An attempt to blunt the Sun's visceral opposition to monetary union could be the reason why Labour acted as adviser to Murdoch
RUPERT MURDOCH was in London on Wednesday, not to call on his new best friend Tony Blair, but to mingle with allies from an older vintage at the memorial service for Lord Wyatt, the former Labour MP turned right-wing columnist on Murdoch newspapers. The list of the congregation reads like a political Who's Who of the 1980s: Lady Thatcher, plus Lords Whitelaw, Wakeham, Hurd and Saatchi.

Tomorrow the William Randolph Hearst de nos jours addresses an EU audio- visual con- ference in Birmingham in rather different company: Robin Cook, the Foreign Secretary, his Cabinet colleague, Chris Smith and Jacques Santer, the EC president. Murdoch's opinions on Europe will be scrutinised after more fevered speculation about the telephone call between the British and Italian prime ministers about Murdoch's chances of buying into Mediaset, Silvio Berlusconi's TV company.

One of Murdoch's new best enemies, the former editor of the Sunday Times, Andrew Neil, believes there is a method in Tony Blair's obliging attitude towards Murdoch. He says that the intention of Blair's blandishments is to draw Murdoch into the Euroclub. By doing so, the Prime Minister's plan is to blunt the Sun's visceral opposition to a single currency. Such is the tabloid paper's perceived power that Downing Street believes that this would remove the main political obstacle to Britain's entry into European monetary union.

Mr Neil's assertion has gained currency on both sides of the House of Commons. One of William Hague's close allies argued last week: "Because of its strong regulatory regimes, Murdoch is hostile to the whole concept of Europe. Even so, Blair will have noticed how the Sun went from complete opposition to the Millennium Dome to total support overnight - as soon as BSkyB became a pounds 12m sponsor."

Could it be that by helping him to take a financial stake in continental television channels, Mr Blair is really hoping that a commercial commitment might tie Murdoch to Europe in the same way that it does to China?

ALTHOUGH News International lobbies as hard as any other major corporation in Brussels, one of the frustrations of its staff is the wrongful assumption that Murdoch is one of Europe's biggest media barons. Rather, he is rooted in the New World and he has no sympathy for the social models of western Europe.

Murdoch behaves like an outsider because he feels like one. The rough reception he received in Britain when he first sought to buy the News of the World in the 1960s left its mark, and one of his allies says: "He sees parallels with his reception in Europe. He is more at home with the free-booting, devil-take-the-hindmost attitudes common in Australia or America, which tend to be antipathetic to most of Europe." It is not true that Murdoch spends no time in mainland Europe, but employees struggle to identify significant visits. He doesn't speak the languages.

"He is driven by his business interests, and by his visceral political instincts - hence his liking for political figures who give a clear lead - like Margaret Thatcher or Tony Blair," says an ex-employee. "He has a temperamental dislike of the whole direction of Europe, of the EU's tendency to create more bureaucracy which slows things down, to be against the market."

To illustrate this point, look no further than the views of Irwin Stelzer, one of Mr Murdoch's advisers. Last year, Dr Stelzer told the Sunday Times: "France and Germany and their monetary union allies will have to seal themselves off from the competition of more efficient nations by erecting a Fortress Europe characterised by high prices, shoddy goods and high unemployment. Why new Labour wants to be at the heart of such an antiquated enterprise is a mystery."

But Mr Murdoch would still like a slice of the television action in Europe. We know this from his thwarted efforts to penetrate continental markets since the early 1990s. There were early talks with the French company Canal Plus, then German ventures with the Kirch Group and Bertelsman which foundered more than a year ago. The most recent expression of interest in Mediaset is, in fact, the second Murdoch approach to Berlusconi.

Most European countries have tough regulation and ownership restrictions, aimed particularly at non-EU nationals or big national companies which threaten to dominate a market. One media expert says: "European media ownership rules are tight. Britain is the most liberal market and even here the restrictions are significant."

The EU Commission itself is an obstacle. Some Conservatives date the hardening of the attitude of the News International titles against Europe to the early 1990s when there were threats of measures against media concentration, culminating in a Green Paper in 1992. In 1997 the directive, "TV Without Frontiers", described mechanisms to restrict exclusive rights to sporting events in Europe. To Mr Murdoch this is a symptom of troublesome regulation. Four direct- orates covering audio-visual media; information, communication and culture; internal market; and telecommunications, share responsibility for the media, but it is Karel Van Miert's competition directorate which poses the biggest threat. Last year it flexed its muscles over BSkyB's role in the British Digital Broadcasting consortium. After the Independent Television Comm- ission consulted Brussels, BSkyB dropped out. With no newspapers in continental Europe, News International has a weak hand to play. "Nothing good has come out of Brussels for Rupert Murdoch," says a media analyst.

IN Number 10 there is sympathy for his predicament; the view is that Mr Murdoch has had a "remarkably unhappy time" dealing with European institutions. Given political sensitivities and UK regulations, Blair knows it will be difficult to allow any further expansion in this country. How wise it must seem, then, to help Murdoch to expand on the continent, perhaps softening his Euro-scepticism in the process.

Critics are unconvinced. There is always the danger that greater contact with European regulations would breed greater contempt for their makers. In any event Europe might remain a relative backwater for News International which plays harder in other key arenas, notably China and the former Communist countries of the eastern bloc.

Some on the Labour benches see this as Blair's "double-bluff", a justification for an essentially cynical involvement with a media magnate with questionable intentions. As one Labour insider put it: "They present a scenario like a counter-attack out of defence in a football match. Tony Blair and Alastair Campbell draw Murdoch towards their goal before dispossessing him and sprinting up the field to score. To accept that requires a leap into fantasy. The further he gets from the straight and narrow, the more chicanery there is, the more likely it is that this will backfire."

Murdoch is a dangerous and unsentimental ally whose interest is the balance sheet. There was a warning in his reading at Lord Wyatt's memorial service; it was drawn from the Parable of the Talents in St Matthew's Gospel: "For unto everyone that hath," intoned the Chief Executive Officer of News International, "shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath."