hands of our enemy Maxwell’. In 1987, with Murdoch as the buyer, they successfully lobbied to prevent a referral. 47 Almost a decade after the purchase of the Times, Thatcher allowed Murdoch to, in effect, sabotage the satellite policies her own government had adopted. In the first half of the 1980s, the government announced that it wanted to see the rapid development of satellite and was keen to achieve industrial advantages from the emerging technology. 48 But equally, it expected the capital cost of providing the satellite system to be met within the private sector. 49 The first attempts to put together a consortium to do this failed. The BBC, for example, pulled out because it could not meet the high costs, as did others who were also wary of the very large finan- cial risks they would be incurring, with high immediate costs and at best deferred income streams. Eventually, in December 1986, the Independent Broadcasting Authority (IBA) awarded the franchise Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 164 to British Satellite Broadcasting (BSB), a consortium of five media companies (not including News International, which was part of a competing tender). 50 Under the cross-media rules, each newspaper was limited to 20 per cent of the satellite broadcaster. The government adopted ‘a high cost and self-consciously “quality” approach to satellite broadcasting’. Shawcross explained: ‘Under the terms of its franchise, BSB was compelled to use a new, untried and very expensive transmission system, D-MAC, which was expected to produce a better picture than the old PAL [colour encoding] system.’ 51 BSB had to use a technology with more initial problems, plus a greater initial expense to potential consumers, but that would have greater long-term value. According to scholar Peter Goodwin’s definitive account, ‘right from the start the IBA, the gov- ernment and BSB were clear that its chances of success depended on a clear run free of new competition’. 52 In June 1988 Murdoch announced plans for Sky, a service aimed entirely at British audiences, but operating on the Luxembourg- based Astra satellite, and using the established PAL technology. This was a direct challenge to all the government’s assumptions, but the government made no response. 53 As Goodwin notes, ‘Murdoch also scored a marketing goal, creating an image of Sky television as the cheap and quick route into the world of satellite television.’ 54 Sky launched its four-channel service in February 1989. The bulk of the programming was repeats and US material. The directors of BSB were horrified. They ‘had agreed to use an untested and expensive new technology, D-MAC, and an unlaunched satellite, Marco Polo’ in return for a monopoly. 55 When they met Mrs Thatcher to voice their objections, they ‘received a short lecture on the virtues of competition. She told them to stop whingeing and sent them away.’ 56 To meet the challenge, the BSB partners pledged a further £900 million in January 1990, in addition to the £423 million already committed. 57 These were unprecedented amounts in British Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 165 broadcasting. Finally, BSB launched, in April 1990, 15 months after Sky, which already had 600,000 dishes in place. 58 Both sides were scrambling to buy exclusive programming rights for movies. Sky signed Fox, Orion, Touchstone and Warner Bros for an estimated £60 million, while BSB contracted with Paramount, Universal, MGM/United Artists and Columbia for £85 million. 59 Shawcross writes, ‘During the summer of 1990, the Sky-BSB battle to sell dishes increased in ferocity. BSB was thought to be losing £8 mil- lion a week and Sky £2 million.’ 60 As both sides bled money, they became increasingly desper- ate to reach an agreement. Finally, on 2 November 1990 it was announced that Sky and BSB would merge to create BSkyB, oper- ating on the Astra satellite and using PAL. Murdoch had alerted ‘Margaret Thatcher to the merger deal a few days before it was publicly announced. The Prime Minister did not see fit to warn her Cabinet colleagues.’ 61 So ‘Peter Lloyd, the Broadcasting Minister, only learned about it when he read his morning newspaper.’ 62 In theory, the IBA was in control of the satellite licence, so BSB was not in a position to dispose of it, or to make the merger with Sky the way it had. 63 When news of the merger was announced, the IBA was furious. 64 But it soon felt compelled to give in to the commercial reality, especially in the absence of any strong counter- indications from the government. This was very much a shotgun marriage. The two sides detested each other. Murdoch thought BSB deserved to die. 65 For Murdoch: the Sky team was lean, young and dedicated. By contrast, BSB was burdened with a big, highly paid management, [who] behaved like established fat cats. 66 From the BSB and IBA point of view, Murdoch had, in effect, ‘seized control of a British television station, BSB, and was now daring the authorities to deny it to him’. Former IBA Chair- Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 166 man Lord Thomson called it a ‘brutal Wapping in outer space’. 67 The Labour Party charged that the merger made a mockery of the new Broadcasting Act. Murdoch responded: They hate the idea of a competitive society, and it is only companies like ours that have the guts and strength to risk everything in building a competitor to the existing monopoly. That’s what we are all about. 68 He sought to portray Sky as the under-resourced but entrepreneur- ial outsider overcoming the establishment organisation. The truth is almost the opposite of Murdoch’s formulation. BSB received no public subsidy, but had to meet onerous publicly imposed obligations, which put it at a severe commercial disadvan- tage. The only justification for this was protection of its monopoly status, at least until its services were established. It had accepted the franchise on one set of conditions only to find the government had allowed that position to be completely undercut. Allowing the merger to proceed on terms very favourable to Sky was not the last piece of assistance the Thatcher Government gave to Murdoch. Newspaper owners were limited to 20 per cent of domestic satellite broadcasters, but Sky and then BSkyB were judged not to be domestic, so Murdoch was allowed to exceed that. This helped ensure that he would always be by far the biggest share- holder. And again, with the 1988 European Broadcasting Directive, which required channels to broadcast at least 50 per cent European programming. The UK Home Office decided this did not apply to BSkyB movie channels, and so it was able to continue with its overwhelmingly US fare. 69 Lastly, Thatcher decreed that the BBC must pay £10 million a year to be transmitted on the Sky platform, although across the rest of Europe commercial broadcasters paid public broadcasters for the privilege of using their content. 70 The British Government portrayed itself as a bystander, Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 167 allowing market forces to play out. It claimed that although BSkyB’s programming operated out of London and was directed at a British audience, its satellite rights were based in Luxembourg, and there- fore the government lacked direct jurisdiction. In subsequent years the Tory Government ‘acted successfully to drive [European-based] UK-directed pornographic channels out of business’, but such powers were never used to curb Sky or BSkyB. 71 It is hard to exaggerate just how far the outcome differed from the satellite policies the Conservative Government had been pro- claiming. BSkyB did not use or advance UK technology, or contrib- ute to the industrial goals the government had embraced. It went back to PAL television, and so ‘put high-definition television in Britain … on hold for a decade’. 72 It was dominated by a non-UK- controlled company and it broadcast heavily non-UK program- ming. 73 The Thatcher Government had willingly connived in making a mockery of its own policies. In doing so, it laid the ground- work for what eventually would become a powerful monopoly, as ‘the real strength of News in Britain lay in the astonishing success of BSkyB’. 74 Murdoch was speaking accurately when he told Andrew Neil, ‘we owe Thatcher a lot as a company’. 75 Hawke-Keating Labor and Murdoch When Murdoch renounced his Australian citizenship in September 1985, he became ineligible to hold an Australian television licence. However, as he told Kiernan, he ‘was sure he would figure out some way to get around’ the Australian law: ‘Perhaps the government would make him an “honorary citizen”.’ 76 Murdoch entered into a protracted period of negotiation with the Australian Broadcasting Tribunal (ABT) as he attempted to restructure arrangements so that he would remain the major shareholder and continue to reap prof- its from the Ten stations, but no longer ‘control’ the stations. His voting stock would be quarantined below the permissible 15 per Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 168 cent, for example. 77 Eventually the ABT referred Murdoch’s pro- posal to the Federal Court to rule on its legality. This long delay profited Murdoch greatly, because in the interim the Hawke Gov- ernment introduced a new media policy, which sparked a scramble for media assets. When Hawke came to power in March 1983, the media structure in Australia was one of entrenched, stable oligopoly. Four compa- nies – Murdoch, Fairfax, Packer and the Herald and Weekly Times (HWT) – dominated. The minister, Michael Duffy, was consult- ing with various stakeholders for two changes in TV policy. There were proposals for aggregation of rural areas to bring competition where there was only a single commercial channel, and there were proposals about reforming the ‘two station rule’. This limited any company to owning two TV stations, but it took no account of the size of the population the channels reached. So stations in, say, North Queensland, counted the same as channels in Sydney and Melbourne, which together reached 43 per cent of the TV market. At that time, Packer and Murdoch both had a Sydney-Melbourne axis. The third network, Seven, was split between Fairfax in Sydney and HWT in Melbourne. Duffy was in favour of redefining the ownership limits so one company could own channels able to reach 43 per cent of the popu- lation, but was opposed by Hawke and Keating. The media issue became, according to media analyst Paul Chadwick, ‘the most inter- nally divisive of the Labor Government’s first five years’. 78 During one tense standoff, another reform-minded minister, John Button, challenged the prime minister: ‘Why don’t you just tell us what your mates [Murdoch and Packer] want?’ ‘It’s nothing to do with my fucking mates,’ an angry Hawke is said to have replied, ‘they’re the only ones we’ve got.’ 79 The deadlock was resolved when Treasurer Paul Keating convinced Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 169 the others to go with a much larger limit (initially 75 per cent), but also to introduce a ban on cross-media ownership, making it impossible to own a newspaper and a TV channel in the same market. In Keating’s phrase, an owner could be a prince of print or a queen of the screen, but not both. Existing arrangements would be unaffected (‘grandfathered’), but the law would apply to all future acquisitions. Banning cross-media ownership was a principle con- sistent with a longstanding Labor view that media ownership was too concentrated. This won assent in Cabinet, and the new policy was announced by press release the day after parliament had risen for the long summer recess. The effect, and probably the intent, was to advantage Packer and Murdoch and to disadvantage Fairfax and HWT. Packer had no newspapers, so was not affected by the cross-media change. Even- tually Murdoch would sell out of television, and so likewise would be unaffected. Fairfax and HWT’s pattern of newspaper and televi- sion ownership made it very hard for either to expand. It transpired that Keating had consulted the first two but not the last two before the changes were made public. As Peter Bowers put it in the Sydney Morning Herald, ‘Keating sees the cross-media rule as historic because it looks after Labor’s long-term interests first, looks after Labor’s mates second, and pays back Labor’s enemies third.’ 80 Many media players thought that the changes represented the last chance to gain entry into television, and it triggered a scramble for position, with unprecedented prices. Even though the changes did not become law until the following May, there was immediate action. In the 12 months between November 1986 and November 1987, 13 of Australia’s 19 metropolitan daily newspapers changed ownership, three of them twice, and 11 of the 17 metropolitan com- mercial TV channels changed owners, two of them twice. None of the four companies which had dominated Australian television in November 1986 had a single channel by November 1987, and the Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 170 three major players who dominated the networks in late 1987 all exited the industry within the next five years, with the Ten network going through two ownership changes. 81 The first, biggest and most controversial single transaction was Murdoch’s purchase of the Herald and Weekly Times. Murdoch described the bid he made on 3 December 1986 as the biggest news- paper takeover in the English-speaking world. 82 As it stood then, if Murdoch did not, or was not forced to, dispose of anything, the pur- chase would have given him more than three-quarters of the daily press, and a great number of television stations. Murdoch journalists wrote as if the deal was already a fait accompli, with Brian Frith in the Australian saying the ‘Flinders Street fortress (HWT) fell in a single day’, and that Murdoch’s generous offer had shattered its ‘long sup- posed impregnable takeover defence’. 83 In fact the ‘mind-boggling number of cross shareholdings’ 84 proved much harder and more expensive to penetrate than Murdoch had anticipated, especially as there were counter-bids from Holmes à Court and later Fairfax for parts of the group. Indeed the ‘takeover battle for the Herald and Weekly Times was probably the longest, most involved and most litigious of any action in Australia’. Rather than being over in one day, it dragged on through many complications for nine weeks. 85 From the beginning, Murdoch was confident of the govern- ment’s support. He told HWT chief executive John D’Arcy at the beginning of November, ‘There will be no trouble with the govern- ment.’ Before then both D’Arcy and Murdoch had believed that neither the government nor the Trade Practices Commission would allow any merger that gave one publisher more than 50 per cent of the metropolitan newspapers, but now Murdoch’s ‘attitude was completely different, and it became apparent to me that he had a deal with’ Bob Hawke. 86 D’Arcy thought ‘that Hawke and Keating had an incredible hatred of HWT and Fairfax’ and affirmed journalist Geoff Kitney’s observation that Hawke’s reaction to Murdoch’s takeover bid was Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 171 ‘almost joyful’. 87 Former Fairfax editor Vic Carroll wrote: Hawke told some senior ministers in the week before the key Cabinet meeting [in late 1986] that if Cabinet approved the new 75 per cent ownership rule for the Packer and Murdoch groups then his government would win the next election. 88 Hawke called Fairfax ‘the natural enemy of Labor’ and HWT ‘a vio- lent, virulent anti-Labor journal’. 89 He also said the old HWT man- agement was ‘viciously anti-Labor, so if Mr Murdoch were to fire a few salvoes at us, it couldn’t be worse than what we have been enduring’. 90 Keating told the right faction of the Labor caucus that ‘Hawke was confident Packer and Murdoch were on Labor’s side.’ 91 These views were widely shared among senior ALP politi- cians. Labor national secretary Bob McMullan told Labor MPs they should be ‘dancing in the streets’. 92 Former premier of New South Wales Neville Wran said that he’d ‘like to see Murdoch own 95 per cent of the papers in Australia’. 93 Victorian Premier John Cain, after ‘friendly and cordial’ talks with Murdoch, said, ‘Mr Murdoch is a newspaperman – I have no worry about him owning the Herald and Weekly Times.’ 94 When John Menadue expressed dismay to his close friend, senior government minister Mick Young, Young replied, ‘The Herald and the Fairfax people – they’re always against us. But you know, sometimes Rupert is for us.’ 95 Another minister put it more pessimistically: there is no way ‘we can fuck Rupert Murdoch with- out fucking ourselves’. 96 Quite apart from the way that none of these politicians seemed to see any democratic problem in this unprecedented media con- centration, their pragmatism was based on problematic assump- tions. Murdoch’s (and Packer’s) quid was far more obvious than Labor’s quo. Packer exited the industry for some years, and even after his return it would be hard to make a case that the Nine Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 172 network showed any partiality towards Labor. He made one public statement praising the Hawke Government, but after the 1993 elec- tion, as the electoral tide was changing, he very publicly swung his support behind Howard, much to Keating’s disgust. 97 Nor did the Murdoch press campaign strongly for Labor in 1987: according to Chadwick, ‘Murdoch indicated to some of his journalists that he wanted election editorials to steer a middle course, although they could lean slightly to the party they thought looked the best.’ 98 Given that his concentration of ownership was politically sensitive, he took the prudent course, and for the first time papers he owned editorialised in favour of different parties. In 1987, Fairfax papers were more editorially supportive of Labor than Murdoch ones. 99 From 1993 and for the next several elections, News Limited news- papers were predominantly on the Coalition side. On the other side of the ledger, one leading analyst estimated the combined selling price of the Nine and Ten networks before the government’s policy change at about $800 million; after the change they commanded $1.9 billion. So in return for some temporary, tepid, qualified sup- port, the two proprietors enjoyed a windfall of $1.1 billion. Equally puzzling is the perception of the Murdoch and Packer groups as ‘mates’ and of Fairfax and the HWT as enemies. 100 In Australia, Murdoch’s support for the Hawke-Keating Labor Gov- ernment came only after it was elected. In 1983 the only metro- politan paper editorially endorsing Labor was the Fairfax-owned Age. In 1984 every metropolitan newspaper that expressed a pref- erence, except the Hobart Mercury, editorialised for the re-elec- tion of the Hawke Government, so it had the support of all three major groups. 101 Some HWT papers, particularly the Melbourne Herald, had campaigned strongly against the government’s propos- als on superannuation taxation, but so had most Murdoch papers. On the basis of interviews with 223 journalists around Australia in the early 1980s, I concluded that among the three companies, journalists’ accounts of political intervention and direction were Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 173 very roughly in the ratio of News Ltd 10; HWT 4; Fairfax 1. 102 While there were pieces of reporting in both Fairfax and HWT papers (and on the ABC) that angered government leaders, 103 the differences seem to have been more in attitude than content. It was the lack of direction from the top in the ABC and Fairfax that the Labor deal-makers seemed to find difficult. They thought that some of Fairfax’s journalism was ‘out of control and dangerous’. 104 Mal- colm Fraser recognised the differences between the groups when he was seeking their support in 1975. He spoke to Murdoch, Packer and James Fairfax, ‘but in the knowledge that the Fairfax papers ran differently to News Ltd – the views of the proprietor were not necessarily reflected in the copy the reporters wrote’. As for Packer and Murdoch, Fraser said, ‘We did not believe the fiction that media barons do not control the policies of their papers.’ 105 Keating also clearly enjoyed being a participant, helping to shape the big moves that were remaking the Australian political landscape. He had given Murdoch and Packer, but not Fairfax, advance notice of the proposed changes. When Fairfax general manager Greg Gardiner telephoned Holmes à Court, Keating was with the latter, and – unbeknownst to Gardiner – listened in. Keat- ing then warned Murdoch that Holmes à Court was serious, and that he [Murdoch] would have to negotiate; he thought his inter- vention with Murdoch was crucial in this happening. 106 Afterwards he gloated to Fairfax executives, ‘I hurt you more than you hurt me.’ 107 There were three regulatory hurdles Murdoch had to clear. The first was his proposal to keep the Ten TV licence by reorganising the control structure of the channels. The second was Foreign Invest- ment Review Board approval for foreign ownership of the HWT newspapers. The last was Trade Practices Commission approval: the level of concentration in newspaper ownership did not breach its policies. Murdoch failed the first – causing him then to sell his Channel Ten stations – and passed the other two. Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 174 On 20 January 1987, Murdoch’s hopes had to be radically scaled back after the full bench of the Federal Court ruled that he could not own an Australian television licence because he was not an Australian citizen. One judge said that the talk of restructuring News Limited was a ‘sham’. 108 This had implications not only for the disposal of the Ten network, but for News’s wish to acquire HWT, as News, as a foreign company, would not be allowed to own its broadcasting assets either. A few days later the ABT indeed announced an inquiry into Murdoch’s status as a foreign person. The ABT made no specific finding on the matter at this stage. In order to pre-empt potential legal difficulties, the HWT Board itself auctioned off its broadcasting assets, and they were all disposed of before the company passed into foreign hands. The decision also brought an extraordinary response: on 22 January, News Limited issued a public statement disowning Rupert Murdoch: A number of statements have recently appeared in the press and elsewhere attributed to Mr K.R. Murdoch relating to News Limited and in particular its takeover bid for the Herald and Weekly Times … The board wishes, however, to point out the following. 1. Although Mr Murdoch was formerly a director of News Ltd, he is no longer a director and he holds no office in the company. 2. Mr Murdoch has no authority to speak on behalf of or to bind News Ltd. 109 This fiction required one to ignore recent history. On the day the bid was launched, Murdoch had been photographed with his mother, with much talk about how proud his father would have been, and commentary on him reclaiming his ‘birth right’. The chair of the ABT, Deirdre O’Connor, pointed out that when Murdoch had talked about the imminent moves, he had talked of ‘his’ take- over of HWT and ‘his’ plans to sell some of its assets. 110 The charade Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 175 did not last long. In the coming days and weeks, Murdoch certainly acted as if he was in charge, and no protest from the Board ever became public. The Foreign Takeovers Act gave the treasurer power to prohibit a purchase of a corporation by foreign persons if that control was deemed contrary to the national interest. A four-member Foreign Investment Review Board (FIRB) would advise the treasurer, who would then make a public announcement of his decision, often without giving any grounds. The FIRB’s advice in this case has never been made public. Treasurer Keating approved Murdoch’s purchase of HWT, and so a majority of the nation’s papers passed into for- eign hands. On the three other occasions during Keating’s period in gov- ernment when decisions involving foreign takeovers of newspapers arose, he rejected the applications. He prevented Robert Maxwell buying the Age and stopped a Malaysian company buying half of the afternoon paper, the Perth Daily News. 111 Famously, he refused to allow Conrad Black to lift his stake in Fairfax, until he saw how bal- anced their coverage during the 1993 election was. 112 Keating also rejected Murdoch’s attempted purchase of the majority of the news agency Australian Associated Press, but approved his acquisition of AAP’s share of Reuters, and also of half of Australian Newsprint Mills. 113 When the Murdoch decision was being made, leading fig- ures tended to appeal to sentiment rather than law, to argue that Murdoch was ‘really’ an Australian. 114 John Singleton’s advertising on Murdoch’s behalf had a double-page spread headed ‘Is the great- est Living Aussie a Yank?’ 115 The Trade Practices Commission (since replaced by the Austral- ian Competition and Consumer Commission [ACCC]) had a man- date to weigh the competition impact of the takeover. The TPC said it was: satisfied that the acquisition of HWT by News Ltd, viewed Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 176 overall, has not increased concentration of ownership of the print media in Australia. Rather has ownership become more widespread. 116 It argued that while the Act precludes one company’s domination, it does not preclude duopolies. The TPC head, Bob McComas, argued: There isn’t any doubt in my mind that a large part of the comment was due to the person behind News rather than the acquisition itself. It is important to recognize that there was a particular feeling about the takeover which in no way related to the law. 117 It would have been a politically hazardous course for any regulator to align itself against such powerful forces, though there were some, albeit limited, grounds for an optimistic conclusion to the taking of such a position. In no metropolitan market was the number of competitors immediately reduced. Ownership of afternoon papers – much weaker financially than morning papers – was more dis- persed. None of this suffices, however, to deal with the elephant in the room: since these deals, the largest company accounted for around two-thirds of metropolitan newspaper circulation, a much bigger share than in any other democratic country. 118 Unfortunately for the TPC, almost immediately some arrange- ments began to fall apart. As Frank Lowy’s Northern Star company extended its TV reach, it wanted to offload the Brisbane and Ade- laide papers it had bought from Murdoch. In August 1987 control of the two papers passed to local managements – who had previously worked for News Limited, whose financing was arranged by News Limited, and whose printing and distribution were negotiated with Murdoch. 119 It would be hard to argue that such arrangements con- stituted them as independent entities, let alone strong competition. Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 177 The newspaper casualties were quick to come: Business Daily, a new national business newspaper backed by HWT, did begin, as planned, in July 1987, but in the face of News Limited’s hostility it closed after only six weeks. 120 In the early 1980s, Murdoch had launched a new daily in Brisbane, the Daily Sun, to compete with the Courier-Mail. Within a year of gaining control of HWT in 1987, he closed the Brisbane afternoon paper the Telegraph; the Sun switched to afternoons, and so Brisbane’s newspapers were reduced from three to two. 121 Third, Holmes à Court closed his weekly Western Mail in December 1987, as he now owned Perth’s daily newspapers. On 9 February 1987, Murdoch, having achieved his goals in newspapers, finally bowed to legal necessity (and perhaps to his own financial needs) and sold his TV channels to Lowy. The delay had been financially rewarding. He was paid over $800 million, 122 which some estimate at more than double what he would have received if he had sold in September 1985. 123 Cross-media ownership between newspapers and television had disappeared, but concentration within both had increased mark- edly. In addition, the upheavals had weakened both industries. Nev- ertheless, Treasurer Paul Keating was pleased with his handiwork. In 1990, he said the result was ‘a beautiful position compared with what we did have’. Between 1988 and 1991, 1200 journalist jobs disappeared, the biggest loss in the industry’s history, as seven of 19 metropolitan daily papers closed, and commercial TV staff declined from 7745 to 6316. 124 Meanwhile, Murdoch had, as he proclaimed, completed the biggest newspaper takeover in the English-speaking world, and achieved an unassailable position in the Australian press. Hawke’s Labor successors have had ample opportunity to regret the misdirected pragmatism of his government, which allowed one company to dominate press ownership in a way that is clearly det- rimental to democracy. Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 178 Blair and Murdoch For everyone in the British Labour Party, the savagery of the tab- loids during the 1992 election was a pivotal experience. Even the political beneficiary of it all, Conservative Prime Minister John Major, described the campaign against Labour leader Neil Kin- nock as ‘pretty crude’ and ‘over the top’. 125 Alastair Campbell had no doubt ‘that the systematic undermining of Labour and its leader and policies through these papers … was a factor in Labour’s inabil- ity properly to connect with the public, and [its] ultimate defeat’. 126 Blair himself resolved: ‘I was absolutely determined that we should not be subject to the same onslaught.’ 127 He told tabloid editor Piers Morgan that ‘I had to court [Murdoch] … It is better to be riding the tiger’s back than let it rip your throat out. Look what Murdoch did to Kinnock.’ 128 Just as the experience made Blair determined to avoid any repeti- tion, it meant others in the Labour Party were likely to be affronted by any dealings he had with Murdoch. Kinnock vented his anger one night at dinner with Campbell: ‘You imagine what it’s like having your head stuck inside a fucking light bulb’ [referring to the Sun’s infamous front page on election day], he raged at me, ‘then you tell me how I’m supposed to feel when I see you set off halfway round the world to grease him up.’ 129 Blair’s approach was more attuned to strategy than to moral judge- ment. In government, on one occasion when Campbell was indig- nant over some mistreatment by the Murdoch press, Blair advised that ‘he was worried my [Campbell’s] sense of injustice about what they did was clouding my judgement about how to deal with them’. 130 Blair described his early period as opposition leader, from 1994, as one of ‘courting, assuaging and persuading the media’. 131 Part Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 179 of what he wanted was to abandon the party’s platform on media reform. He told the Leveson Inquiry that Labour made a strategic decision not to tackle the problem of media power: ‘[I’m] being open about the fact that, frankly, I decided as a political leader that I was going to manage that and not confront it.’ 132 He felt that any policy on changing the law on the media: would have been an absolute confrontation. You would have had virtually every part of the media against you in doing it, and I felt that the price you would pay for that would actually push out a lot of the things I cared about …133 Blair went beyond making a strategic decision about choosing which battles to fight, however. He sought political advantage when the Major Government moved towards some limits on media ownership which would have disadvantaged Murdoch. Responding to pressures to alleviate the previous total ban on newspapers being allowed to have a commercial TV licence, 134 Major moved towards the then fashionable view of framing ownership limits by defining a ‘share of voice’ across media. In 1995, his government proposed prohibiting newspaper companies with more than 20 per cent of national circulation applying for ITV licences. This would cut out the Mirror group and Murdoch. 135 McKnight notes that ‘A witness to Murdoch’s reaction saw him driven into a “furious rage”.’ 136 Blair moved to exploit the proprietor’s discontent. ‘It’s not a question of Murdoch being too powerful,’ he commented. 137 Labour wanted the 20 per cent limit raised, so instead of being on the more regulatory side, Labour was now on the more deregulatory side. The minister, Virginia Bottomley, accused Labour of ‘lurching from paranoid terror of large media groups to sycophantic devotion to them’. 138 The stance was not driven by policy merits, she claimed. Rather ‘it was a carefully calculated political stratagem designed to curry favour’. 139 Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 180 Labour had Murdoch’s support in 1997, and won, although as Campbell observes, ‘The Sun backed us because they knew we were going to win. We did not win because they backed us.’ 140 This set the scene for one of the more extraordinary prime minister-press proprietor relationships in British history. On the one hand, the government was at pains to please Murdoch. For example, Blair ensured that Murdoch sat next to Chinese President Jiang Zemin at a state dinner in London, 141 according him status and the chance to advance his business aspirations in China. Labour favoured the Murdoch press with interviews and leaks of important announce- ments, 142 and the likely reaction of Murdoch was in the forefront of government thinking when deciding policy: ‘No big decision could ever be made inside No. 10 without taking account of the likely reaction of three men – Gordon Brown, John Prescott and Rupert Murdoch.’ 143 This was most obvious in policy on Europe, but as former Blair staffer Lance Price observed, ‘the influence of the Murdoch press on immigration and asylum policy would make a fascinating PhD thesis’. 144 Yet at the same time the government was paranoid about its dealings with Murdoch becoming public: ‘In the past week both Murdoch and the new editor of the Sun, David Yel- land, were in Number Ten for dinner – not something we’ve been advertising,’ 145 recorded Price in his diary. This confluence of an eagerness to please Murdoch, and a reluctance to acknowledge any relationship with him, produced an unnecessary embarrassment for the government. During a phone call, British Prime Minister Tony Blair – at Murdoch’s request – asked Italian Prime Minister Romano Prodi what his attitude was to Murdoch’s wish to acquire Berlusconi’s Mediaset company, and Prodi replied that he would prefer an Italian company. This epi- sode blew up into a momentary controversy after the conversa- tion became public. When the story first surfaced in March 1998, Campbell extravagantly denounced it as ‘a joke, C-R-A-P, balls’. But uncomfortable backtracking quickly followed, mainly centring on Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 181 the meaning of the word ‘intervene’. Blair then made public state- ments about his willingness to help ‘any business with British inter- ests’, but as one Labour MP observed, the government’s handling of the issue was a ‘rather unedifying spectacle of half-truths and non-denial denials’. 146 As Piers Brendon notes, ‘When revealed, this piece of lobbying embarrassed Blair as much as it delighted Mur- doch [who] bragged about his access.’ 147 Did this translate into tangible policy favours? Campbell and Blair both emphasised to the Leveson Inquiry that several of their media policies ran contrary to News International’s interests. For example, they increased the BBC licence fee; they blocked Mur- doch’s proposed takeover of Manchester United; and they expand- ed and strengthened the role of the regulator, Ofcom. 148 In each of these cases they were responding also to larger pressures in society and in the Labour Party. On other occasions, they clearly resisted wider currents for reform. For example, they refused to back moves in the House of Lords against predatory pricing in newspapers in February 1998, 149 when the Times was seeking to drive its competi- tors out of business using exactly this tactic. The government also opposed – in contrast to previous Labour policy and many other voices – any attempts to tighten anti-monopoly provisions in the media. The occasion when the Labour Government ruled most directly against Murdoch’s interests was over his bid to acquire Manchester United. Murdoch bid £623 million, which the club accepted in Sep- tember 1998. Supporters’ groups and others immediately opposed the takeover. In October, the Trade Secretary, Peter Mandelson, referred the bid to the Monopolies and Mergers Commission. Mur- doch was unhappy about the referral. The following April, after a six-month investigation, the government ruled against the bid. 150 The Sun and the Times both criticised the decision, and said football would be the loser. The Guardian took the contrary view, with its editorial, ‘Murdoch 0, Football 1’. 151 Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 182 The Commission’s report was ‘highly suspicious of BSkyB and United, concluding that promises offered by the two companies to help the deal go through were unlikely to be kept’. 152 Although there were and are other privately owned clubs, there were particu- lar issues with BSkyB owning Manchester United. It would make it very difficult for any other broadcaster ever to win the rights for the English Premier League. It would give BSkyB an incentive to give preference to Manchester United over other clubs. At worst, it could be the basis for BSkyB to support a breakaway competition, à la SuperLeague in Australian rugby league. Price gave an insight into how worried Blair was by the decision: He is, of course, totally preoccupied by Kosovo at the moment, but also very exercised by the decision yesterday to block Sky’s bid for Manchester United. No matter what we say publicly, he’s very concerned to keep Murdoch on board … He was furious that the DTI [Department of Trade and Industry] let it be reported that the government had blocked the deal, rather than the Monopolies and Mergers Commission. 153 Apart from observing ‘no-go areas’, the one area where the Blair Government adopted a policy that clearly advantaged News Inter- national was in the Communications Act of 2003, which for the first time withdrew all foreign ownership restrictions on British broadcasting, and allowed major newspaper proprietors to own the new Channel 5 terrestrial licence, but not the original commercial Channel 3 licences. 154 As Brendon puts it, ‘Official denials merely convinced critics that this did not so much create a “level playing field as a landing strip for Rupert Murdoch”.’ 155 Neil testified before the Leveson Inquiry that Murdoch had lobbied Blair for changes in media laws that would end the ban on foreign ownership of TV licences. 156 Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 183 Leveson concluded, perhaps generously, that: the evidence does not support an inference of an agreement between Mr Murdoch and Mr Blair. Not only did Mr Blair flatly deny any such deal but the contemporary papers … reveal very considerable thought, genuine debate and reasoned decision making during the development of the policy underpinning the 2003 Act. Murdoch’s lobbying style The news media pride themselves on their ability to penetrate official secrecy and maintain public accountability. It is some- what ironic then that News Corp shows such a strong preference for closed policy processes and a tendency to evade public com- mitments. Murdoch’s dealings with governments and regulatory agencies show just how much access, at the very top levels of all governments, he and his representatives have enjoyed. They also show his preference for closed and informal decision-making pro- cesses. As Leveson commented: There is a very powerful incentive and momentum precisely for the lobbyists of the press to guide their political relationships into the private sphere of friendships … Such friendships not only intensify the influence of the lobbyist, they pull the relationship (including its lobbying dimension) out of the sphere of accountability. 157 Probably Murdoch’s closest relationship with a regulator was with the Reagan-appointed chair of the US Federal Communications Commission (FCC), Mark Fowler. Fowler’s Reaganite views led him towards radical deregulation: ‘Over four years he got rid of 70 per cent of the rules and regulations that governed American Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 184 broadcasting.’ 158 Beyond this Murdoch and Fowler had a close per- sonal relationship: they were ‘virtual soul mates, proponents of the free market and determined to do away with regulation at all cost … [Murdoch described Fowler] as one of the great pioneers of the communication revolution.’ 159 Fowler ‘did everything he could to ease Murdoch’s passage’. 160 The FCC gave Murdoch a charmed run in the 1980s, although its most outrageous decision was of little commercial help. When Murdoch acquired six US TV stations in 1985, he also sought a waiver to keep his newspapers in New York and Chicago, despite owning TV licences in those cities. The US had had, since 1975, restrictions on cross-media ownership forbidding ownership of a TV station and a newspaper in the same city, and had never granted an exemption or even a temporary waiver to a new entrant to televi- sion. News Corp argued that it should not be forced into a ‘fire sale’, and so have to receive a lesser price for its papers. It even argued that selling at a lower price would be bad for media diversity. The FCC granted Murdoch an unprecedented two-year period of grace during which he could keep the newspapers. This decision seems impossible to justify. It was not an act of God that had put Murdoch in breach of the law, after all; it was his own deliberate actions. However, at least in the case of the New York Post, this regulatory favour essentially allowed Murdoch to keep losing money. One recurring theme throughout Murdoch’s career has been his failure to keep commitments. In 1968, Murdoch agreed not to buy any more shares in News of the World, but did so within months, the moment they became available. 161 When he took a stake in London Weekend TV in 1970, he had to give undertakings to the Inde- pendent Television Authority that he would not exercise executive power, but immediately did so. When reminded of this by the CEO he fired soon after, he simply replied, ‘Yes, but that was before I came.’ 162 He told the publisher of the New York Post, Dolly Schiff, in 1976 that he would retain the paper’s liberal, progressive character Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Reaping the rewards 185 and keep its top editorial staff. 163 In front of the Australian Broad- casting Tribunal, as he took over Channel Ten in 1979, he made a series of spectacularly inaccurate statements. He declared, ‘Chan- nel Ten will continue exactly as it is today’, but two weeks after he gained the Tribunal’s approval, the general manager was gone, and within two months so was the chairman. 164 He also said that although he held an American green card, it was not his desire to apply for US citizenship, and he could not imagine doing so. Six years later he did just that. 165 When asked whether he would seek to own Ten’s sister station in Melbourne, he answered, ‘There is no substance to that rumour, and I do not see why I should give up a very profitable station in Adelaide for a loser in Melbourne.’ But three months later he did exactly that. 166 The most controversial broken commitments – and ones which in theory were legally binding – were the guarantees of editorial independence he gave when buying the Times. Amazingly, the Ban- croft family sought to repeat the process when selling Murdoch the Wall St Journal. Murdoch found the process insulting but was ‘willing to sign on to an artificial set of rules he would inevitably circumvent’, 167 knowing that they were ‘more about other people’s need for a fig leaf than about any reasonable idea of governance’. 168 Then editor Marcus Brauchli thought: We’re all trying to put Murdoch in a straitjacket, wrap him in chains, put him inside a lead box, padlock it shut, and drop it into the East River … and five minutes later he will be standing on the bank, smiling. 169 When it comes to complying with obligations to government, Mur- doch commented to Kiernan in the early 1980s: One thing you must understand, Tom. You tell these bloody politicians whatever they want to hear, and once the deal is done Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.Rupert Murdoch 186 you don’t worry about it. They’re not going to chase after you later if they suddenly decide what you said wasn’t what they wanted to hear. Otherwise they’re made to look bad, and they can’t abide that. So they just stick their heads up their asses and wait for the blow to pass. 170 If, as former Murdoch editor David Montgomery observed, ‘Rupert has contempt for the rules, contempt even for governments’, 171 it is not surprising that his record is one of regulatory brinksmanship. He takes the view that a rule only applies if it can be enforced. Indeed, Murdoch’s capacity to affect how regulations are enforced has probably been more important than his capacity to change poli- cies through legislation. Tiffen, Rodney. Rupert Murdoch, edited by Rodney Tiffen, University of New South Wales Press, 2014. ProQuest Ebook Central, . Created from unimelb on 2017-01-31 16:27:07. Copyright © 2014. University of New South Wales Press. All rights reserved.