Murdoch admission leaves Blair in the lurch

RUPERT MURDOCH's ability to surprise left even cynical London political and media circles open-mouthed yesterday after an article in his newspaper, the Times, undermined week-long denials by Downing Street about the Prime Minister's efforts on behalf of the tycoon's business interests.

Mr Murdoch's intervention left observers wondering about his motives for embarrassing his supposed friend, Tony Blair, by confirming he had indeed asked him to quiz Italy's prime minister about whether the Italian government would allow Mr Murdoch's acquisition of Mediaset, Italy's leading commercial television network.

Times journalists said yesterday that its report was a sign of the paper's new willingness to report on the affairs of its owner. The paper's media editor, Raymond Snoddy, has admitted an error in not covering the decision of Murdoch-owned publisher HarperCollins to drop Chris Patten's book on Hong Kong. The Times report also revealed that Mr Murdoch used the information to reject the deal after an attempt to raise Mediaset's price tag by its owner, Silvio Berlusconi, former prime minister of Italy.

Times insiders are adamant the story was prompted by inquiries by its media editor and was not "placed" by the newspaper's proprietor. "HarperCollins was an embarrassment," said a News International source. "Now it's time for glasnost on News Corp stories."

Notwithstanding the paper's claim to have tracked down Mr Murdoch and extracted his quote on its own volition, observers still believe Mr Murdoch gave the confirmation to illustrate the strength of his connections with Mr Blair.

The Financial Times revealed earlier this week that Mr Murdoch boasted to colleagues during his negotiations for Mediaset in Milan that he would call up Mr Blair to get his help.

The Times story also served to illustrate how easily Mr Murdoch can turn up the heat on the Prime Minister when he chooses - just before the new Competition Bill, carrying a Lords' amendment that would end the Times's predatory pricing tactics, appears in the Commons. Mr Murdoch's revelation may be timed to remind Mr Blair to stick to plan to excise the amendment.

Mr Murdoch's statement to the Times - "this was a perfectly innocent request for information which I would expect from any British business needing help from their government in European-wide investments" - undermined a week of denials by Downing Street.

Mr Blair's spokesmen first dismissed claims about the call as "a joke" or claimed they had no knowledge about its contents because the official who monitored the call was overseas - first they said he was in the Middle East and then claimed he was in Paris. However, on Tuesday the British Embassy embarrassed the Government by confirming that Mr Murdoch's acquisition of Mediaset had been discussed in the call between Mr Blair and Mr Prodi.

Despite denials by Mr Prodi, a centre-left ally of Mr Blair in Europe, that Mr Murdoch had been discussed, Italian government sources confirmed Mr Blair had quizzed the Italian leader in some detail about new broadcasting legislation planned in Italy. Mr Blair still claimed in Paris on Tuesday that he treated Mr Murdoch no differently from anyone else with British business interests.

In fact, BSkyB, the supposed British vehicle for the take-over of Mediaset, is not treated as a British company by the British government because it is broadcast by a satellite company based in Luxembourg. For this reason, BSkyB is exempt from the Independent Television Commission regulations which cover British broadcasters. It also flouts European Union quotas on the use of non-European programming. "This illustrates the marvellous dexterity Murdoch uses to play both ends against the middle," says James Curran, professor of communications at Goldsmith's College. "As far as regulation is concerned BSkyB is not British, but it is British when it comes to representing his interests."

Yesterday in Hong Kong evidence emerged of the likely sensitivity of Mr Patten's book about Hong Kong to Mr Murdoch's empire, when it was reported that the tycoon is planning to buy a controlling stake in Hong Kong's second- largest terrestrial TV station. The respected Chinese-language Oriental Daily News reported that News Corp will buy a 51 per cent stake in Asian Television Ltd for $180m (pounds 109m). ATV refused to confirm or deny the report.