Phone-hacking scandal: is this the tipping point for Murdoch's empire?
For decades the US mogul has held sway over British media and political life ? but last week all that seemed to change
Shortly before nine o'clock on a Saturday evening last month an elderly man wearing a woollen jumper and slacks escorted a flame-haired woman to the back of a dining room in a Cotswolds pub. The sun was emerging after a day of rain and the jolly mood in the Oxfordshire gastropub was shared by the couple. Laughing, they settled side by side behind a stripped pine table and examined their menus.
Fellow diners scrutinising the couple attentively could have been forgiven for mistaking them for father and daughter, such was their age gap and the way they seemed to be extremely comfortable in each other's company. Whatever their relationship, clearly they were close. At one stage the woman could be seen wiping fluff off her companion's jumper.
They were still at their table, chatting casually to locals, two hours later. If they had pressing matters on their minds, they did not betray them. Only the chauffeur-driven car waiting outside the honey-stoned pub might have given a clue that they were a little out of the ordinary.
That Rupert Murdoch had chosen to spend a rare evening in the UK outside London with Rebekah Brooks, chief executive of his News International UK subsidiary, says much about the relationship between the two.
While many of their friends and colleagues, including Brooks's racehorse-training husband, Charlie, were attending George Osborne's 40th birthday party, Murdoch had chosen to spend his evening with his most loyal lieutenant, who lives close to the Kingham Plough pub, near Chipping Norton. Murdoch, who can expect presidents and prime ministers to fly all the way round the world to court him, was dropping in on his employee. The mountain was coming to Muhammad.
Although, only two days earlier, Brooks had been at Murdoch's annual summer party in London, where she had rubbed shoulders with David Cameron and the Labour leader Ed Miliband, the two would still have had much to talk about.
That party was notable for the fact that several Tory ministers, including culture secretary Jeremy Hunt, had opted not to attend, concerned about being seen to be too close to Murdoch at a time when his holding company, News Corp, was seeking a full takeover of satellite broadcaster BSkyB, a deal that rival media companies warned would cripple competition.
The putative takeover was framed by the backdrop of never-ending allegations of phone hacking at Murdoch's News of the World newspaper, which had given the media mogul's enemies plenty of ammunition to use against his BSkyB bid. How could the government endorse such a deal when one of the jewels in the crown of the Murdoch empire had been engaged in such criminality, critics asked. How could Brooks apparently have not known what was going on?
The same questions were repeated vociferously last week as evidence emerged that the phone of murdered teenager Milly Dowler had been hacked, as well as those belonging to the families of the 7/7 victims.
But Murdoch would not give his critics what they wanted: Brooks's head. For a man often labelled ruthless, it was an extraordinary defence of an employee. It was also costly. News Corp's share price dropped as analysts warned the Sky deal might be delayed.
The saga was spiralling out of control, threatening not only the Sky deal but also long-term damage to Murdoch's US interests such as Fox News and the Wall Street Journal. According to one insider, the crisis has dismayed Prince Alwaleed bin Talal whose Saudi-based Kingdom Holdings sovereign fund owns 7% of News Corp.
In a belated attempt to show how seriously it was taking the allegations, News Corp revealed that Brooks has been replaced as the head of a team investigating the phone hacking. Instead, two experienced lawyers, Joel Klein and Viet Dinh, who both sit on News Corp's board in New York, will lead the inquiry.
But it was not nearly enough. Murdoch, who was attending a conference of media bigwigs in Sun Valley, Idaho, found himself surrounded by reporters last Thursday, baying for answers. Flanked by his wife, Wendi, the ageing mogul cut a diminished figure, battling through the throng and belligerently saying he had nothing to add to a statement he made earlier in the week.
With shareholders and politicians vying to express their fury, it was left to Murdoch's son, James, News Corp's chief operating officer, to deliver the coup de gr?ce.
But, astonishingly, it was not to be Brooks's head on a plate. Instead it was the newspaper she edited between 2000 and 2003. The News of the World, Britain's bestselling Sunday paper, was to be axed after 168 years, Murdoch Junior revealed in an email sent to all News International staff. A fleeting visit from Brooks to the paper's newsroom, in which ? soft-voiced, dry-eyed and rambling ? she spoke of her affection for the paper, confirmed its demise to the few shell-shocked staff who were there to hear her.
As a damage limitation exercise, it was as brutal as it was unprecedented. But in sacrificing its massively profitable Sunday title, the Murdoch empire has triggered more questions than answers. Questions that will now dismantle what became an unholy alliance of politics, press and police.
?Bury your mistakes,? Rupert Murdoch is fond of saying. But some mistakes don?t stay buried, no matter how much money you throw at them.
Time and again in the United States and elsewhere, Mr. Murdoch?s News Corporation has used blunt force spending to skate past judgment, agreeing to payments to settle legal cases and, undoubtedly more important, silence its critics. In the case of News America Marketing, its obscure but profitable in-store and newspaper insert marketing business, the News Corporation has paid out about $655 million to make embarrassing charges of corporate espionage and anticompetitive behavior go away.
That kind of strategy provides a useful window into the larger corporate culture at a company that is now engulfed by a wildfire burning out of control in London, sparked by the hacking of a murdered young girl?s phone and fed by a steady stream of revelations about seedy, unethical and sometimes criminal behavior at the company?s newspapers.
So far, 10 people have been arrested, including, on Sunday, Rebekah Brooks, the head of News International. Les Hinton, who ran News International before her and most recently was the head of Dow Jones, resigned on Friday. Now we are left to wonder whether Mr. Murdoch will be forced to make an Abraham-like sacrifice and abandon his son James, the former heir apparent.
The News Corporation may be hoping that it can get back to business now that some of the responsible parties have been held to account ? and that people will see the incident as an aberrant byproduct of the world of British tabloids. But that seems like a stretch. The damage is likely to continue to mount, perhaps because the underlying pathology is hardly restricted to those who have taken the fall.
As Mark Lewis, the lawyer for the family of the murdered girl, Milly Dowler, said after Ms. Brooks resigned, ?This is not just about one individual but about the culture of an organization.?
Well put. That organization has used strategic acumen to assemble a vast and lucrative string of media properties, but there is also a long history of rounded-off corners. It has skated on regulatory issues, treated an editorial oversight committee as if it were a potted plant (at The Wall Street Journal), and made common cause with restrictive governments (China) and suspect businesses ? all in the relentless pursuit of More. In the process, Mr. Murdoch has always been frank in his impatience with the rules of others.
According to The Guardian, whose bulldog reporting pulled back the curtain on the phone-hacking scandal, the News Corporation paid out $1.6 million in 2009 to settle claims related to the scandal. While expedient, and inexpensive ? the company still has gobs of money on hand ? it was probably not a good strategy in the long run. If some of those cases had gone to trial, it would have had the effect of lancing the wound.
Litigation can have an annealing effect on companies, forcing them to re-examine the way they do business. But as it was, the full extent and villainy of the hacking was never known because the News Corporation paid serious money to make sure it stayed that way.
And the money the company reportedly paid out to hacking victims is chicken feed compared with what it has spent trying to paper over the tactics of News America in a series of lawsuits filed by smaller competitors in the United States.
In 2006 the state of Minnesota accused News America of engaging in unfair trade practices, and the company settled by agreeing to pay costs and not to falsely disparage its competitors.
In 2009, a federal case in New Jersey brought by a company called Floorgraphics went to trial, accusing News America of, wait for it, hacking its way into Floorgraphics?s password protected computer system.
The complaint summed up the ethos of News America nicely, saying it had ?illegally accessed plaintiff?s computer system and obtained proprietary information? and ?disseminated false, misleading and malicious information about the plaintiff.?
I'll believe corporations are persons when Texas executes one.: LBJ's Ghost
One of the first voices to blow the whistle on phone hacking - former News of the World journalist Sean Hoare - has been found dead at his home in Watford, about 40km northwest of London.
Police said the death was being treated as unexplained but was not considered suspicious.
Hoare was quoted by The New York Times saying that phone hacking - listening to the voice mail of celebrities, politicians, other journalists or even murder victims - was widely used and even encouraged at the News of the World under then-editor Andy Coulson.
"Everyone was doing it," Hoare told the US paper. "Everybody got a bit carried away with this power that they had. No one came close to catching us."
Speaking to BBC Radio 4's PM program, he said phone hacking was "endemic" in the newspaper industry.
Hoare, who worked on the Sun before being recruited by Coulson to work on the NOTW, said: "He [Coulson] was well aware that the practice exists. To deny it is a lie, simply a lie."
Coulson denies the allegations.
Hoare's claims were passed to Scotland Yard but they said he declined to give evidence.
The former News of the World showbusiness reporter was found after being reported as missing, police sources confirmed.
A neighbour, who did not want to be named, said Hoare struggled with alcohol abuse, and he had looked increasingly unwell in recent weeks.
The man said he knew the former journalist quite well because Hoare would talk to him about his problems.
He said Hoare was "paranoid" about people seeing him, and he was fearful of the police and the government.
Speaking outside the block of flats that Hoare moved into in November 2009, the neighbour said: "He talked about all sorts of problems that he had in his life. A lot of it was alcohol-related.
"His passage through life has not been an easy one. It?s really, really sad news. It?s a shame."
Asked if he ever spoke about the Sunday tabloid, the man said: "Yes, he did.
"He talked a lot but we never knew if he was telling the truth."
The neighbour said: "He said he was in trouble and he was worried about people coming to get him."
Describing Hoare as a "fantasist", the neighbour said: "A lot of the time we didn?t know what to believe. He did say something about phone hacking. He did mention he was paranoid and that there was a conspiracy."
The neighbour said Hoare lived in the first-floor apartment of the modern block, and his balcony overlooked the front entrance.
He said he had recently suffered a fall and had started to look "jaundiced".
The man added that Hoare lived at the flat with his wife Jo, whose car was in the car park of the four-storey block.
Hoare was found dead early on Monday, Hertfordshire police said in a statement.
"At 10.40am [7.40pm AEST] today police were called to Langley Road, Watford, following the concerns for welfare of a man who lives at an address on the street," the force said.
"The body of a man was found. The man was pronounced dead at the scene shortly after.
"The death is currently being treated as unexplained, but not thought to be suspicious. Police investigations into this incident are ongoing."
A former reporter for News Corp?s ?News of the World Tabloid,? was just found dead in his home in Watford, England. Sean Hoare alleged that his editor, Andy Coulson, encouraged phone hacking by his staff. Hoare was the first person to come forward.
The local police are stating that the death does not seem suspicious. Really? Trust me on this one, when you cross the big boys, you end up in a pine box. Hoare was an entertainment reporter and alleged that the reporters at the tabloids hacked into phones of celebrities, politicians, victims of murder and terrorism, and also bribed police for stories. The News Corp. shut down the newspaper over the scandal, but there is a price to pay for those that have opened their mouths.
The whistleblower, Hoare, was taken out I believe. I don?t believe that the police will do a sufficient job investigating this matter. They have a stake in this as well as those at News Corp. I hope that there is an independent investigation into this death. We MUST send a message to the people out there that it is OK to come forward and that you will be protected and that this sort of nonsense will not be allowed to take place. If this is ruled a suicide or accidental death, it will be an injustice.
I'll believe corporations are persons when Texas executes one.: LBJ's Ghost
Rupert Murdoch attacked at phone-hacking hearing
Select committee brought to halt as activist attempts to hit News Corp chief in face with paper plate covered in shaving foam:
The Murdochs' appearance before MPs for a grilling about the phone-hacking scandal was brought to a dramatic halt after an activist attempted to hit Rupert Murdoch in the face with a paper plate covered in shaving foam.
Murdoch's wife Wendi Deng, who was sitting behind her husband at the culture, media and sport committee hearing, leapt up to defend her husband and appeared to hit out at the attacker as security guards and police rushed across the room to apprehend him.
The attack happened just before 5pm on Tuesday and the News Corp chairman and chief executive was back answering MPs' questions within 20 minutes, having removed his foam-spattered suit jacket.
Murdoch's assailant, who was sitting four rows back in the committee meeting room at Portcullis House near the Houses of Parliament, apparently identified himself on Twitter shortly before the attack as a standup comic and UK Uncut activist called Jonnie Marbles.
Marbles appears to have tweeted moments before he invaded the hearing. "It is a far better thing that I do now than I have ever done before #splat," he wrote on the social media network.
Moments after the committee chairman, John Whittingdale MP, suspended the meeting, a man wearing a checked shirt was seen outside the meeting room at the House of Commons in handcuffs.
Cries of "no, no," could be heard as the man ran towards Rupert Murdoch, who was sitting in front of MPs on the committee alongside his son James.
"He was sitting four rows back," said Guardian journalist Jane Martinson, who was among the reporters in the room when the attack took place. "He walked calmly to the front and smacked it in Rupert's face."
Marbles had earlier tweeted: "I'm actually in this committee and can confirm: Murdoch is Mr Burns."
He added: "Rupert Murdoch appears to be going senile." He also tweeted: "It might be quicker if Baby Murdoch simply listed all of the things that he does know.
"One gets the sense that they haven't really done the required reading ahead of their presentation. Think they may fail this module."
Marbles describes himself on his Twitter page as an "activist, comedian, father figure and all-round nonsense. Tweeting in an impersonal capacity."
But UK Uncut moved swiftly to distance itself from the invader. "The pie in Murdoch's face was NOT a UK Uncut action, everyone!" it tweeted soon after.
Martinson added: "The man lobbed a plate of shaving foam into Murdoch's face at point-blank range. There was an astonishing reaction from Wendi, who, sitting behind her husband, immediately returned fire.
"James looked stunned, several members of room gasped, but Wendi then sat on the desk calmly wiping foam from her husband's face. There was foam all over her blue-painted toes as well as two police officers who immediately grabbed him. There was shock that he got the foam in given the tight security. Another man with a long beard was also questioned."
She added: "All the press were kept in an overspill room as the committee resumed. I'm not sure how the foam man hid the paper plate. He was wearing black combat trousers and walked straight past me from the back row where the public was sitting to within inches of Murdoch.
"Wendi was on her feet lobbing the plate back at her husband's assailant before James got up. Another woman ? small and dark-haired ? was the one who accosted the assailant first."
Labour MP Tom Watson, one of the members of the select committee, told Murdoch: "Your wife has a very good left hook."
Louise Mensch, a Conservative MP and fellow select committee member, said Murdoch had shown "huge guts" in being willing to carry on.
Another Labour MP, Chris Bryant, described the attack as "just despicable". He said witnesses should not be treated in such a manner and described it as contempt of parliament.
Associates of Marbles said he "lives and breathes politics" and had been involved in previous UK Uncut protests.