Profile: Rupert Murdoch: Blair's red-top baron

Michael Leapman on how the world's most powerful media magnate remains impervious to attack
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The Independent Online
PRESS BARONS are not in business to be loved. Northcliffe, Beaverbrook, the Rothermeres and Rupert Murdoch have all been widely detested in their lifetime, as were their American counterparts Hearst, Pulitzer and Bennett.

They enjoyed unrivalled power to manipulate public opinion on every issue - except, it seems, that of their own virtues. So the attacks on the Murdoch empire in the House of Lords last week, echoed in nearly every newspaper that he does not own, will not have surprised, or indeed, even troubled him.

Lord Hattersley, the former deputy Labour leader and a man not given to over-statement, called him a "tycoon who is a danger to our democracy". Now a Liberal peer, Lord McNally accused him of trying to drive two competitors - the Independent and the Telegraph - out of existence, adding: "What is good business for Murdoch is not necessarily good sense for a healthy democracy or a diverse and healthy press."

Lord McNally introduced an amendment to the Competition Bill which would prevent as "predatory" the level of price cuts that Murdoch has been making on the Times. The amendment was carried by the Lords but the Government has said that it intends to make sure it is voted down in the Commons.

What might alarm him is the revelation in the Independent that tax authorities around the world have set up a task force to investigate why his empire pays so little tax.

As far as complaints from politicians are concerned, the leather-faced tycoon has seen it all before. The pricing issue is just the latest instance of his falling foul of consensus. His newspapers have been attacked for breaching privacy, corrupting morals and generally debasing popular culture. By crushing the print unions in 1986 he provoked demonstrations and boycotts by the Labour Party and other defenders of workers' rights.

DOWNING STREET's backing on this latest row will reassure Murdoch that his four-year courtship of Tony Blair has borne fruit. For Murdoch's indifference to his popularity in the world at large does not extend to the corridors of power. His pounds 14bn global media empire, embracing newspapers, television and film, is underpinned by his technique of forging cordial relations with those people who hold sway over the regulatory processes.

From his earliest days in Australia, politicians who have thwarted Murcoch's commercial ambitions by refusing to change or bend the rules on his behalf have found themselves under attack from newspapers he owns. His political alliances have nothing to do with ideology. As he showed before the last general election in Britain, and repeatedly in Australia, he has no compunction about making political U-turns to support whatever party seems likely to gain office.

His understanding with Mr Blair, cemented at cosy dinners from 1994 onwards, seems straightforward enough. New Labour would get the electoral support of the Sun and would not be opposed by the Times. In return, calls to curb Murdoch's burgeoning interests would be discouraged by a Blair administration. Not, of course, that it was spelled out in such crude terms: just a nudge, a wink and a sideways grin. Both men know that their bargain holds good only for as long as Blair retains his tight hold on the British electorate.

Murdoch, who will be 67 next month, has been a newspaper proprietor since before Mr Blair was born. In 1952 he inherited the Adelaide News and Sunday Mail from his father, Sir Keith Murdoch. With a ruthlessness that was honed in the world's toughest media markets - Sydney, London, Hollywood and New York - he has parlayed that insignificant holding into a hydra- headed conglomerate.

Through it all, he has kept control of the company in his own and his family's hands, intending to pass the baton on to his children. His son Lachlan is chairman and managing director of News Ltd, the Australian side of the business, while his daughter Elisabeth is a senior executive at the satellite company BSkyB. There are growing signs of rivalry between the two.

In his family life, Murdoch has an autocratic streak. When his children were still at home in Los Angeles, he would insist that they were up, dressed and sitting at the breakfast table with their mother Anna when he returned at six o'clock in the morning from a transatlantic trip.

He does not give the impression of greatly enjoying his wealth, although he lives in some luxury in LA. At one point, he lived next door to his main adviser Irwin Stelzer and the two men spent so much time together discussing his business that Murdoch suggested they build a tunnel to link their homes. Their wives joined forces to prevent the merger.

During the company summit he hosted in 1995 in Australia's Hayman Island, attended by Mr Blair, the gala dinner ended early when Murdoch ordered the lights to be turned off and stepped up to the microphone to enjoin the guests to go to bed early so that they would be fit for the next morning's session.

When accused of being overmighty and monopolistic, the characteristic response of Murdoch and his minions is to hold up their hands and exclaim: "Who? Us?" In 1989 there was a heated debate about the limits of cross- media ownership in Britain. The Labour Party joined the calls for restrictions.

In its defence, his British company, News International, said: "We quite agree that excessive concentration of media ownership would be undesirable. It would permit media owners to charge audiences extortionate prices; it would place advertisers at their mercy; and it would reduce the variety of news and views reaching the public. Fortunately, no such concentration exists in Britain ... No one does or can dominate the media market, or any of its segments."

This statement came in response to a complaint of monopoly by British Satellite Broadcasting, about to launch a rival satellite service to Murdoch's sky. Within a year, the two companies had merged as BSkyB, Britain's only satellite broadcaster - with Murdoch, naturally, the dominant shareholder. Since then, the price of Sky's premium subscription channels has risen steadily. Rules on cross-media ownership have been relaxed rather than tightened.

A similarly robust plea of innocence came from Murdoch's Wapping headquarters on the morning after last week's Lords amendment: "The attempt to force price increases through legislation is anti-competitive, anti-consumer and anti- democratic." Jane Reed, his spokeswoman, said the Office of Fair Trading had twice ruled that the Times pricing policy was not predatory. She denied charges that BSkyB was subsidising the newspaper division.

Murdoch's price-cutting strategy dates from September 1993, when the circulation at both the Times and the Independent hovered at around 350,000. Defying the received view that broadsheet newspapers are not a price-sensitive market, he cut the price of the Times from 45p to 30p.

The effect was dramatic. In the first six months of 1994 the paper's circulation climbed by nearly 40 per cent to over 500,000. The Independent - which initially increased its price in a perverse response to its competitor's move - went down by 20 per cent to 275,000.

He is a driven man and one who sees people, governments and newspapers as means to his ends. Unlike his rival in the British newspaper market, Conrad Black, he does not enjoy the trappings of his wealth, nor seek to strut the international political stage. He treats his visits to London as work, not pleasure, enter- taining only rarely at his St James apartment. Recently, he visited the News International plant so early that none of the staff he wanted to speak to had arrived for work.

Of all modern tycoons, he comes closest to the Marxist caricature of the capitalist as accumulator of wealth for its own sake. He is perpetually restless. In another century, he would have been one of the American robber barons. His personal beliefs are contradictory. Under his ownership the Sun invented the Page Three girl, yet he sacked an executive who staged a raunchy sales presentation in the presence of Anna Murdoch, his wife, and Dick Cheney, then American Defence Secretary. He treats rivals and employees with equal ruthlessness, yet he was reported a few years ago to have become a born-again Christian and is a loving, if demanding, father.

Through defying conventional wisdom and taking risks on a scale that few of his contemporaries would contemplate, Murdoch has created the dominant communications company in the English-speaking world. His influence is pervasive. Take in a movie such as Titanic or The Full Monty, return home to watch the Test Match on Sky Sports and you will be purchasing his products. He is ferociously competitive, constantly seeking to add to his already vast empire. Trying to stop him being predatory is like trying to turn a vulture into a vegetarian.

IN one area, though, he may soon find everything does not go all his own way. Revenue investigators from Britain, the US, Canada and Australia have agreed to establish a task force to examine the methods he uses to keep his company's tax bills low - as little as 1.2 per cent on profits between 1985 and 1995, according to one calculation. News Corp, Murdoch's umbrella company, is adept at shifting money around the group, using offshore tax havens and claiming relief on servicing its bank loans. These are perfectly legal devices and because he operates in more than 50 countries it is hard for the authorities to keep track of his ploys.

Defeats of his ambitions are rare, and they rankle. He once tried to acquire Warner Brothers, the Hollywood studio, but was thwarted by the nimble financial footwork of the Warner chairman, Steven Ross. The Australian bruiser's reaction amounted to a succinct statement of the Murdoch philosophy: "Someone can beat you up or run you over, but if you don't give them a few bruises in return, they can do it to the next person who comes along ... It would be very bad for News Corporation for people to think that we were a patsy that can be run over and disenfranchised."

Some 15 years later, Murdoch has established that he is not a patsy. Can we say the same thing about Mr Blair? The jury is still out.