Murdoch's World (21 page)

In April 2011,
News International established a fund to settle with a small group of people including the actress Sienna Miller—the kind of people who had public stature and the wealth to pursue their grievances. The company conceded that they had been targeted for voice mail hacking. Those who knew Murdoch's world well nudged me to keep an eye on developments. Andrew Neil, the former editor of the
Sunday Times
and founding chairman of BSkyB, said the newest
revelations raised the questions from Watergate: “Who knew, and when did you know it?”

He continued: “If it's now accepted the ‘rogue reporter' defense has bitten the dust and was smashed to smithereens, if it's now accepted that it was going on all over the place in this newsroom, then it beggars belief that . . . they didn't know,” Neil said. “It is frankly incredible.”

FOR ALL THAT, on the surface, as June gave way to July 2011, things looked quite promising for the Murdochs.

Major investors were giving Rupert Murdoch's company their continued support, allowing him to indulge his love of newspapers. In decades past, Murdoch
enjoyed sauntering through newsrooms to peer at his papers' flats, the pages with the stories laid out by men with exacto knives before they went to press. He would look over the front page and section fronts, pointing out a headline that he felt wasn't up to scratch, playing to a gathering crowd of editors by suggesting a catchier alternative. In more recent years the pages were displayed on giant computer monitors but the impulse was the same.

Regardless of who held what job title, regardless of what country, he was the publisher of every paper News Corp owned, and the editor in chief too, when he wanted to be. The papers reflected Murdoch's right-of-center populist touch, his recurring demand that the writing be concise, the issues clear-cut, the reporting timely, and the matters addressed accessible, important, or preferably both. In the tabloids the elites hated (he loved their success in significant part because the elites hated them), Murdoch found a way to connect with readers. And he appealed to the great and mighty by also owning respectable papers with a more literate and worldly flavor.

Investors who gambled on Murdoch's impulses knew they had to accept
some of them would go awry. When they did misfire, News Corp would lose hundreds of millions or even billions of dollars in shareholder money. The company
wrote down the value of the
Wall Street Journal
and Dow Jones by $2.8 billion—about half the cost of acquiring the paper in the first place. Its managing editor, Robert Thomson, had embarked on an effort to streamline costs by compelling the journalists inside the newsroom of the nation's premier financial daily to work more closely with its sister wire service, Dow Jones. Not too many
Journal
staffers wanted to blur the distinction. Earlier in the year, Murdoch had paid $675 million for a boutique TV and film production
company called Shine, founded a decade earlier by Elisabeth Murdoch. It had created some TV hits and some well-received smaller films. Analysts contended Murdoch had paid his daughter's company two to three times its worth.
Elisabeth Murdoch walked off with more than $200 million from the transaction—as well as full payment for her legal costs, worth tens of millions more.

At the end of June 2011,
News Corp sold the social media website MySpace for $35 million—about 6 percent of the cost he had paid for it in 2005. That purchase was, as Murdoch readily admitted, a debacle. Its primary competitor, Facebook, would soon be valued at $104 billion in its initial public offering.

Some good governance groups and pension and labor fund investors in News Corp called for the Murdochs to stop running the company as a family concern. The board waved through the Shine deal without serious reservations. Directors had approved a side investment for one of their own as well. Kenneth Cowley had led News Ltd in Australia and remained on the board afterward.
Rupert Murdoch wanted to invest $28 million of the company's money in R.M. Williams, an agricultural company of which Cowley was the chairman. The idea was to convert cattle and chicken farmlands to the world's largest “carbon farm,” enabling the company to trade credits for reducing carbon emissions through an initiative from the Australian government under Prime Minister Gillard. The corporation did not disclose the board's approval of the 2009 investment among its list of transactions for “related parties” in documents filed with federal regulators. The carbon farm did not materialize in a meaningful way.

But as the Murdochs controlled so much of the voting stock, and had fostered so many profitable elements for the company, those concerns were easily drowned out. The entertainment side of the ledger, especially cable and satellite television, was thick with cash.

Murdoch had expanded across countries and continents and industries. Most of those parts of News Corp, apart from the press, were
outside his creative zone; he indulged
The Simpsons
and watched it become the longest running franchise in television history; despite little technical expertise or inclination he ran circles around competitors with computerized card technology for his satellite TV subscribers; his daughter
Elisabeth suggested Fox import a now iconic show from the UK; called
American Idol
in the US, it helped lead the network to one ratings coup after another; he built up newspapers and television empires based on the loyalty of sports fans who would reliably return for more without particularly caring for sports himself.

Fox News kept on drawing in viewers, its profits standing at roughly $900 million a year. If News Corp could take over full ownership of the British TV giant BSkyB, it would gain access to all of the $1.6 billion in annual profit the company threw off. Hence News Corp's obsessive desire to complete the purchase of the remaining 60 percent in shares it did not already own.

FOR BRITS, the Milly Dowler story had been a sensation from nearly the moment she disappeared in 2002. She was a thirteen-year-old schoolgirl from Walton-on-Thames, a city of 25,000 about forty-five minutes outside London. She took a walk after writing despairingly in her journal article that her parents cared far more for her elder sister. She called her father to say she'd be home in about a half hour. Her bones were found six months later, a hundred miles away. It took nine years for police to track down her killer and for prosecutors to bring him to trial. On June 23, 2011,
jurors took just seven hours to convict the man, who was already serving time for killing several others. He was sentenced to another life term in prison.

On July 4, 2011, the
Guardian
carried a sprawling front-page headline that could not have been more damning: “News of the World Hacked Milly Dowler's Phone During Police Hunt.”

The
Guardian
's blockbuster story alleged
a series of grievous wrongs: her voice mail messages had been hacked by a private investigator working for the paper; those messages had been deleted by the same PI because her in-box had filled and he wanted others to leave juicy nuggets to mine for stories; the activity involving her messages gave her parents false hope and impeded the ability of police to track her down; the police in Surrey were aware of this hacking and did nothing.

“It is distress heaped upon tragedy to learn that the
News of the World
had no humanity at such a terrible time,” said Mark Lewis, who had become the Dowlers' private lawyer too. “The fact that they were prepared to act in such a heinous way that could have jeopardized the police investigation and give [her family] false hope is despicable.”

The nation convulsed.
News of the World
had plundered an innocent dead girl's private messages from relatives and friends, some of whom were desperately seeking confirmation she was still alive, simply in pursuit of an edge on stories against their tabloid competitors.

Labour MP Tom Watson, a frequent critic of the Murdoch press, seized the moment, calling the hacking “a despicable and evil act.”

ON THE day Davies and his
Guardian
colleague Amelia Hill broke the Dowler story, Prime Minister David Cameron stood behind a lectern at the Arg, the Afghan presidential palace, in Kabul, a few feet from President Hamid Karzai. A delicate task dominated Cameron's agenda for the trip: continuing his country's military and diplomatic presence while scaling back the number of troops deployed there. But the death of a young Brit had cast a shadow over the visit. The soldier had wandered, inexplicably, off the military base and was soon abducted, apparently by Taliban sympathizers. His recovered body had
been mutilated, and reports claimed it had been paraded in front of insurgents as a trophy.

The two leaders spoke of their shared commitment to stability for Afghans amid the continued threat of Taliban violence. They spoke soberly of the family of the eighteen-year-old infantryman, a member of a Scottish regiment. Then they took questions.

First up, a British reporter asked whether the UK should offer more civilian aid to Afghanistan and then added: “And,
Prime Minister, if I could ask you a specific question: What is your reaction to the allegations that a
News of the World
investigator hacked into the phone of the missing girl, Milly Dowler? And in light of those allegations, do you think that the owners of the
News of the World
are a fit and proper company to take over BSkyB?”

The reporter had distilled a blockbuster story into a vexing and overarching question for both News Corp and the British government. No longer could the
Guardian
reporting be credibly dismissed as the hyperventilating of a competitor.

Former home secretary Alan Johnson, an MP for the Labour Party, stood to speak in the House of Commons. “The public mood, the mood in Parliament, the mood elsewhere, was this was
an obsession of one newspaper,” Johnson told his fellow lawmakers. “Let's praise the
Guardian
for doggedly staying on this case.”

Revelations about victims of violence who had been hacked poured forth in the coming days: those killed and wounded in the July 7, 2005, bus and subway bombings in London and their families; British soldiers killed in Afghanistan and Iraq; the families of other victims of high-profile murders.

Even personal ties to the Murdochs or their associates
offered little protection from the electronic sweep of the private eyes and their newsroom clients. Nor did political pull. Among those worthies whose mobile phones were believed to have been targeted for hacking:

        
•
  
The daughter-in-law of a prime minister whom Murdoch and his papers initially supported (Emma Noble, daughter-in-law of John Major)

        
•
  
The deputy to a prime minister Murdoch's papers supported for election three times (John Prescott)