The Age of Murdoch

o civics text has the stomach to describe Washington's "wait in line" industry. When a famous witness is to appear before a committee of Congress, or a famous case is to be argued at the Supreme Court, tourists imagine they can drop in to watch; but they discover that the line for admission formed well before dawn. Professionals in town—lawyers, lobbyists—can't afford to be left out, especially if clients' money is at stake. So they hire services to do the waiting for them. On the days of big events, lines resembling those outside soup kitchens or for-pay blood banks snake through marble corridors in House and Senate office buildings and spill out onto the sidewalk long before most staffers show up for work. At 9:45 or so, for the typical 10:00 A.M. committee hearing, taxis and town cars begin depositing passengers who have come from breakfast or early meetings at their firms. The paid placeholders hold up little signs with names on them, like limo drivers greeting arrivals at an airport, and the switch occurs. Someone with wild hair or wearing several sweatshirts leaves his place in line or his seat in the hearing room, and someone in a nice suit steps in. Economically the arrangement makes sense, but it's a little too crass a reminder of the different standing of citizens before their democratic government.

A line formed outside the Russell Senate Office Building early one morning this May, in anticipation of a session that would combine glamour and money. Congress was beginning to pay attention to pending changes in the rules that restrict the number of radio and TV stations a person or company may own. The proposed revisions were highly technical, but if the changes went through, they would provoke a wave of buying, selling, and consolidation in the media business. In particular they would allow, and therefore presumably encourage, a large number of mergers or takeovers among newspapers and TV stations. Supporters argued that this would be economically efficient and productive, opponents that it would give too much power to too few companies. A Senate committee chaired by John McCain had summoned several expert witnesses to discuss the implications of the changes that morning, along with a man who was not directly involved in the debate but who seemed to personify media power: Rupert Murdoch.

At this hearing, as in most of his public appearances, Murdoch would dismiss the idea that he is anything like a media "baron" or that the holdings of his company, News Corporation, constitute an "empire"—a term he dislikes. The company is generally referred to as "News" or "News Corp"; politicians often pronounce the name "News Core," as if it were akin to the Peace Corps or the Marine Corps. Its main holdings are the Fox broadcast networks and Fox News, Fox Sports, FX, and other Fox cable channels in the United States; 20th Century Fox studios; thirty-five local U.S. TV stations; the New York Post plus The Times and The Sun of London; the conservative magazine The Weekly Standard; the publishing house HarperCollins; the Sky satellite system in England and the Star satellite system in Asia; the Los Angeles Dodgers, which News Corp is selling; and various publications in Murdoch's native Australia. In addition, Murdoch is now seeking federal approval to buy a one-third share in DirecTV, the leading satellite-broadcast system in North America.

To someone not named Murdoch, this might sound like a lot. But Rupert Murdoch frequently points out that the three established TV networks in the United States are part of conglomerates much larger than his. Last year the total revenues of News Corp were about $17 billion. CBS belongs to Viacom, which also owns Paramount Pictures, Simon & Schuster, Blockbuster, Infinity radio, and so on, with total revenues of $25 billion. ABC is part of Disney, with revenues of $26 billion. NBC is owned by General Electric, whose total revenues were $131 billion. Murdoch's upstart Fox News Channel, founded in 1996, has for more than a year consistently beaten the better-known CNN (founded in 1980) in cable-news rankings. CNN is part of the AOL Time Warner combine, whose revenues last year, despite the historic AOL collapse, were $42 billion—two and a half times News Corp's.

So Murdoch didn't represent the biggest media company, or even one that was directly affected by the proposed changes in ownership rules. His share in DirecTV would involve legal and regulatory issues different from the ones Congress was discussing. But Murdoch was the media heavyweight the politicians wanted to hear from, because News Corp and Fox are personal companies in a way that other networks have not been since the days of William S. Paley and "General" David Sarnoff. Murdoch and his relatives control some 30 percent of all News Corp shares, through a family trust called Cruden Investments. That stake is worth about $12 billion at News Corp's current market capitalization. Because of his role as owner, and also his market success, Murdoch's reign has been long and unchallenged in a way not seen for the past few decades, during which CBS and NBC (the networks Paley and Sarnoff founded), and most of the rest of the media world, became the province of corporations. Jack Welch was in charge of GE for more than two decades, and Michael Eisner has run Disney for nearly that long. But neither of them can expect to stay in command as long as they're physically able, which Murdoch clearly intends to do. And unlike Paley and Sarnoff, whose familial power died with them, Murdoch has planned his succession.

Whether or not News Corp is an empire, functionally it is a dynasty. At seventy-two, Murdoch is four years older than Welch—but twenty-two years younger than his own mother, Dame Elisabeth Greene Murdoch, who as of this summer was still active in Australia. (Murdoch is said to have remarked when he heard that Britain's Queen Mother had succumbed at 102, "An early death!") His father died at sixty-seven, after heart and prostate problems. After a prostate-cancer scare three years ago, Murdoch become a diet-and-fitness enthusiast. His third wife, Wendi Deng, is thirty-five. His fifth child, Grace, is not yet two, and a sixth child is on the way. He has two older daughters—Prudence, age forty-five, and Elisabeth, thirty-five—and two sons. Lachlan, thirty-two, is the deputy chief of operations at News Corp. James, who will turn thirty-one late this year, runs the Star satellite business in Asia. For several years Murdoch has been indicating that one of the sons—probably Lachlan but perhaps James, depending on how he does in the next few years at Star—or both jointly will succeed him at News Corp.

Several years ago I ended up, to my shock, sitting across from Murdoch at a long restaurant table at a crowded technology conference. He said hello and asked my name, went back to finishing his meal, and in general didn't behave as if I should be in awe of him. We discussed nothing of substance on that occasion, and News Corp officials told me not even to dream of interviewing Murdoch for this article. I was able to watch him testify and speak to groups several times, and I interviewed people who have worked or still work closely with or who have competed against him. All the associates and employees I reached, and most of the business rivals, refused even to meet for a discussion unless I agreed not to use their names. The Fox News organization is under blanket orders not to talk to the press unless pre-cleared. I did not manage to get anyone at Fox to admit the incongruity of a news organization's taking this stance.

Billionaires, based on the seven-person sample I've had the chance to observe, tend to be either superpolite and ostentatiously respectful or the reverse. Murdoch is in the polite camp. When he stepped into the Senate hearing room, his personal bearing set him apart from the senators who had asked him to appear. Senators carry themselves as if waiting to be noticed. Murdoch eased into the hearing room as if hoping not to make a stir. He was wearing a plain dark suit and not-very-stylish large glasses. His face is heavily lined; his hair is thin and combed straight back; he is of medium build. He would not stand out in a crowd. Nonetheless, TV cameras immediately surrounded him, and senators came down from behind the podium to shake his hand.

Murdoch gave a brief, upbeat opening statement that was almost identical to what he had told a different congressional committee two weeks earlier: "We have a long and successful history of defying conventional wisdom and challenging market leaders ... We started as a small newspaper company and grew by providing competition and innovation in stale, near monopolistic markets." When asked about the topic of the hearing, the new rules for media ownership, he said, to appreciative laughter, "I don't have a dog in that fight." He was being cute: although unaffected by the specific measure under discussion, he obviously supported a general relaxation of rules. Then he responded tersely but with a wry edge to what the senators, especially the Democrats, were really asking: whether he had become too powerful for the world's good.

Ernest Hollings, of South Carolina, a Democrat in his eighties who often makes folksy remarks, held up a long list of companies controlled by News Corp to counter Murdoch's self-portrayal as a small fish in the media sea. The list ran to a full ten pages. Hollings drawled, "I wish I could buy some stock in this thing."

"Any day," Murdoch deadpanned (the company is, after all, listed on the New York Stock Exchange), bringing laughter from everyone but Hollings. Murdoch then gave a discursive answer about his holdings that lasted until a light turned red in front of Hollings, signaling that his time for questions was up. "Your lawyer is good!" Hollings told Murdoch. "Your answer went past the red light." Then, thinking that the microphone was turned off, sounding both exasperated and impressed, he muttered "Jesus!"

What about the imbalance of political views on talk radio and many cable TV channels? asked Byron Dorgan, a Democrat from North Dakota. Murdoch repeated his standard claim that his news organizations always strove to be "fair and balanced." Then could he explain the fact that radio had 300-plus hours of nationally syndicated conservative talk each week, versus five hours of liberal talk?

"Yes," Murdoch said with a twinkle. "Apparently, conservative talk is more popular." As if aware that he might have needlessly shown up Dorgan, Murdoch added, in charmer mode, "If we could find a popular, amusing broadcaster to talk for an hour or two every day and he was a liberal, we'd have him on like a shot." Senator Dorgan, Murdoch said, was "doing very well" in his tryout for the job.

Barbara Boxer, a Democrat from California, pointed out that Murdoch's New York Post had introduced the label "Axis of Weasels" for France and Germany, and that his Fox News had enthusiastically repeated and amplified the message. Didn't this show that one man could become his own media echo chamber? She then asked, "Do you believe there should be any limits—at all—on how much media one individual or one company can control?" The result was a David Mamet-style dialogue.

MURDOCH: I don't know what the right limits are, but I'm certainly in favor of relaxing the existing limits, Senator.

BOXER: You're in favor of relaxing the limits! ... Well, what if you owned everything?

MURDOCH: I think there should be competition everywhere. My life has been built, and my business, [by] starting competition and starting up against—

BOXER: So we've gotten this far. So you agree there should be limits. And the—

BOXER: Good. Limits and diversity. We agree. So then the question is how much? And that's—you're saying you can't put a number on it.

or all the surreal, ultimately pointless show-trial aspects of the session, there was a larger historical logic to the meeting between Murdoch (who must have left the room thinking They didn't lay a glove on me) and the forces of government that day. Two great and opposing conceptions of the press and its role in public life had just collided. One of them holds that the press is basically different from other businesses: the unique protection it enjoys under the First Amendment gives it unique responsibilities to serve the public interest. The other holds that the news business is basically the same as other businesses. The second version—the Murdoch version—has now won, and Murdoch deserves to move from "controversial" to "visionary" status.

It is thanks largely to Joseph Pulitzer, who invented a new kind of journalism in the late 1800s, that newspapers moved from the open partisanship of an earlier era to a pretense of objectivity today. Henry Luce transformed magazine journalism before World War II with Time, Fortune, and Life. After the war a handful of television-news pioneers created the documentary form, the evening newscast, the Sunday talk show, and other staples. Then TV news changed again, starting in the late 1970s, through the efforts of, among others, Roone Arledge, of ABC, who made news profitable; Ted Turner, of CNN, who made the news cycle continuous; and Larry King and Geraldo Rivera, who merged news and entertainment.

Rupert Murdoch is this era's influential figure. His holdings have grown surprisingly fast, over a surprisingly long period of time. The cartoon explanation of his success is that he is ruthless or power-mad or even today's Hitler, as his former friend and current antagonist Ted Turner has called him. The real explanation is that he has combined several crucial ingredients—an instinct for mass taste, an appreciation of technology, a concept of strategic business structure, and a knack for exploiting political power—in a new and uniquely effective way. His is not the largest media company, but it is now the model to beat—or to imitate.

upert Murdoch was born into a newspaper family, but one far less established than those of his near contemporaries Arthur ("Punch") Sulzberger Sr., of The New York Times, and Otis Chandler, of the Los Angeles Times. (Both are a few years older than Murdoch, and both are retired.) Murdoch's father, Keith, was the son of a Presbyterian minister who had emigrated from Scotland to Australia in the 1880s. Early in life Keith decided that he wanted to be a reporter. After an apprenticeship in his home town, Melbourne, his big break came during World War I. He took part in an early version of "embedding" with Australian and New Zealand troops at Gallipoli, where he assured the commanding general that what he saw would remain confidential. In violation of that assurance, he then wrote a bitter letter to the Australian Prime Minister about conditions for ANZAC (Australia and New Zealand Army Corps) troops. Eventually the general was recalled, the troops were withdrawn, and Keith Murdoch, age thirty, became known as a man who could rock the boat. "Oh, sure, it may not have been fair," Rupert Murdoch told an interviewer, Gerard Henderson, in 1989. "But it changed history, that letter."

The rest of Keith Murdoch's rise in journalism had a similarly scrappy, anti-elite quality. He went to London and learned the techniques of mass marketing from Alfred Harmsworth, who became Lord Northcliffe, the Fleet Street genius of the time. As William Shawcross points out in Murdoch: The Making of a Media Empire (1997), a respectful and authoritative biography of Rupert Murdoch, Northcliffe's papers introduced many of the irresistibly vulgar come-ons associated with London tabloids—and, now, with the Fox network and the New York Post. A typical headline would read "DO DOGS COMMIT MURDER?" or "WHY JEWS DON'T RIDE BICYCLES." "A newspaper," Northcliffe told his acolytes, "is to be made to pay. Let it deal with what interests the mass of people. Let it give the public what it wants."

Keith Murdoch put this philosophy into effect when he returned to Australia. With Northcliffe's encouragement, he took over Melbourne's stagnant evening paper, the Herald, and revived it with racy features. Through the late 1920s he acquired other newspapers and turned them into a chain, to which he added radio stations. His son, Keith Rupert, was born in 1931. (There were also three daughters in the family.) Over the Depression decade Murdoch's newspaper and radio holdings expanded, and the family business entered a nationwide market struggle against Australia's established and respectable press dynasty, the Fairfax family, whose base was the Sydney Morning Herald. The Murdoch chain kept growing through the war and postwar years.

By the time young Rupert went off to Oxford, in 1950, Keith was in his mid-sixties, sick, withdrawing from the business, and greatly concerned about its future. While Rupert was largely frittering away his time at Oxford, his father discovered a plot led by his deputy to push him out of power within the company. "I can't die yet," Keith Murdoch said in 1952, according to Neil Chenoweth's recent book Rupert Murdoch: The Untold Story of the World's Greatest Media Wizard. "I've got to see my son established, not leave him like a lamb to be devoured and destroyed by these people." After Keith Murdoch's death, in the fall of 1952, company rivalries and disputes broke into the open, and the family's holdings were greatly reduced. Keith Murdoch had stated in his will that he hoped Rupert would "have the great opportunity of spending a useful, altruistic, and full life in newspaper and broadcasting activities"—that is, would succeed him in control of the company. But the company Rupert inherited, now called News Limited, was battered and troubled. Most of what is said about Rupert Murdoch and his operations was said about Keith Murdoch as well: that despite his great influence he always felt at odds with a respectable elite; that he understood himself to be running a family business; that he believed controversy was beneficial and understanding mass taste was indispensable. But Rupert Murdoch was also motivated to rebuild a family business that his father had created and partially lost.

Between the young Rupert Murdoch who took over an Australian family business in the early 1950s and today's globally recognized symbol of media power is a path described in hundreds of articles and numerous books. In reading through the vast public record, I was surprised to be reminded of how many dustups Murdoch has been involved in. He has been like Zelig, seemingly everywhere that important changes in media were taking place—but at the center of the action rather than the periphery.

He entered British journalism in the late 1960s and was soon in a tussle with Robert Maxwell for control of the British tabloid News of the World. Over the next fifteen years he mounted campaigns to take business and editorial control of the low-end Sun and the high-end Times and Sunday Times of London. In the mid-1980s, as Margaret Thatcher was fighting coal miners, Murdoch waged an epic battle against press unions and built an entirely new printing plant so as to operate with much cheaper labor.

He entered the U.S. newspaper world in the early 1970s, with a quiet takeover of the San Antonio Express and News; noisier takeovers of the New York Post and New York magazine soon followed. (It was under Murdoch that the Post published the great tabloid headline "HEADLESS BODY IN TOPLESS BAR.") He also owned, briefly and improbably, the Village Voice. To satisfy U.S. ownership requirements of the time, he applied for U.S. citizenship and was naturalized in 1985. Murdoch was forced to sell the Post in 1988, mainly because of the efforts of Senators Edward Kennedy and Ernest Hollings to overturn a previous waiver of ownership rules. But he bought it again, out of bankruptcy, in 1993.

His real entry into the American consciousness came with his move into television. Murdoch took over 20th Century Fox in the mid-1980s, and at about the same time announced a fanciful-sounding plan to assemble small TV stations into a fourth national network. In the late 1980s he bought the parent company of TV Guide and also began creating his Sky and Star satellite systems in Britain and Asia. In the early 1990s Fox Broadcasting shocked CBS by outbidding it for the rights to National Football League games—the first of many contracts that have made Fox the dominant broadcast sports network. Murdoch fell out with Ted Turner in the mid-1990s, and the two waged personal and business war. (After Turner compared Murdoch to Hitler, the Post ran the headline "IS TED NUTS? YOU DECIDE.") Murdoch started the Fox News Channel partly with the goal of overtaking and thus humiliating Turner's CNN.

One correction to the lead in this story. Those who are members of the Supreme Court bar are guaranteed seats. If I were covering the argument in the Court on the McConnell case, I would go up for that and have no difficulty in getting seated.

John / Billybob

2 posted on 08/26/2003 10:45:42 AM PDT by Congressman Billybob ("Don't just stand there. Run for Congress." www.ArmorforCongress.com)

To: StarFan; Dutchy; Gracey; Alamo-Girl; RottiBiz; bamabaseballmom; FoxGirl; Mr. Bob; xflisa; lainde; ..

FoxFan ping!

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3 posted on 08/26/2003 7:30:55 PM PDT by nutmeg (Is the DemocRATic party extinct yet?)

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