Wednesday, January 28, 2009

The Man Who Owns the News by Michael Wolff

Michael Wolff. The Man Who Owns the News. New York: Broadway Books, 2008.

This is a biography of Rupert Murdoch, owner of the News Corporation, based in part on numerous interviews with Murdoch, his associates, and his family, many of whom are involved with his businesses. News Corporation, named for his media holding, a newspaper in Adelaide, Australia, The News, today includes Fox Studios, Fox Television, the Wall Street Journal, the New York Post, and Sky TV, a British TV network.

The author views Murdoch as someone with a sense of righteousness who sees his corporation and businesses as, what Murdoch himself describes it, “change agents.”

Murdoch is a controversial figure. He purchased the Wall Street Journal with the intent of challenging The New York Times, setting up a battle between two of the country’s most respected newspapers.

Murdoch was known in the 1970s for his London tabloid newspaper that always had a photograph of a bare breasted woman on “Page 5.” His name became more public when kidnappers, meaning to abduct his wife, mistakenly seized and killed another woman.

Murdoch later launched a tabloid in America, the National Star.

Murdoch concentrated on newspapers until he purchased Twentieth Century Fox. Entering the Hollywood set let him join his peers in purchasing his own airplane. Yet he never felt comfortable amongst the Hollywood crowd.

Murdoch is devoted to his work. Some employees find him cold and “even cruel”. His reputation is for hiring people who appreciate the change to work for him.

Murdoch involves his family in News Corp. He has been married three times. His children and three sisters, along with their families, are involved with News Corp. This sometimes creates problems for executives who find themselves caught between family disputes.

Rupert Murdoch and his wife live in a $44 million apartment, the most costly in New York City. Yet most agree money is not what motivates him. Murdoch does not seek the limelight and is not obsessed with status.

Murdoch faces an activist shareholder, John Malone, who once owned 19% of News Corp. compared to the Murdoch family’s share of 30%. Malone has differed with Rupert Murdoch. The Murdochs had to create a financial poison pill to keep Malone from increasing his ownership share.

Murdoch is criticized for running a company at his age. Yet Sumner Redstone, at age 85, owns Viacom (which owns CBS) and is a competitor to News Corp. and Fox.

Barry Diller, in charge of Fox Studio and the Fox TV network when purchased by News Corp., insisted he receive an improved share of the Fox company. Diller was one of the few executives ever to make demands of independence upon Murdoch. Murdoch and Diller made an agreement that financially benefitted Diller as Diller left as head of Fox.

Peter Cernin, President of News Corp.. heads the most important portions of the company while Murdoch serves more as its visionary. Chernin toned down the company’s previous tendency to acquire other companies. Chernin, a Democrat, is known to be upset at Fox News, which is run by Roger Ailes, who has run the network with a noticeable Republican tilt. When Disney made overtures towards hiring Chernin away from News Corp, Chernin obtained a deal with Murdoch that, during his first four years of his contract, he would succeed to the Chief Executive office if that position became vacant.

Chernin recruited Roger Ailes to lead Fox News. Chernin and Ailes have political and managerial differences. Ailes has a more aggressive management style. In fact, Murdoch has a fear of Ailes.

When Murdoch divorced his wife Anna in 1999, Anna gave up a larger share of what she was entitled to under California’s community property law in return for an inheritance trust for Murdoch’s share of News Corps. for their four children. Rupert wants the trust expanded for his two additional children with his new wife, yet the four siblings are refusing this,

Chernin was opposed to acquiring Dow Jones (which owns the Wall Street Journal). Chernin felt News Corp. had already accomplished all that Dow Jones could bring to the company.

Murdoch spent over two decades building a chain of mostly tabloid newspapers in Australia, followed by The Sun in London. He obtained the Sun, which began as a left wing paper. The paper’s labor unions initially supported Murdoch’s takeover of the Sun as they were unhappy with the previous owner. After buying the Sun, Murdoch then crushed the labor unions’ powers.

Murdoch transformed the Sun into a “gross out comedy” paper, something the author noted would be repeated when Murdoch launched Fox TV with programs such as “Married with Children”. Murdoch was one who combined vulgarity with right wing politics in an appeal to a mostly middle class audience.

Murdoch bought the New York Post and a partial ownership of New York magazine, which also owned the left wing Village Voice. Over time, he took over New York magazine. A rival publication Rolling Stone magazine ran an article criticizing and bolstering the image of Murdoch as an underhanded business dealer who is diminishing the stature of journalism/. The article was written by Gail Sheehy, who would later marry Clay Felker, one of the key people who lost power in the New York magazine takeover struggle.

Murdoch once agreed to allow a close associate Judith Regan have former murder defendant O.J. Simpson appear on Fox to give an explanation of how he could have committed the murders had he done them, which is not to say he did them. A public outrage that this would air emerged, especially since Simpson was generously paid for this. In what the author calls on uncharacteristic action, Murdoch, who usually likes tabloid press, withdrew to offer to do the show. In addition, he fired Regan.

Murdoch once invested $100 million acquiring Warner stock. When he owned over 5% of the shares, he was required to disclose this fact under American law. While he was the person owning the most Warner stock, having 6.7% of its shares, Warner responded to his takeover attempt Warner and Chris Craft Industries, which owns independent TV stations nationwide, made a deal where Chris Craft had 19% ownership of Warner while Warner owned 42.5% of the Chris Craft subsidiary TV stations. Since American law prohibits a non-American, such as Murdoch, from owning over one fifth of American TV stations, the agreement legally prevented Murdoch from taking over Warner. Murdoch sued and accused the deal of having “a pattern of racketeering.” Warner portrayed Murdoch as an untrustworthy takeover threat.

Murdoch spent $350 million for a number of trade and consumer specialty magazines, such as Modern Bride, Popular Photography, Car & Driver, Yachting, etc. It still bothered him that he was prevented from buying TV stations. He then bought half of 20th Century Fox from Marvin Davis for $250 million in 1984. David had paid $116 million for this in 1981. In 1985, Murdoch purchased six Metromedia independent TV stations from John Kluge for twice their worth. The debt to preferred shareholders in News Corp. is considered as value in Australia that allows Murdoch to borrow more money, something he could not do under American law.

To buy more TV stations. Murdoch sold Village Voice, which he bought for $7.5 million in 1978 and included two other publications, for $55 million. He also sold the Chicago Sun Times, which had bought two years prior for $90 million, for $145 million.

Murdoch had received a waiver from the Federal Communications Commission in the past that allowed him to own print and TV media in the same market, something that is otherwise prohibited. A law was passed to prevent granting any more such waivers. The U.S. Supreme Court struck down this law because it was meant to exclude him.

Murdoch purchased book publishers, paying $500 million for Harper and Row publisher and then purchasing all of William Collins & Sons publisher, of which he already had a minority share. He also bought 20% of Pearson PLC which publishes the Financial Times newspaper.

Murdoch began operating four satellite TV stations in Great Britain. Then he purchased Triangle Press, which publishes TV Guide, In total, Murdoch was $7.5 billion in debt.

In 1990, Murdoch sold the Star to its National Enquirer competitor for $400 million.

To own a TV station in the New York market, Murdoch sold the New York Post in 1998. The Post continually lost money. By 1993, the Post was nearly bankrupt. Murdoch bought it back. In 2007, the Post lost $50 million.

The Post espoused a right wing leaning, declaring in headlines that U.N. countries voting against the Iraq War were “The Axis of Weasels” and that James Baker and Lee Hamilton, who co-chaired the Iraq Study Group, were “surrender monkeys”.

Murdoch tried unsuccessfully to buy CNN from Ted Turner. This drove him to create Fox News.

Roger Ailes of Fox News was upset over negative comments stated by Keith Olbermann of rival MSNBC made about Ailes. Alies then told the head of NBC that both Bill O’Reilly of Fox News and the New York Post would begin assaults on Jeffrey Immelt, the Chief Executive Officer of General Electric, which owned NBC and MSNBC.

Murdoch is a believer in the free market. He dislikes political establishments. He recalls how the Australian government fought him in his efforts to obtain a lease for a TV station. He was also threatened to never get another visa by U.S. Secret Service agents who stopped his plane because he was planning to publish an off the record comment President Kennedy told him about plans on changing American policy concerning Indonesia’s plan to seize West Papua from the Dutch.

Murdoch used to be politically liberal in Australia. Murdoch began opposing the Australian government by printing scoops of illegal financial deals, which were later verified, and of sex scandals, which turned out were not true. 75 newsroom personnel protested Murdoch’s using the paper as a vehicle to bring down the government, but to no avail. Some believe Murdoch did this in anger at the government’s refused to grant him bauxite mining licenses the year before. Ultimately, a new government arose replacing the one Murdoch helped drive out.

When Murdoch bought the New York Post, he wanted to show he had the power to show he could use his media power to get someone elected. He didn’t particularly care who it was, just that he could show he could do it. In fact, he preferred someone new rather than someone entrenched in politics to show he could beat the establishment with his candidate. He picked Ed Koch, running for Mayor of New York, and the Post’s coverage of his campaign did help elect Koch Mayor in 1977.

Murdoch tends to prefer supporting conservative candidates, as he believes conservatives tend to be more supportive of business interests. Yet, he does not exclude supporting non-conservatives. Loyalty to Murdoch’s interests is far more important to Murdoch than ideology.

John Podhoertz, a New York Post columnist, convinced Murdoch to create the Weekly Standard magazine, which became an important neoconservative publication. Podhoertz also helped convince Murdoch and the Post to support Rudy Giuliani in what would prove to be a successful campaign for Mayor of New York. Murdoch was hesitant to support Giuliani, for he had been the prosecutor who sent Murdoch’s friend Michael Milken to prison.

The author states Murdoch dislikes telling his opinions on politics. Murdoch is best described as a libertarian. He generally dislikes politicians, who he views mostly as tools of others’ interests; He was supportive of the deregulatory efforts of the Reagan in the U.S. and Thatcher in England. Yet, there was a mutual distrust between Murdoch and the successive George H.W. Bush and John Major administrations, even though each sprang from the general conservative movement. Murdoch then hated the Clinton government and supported Newt Gingrich’s anti-Clinton campaigns, even arranging for his Harper Collins publishing to give Gingrich a generous payment to write a book.

Fox News took on the Clinton Administration. They kept the Monica Lewinsky scandal in the forefront of their news against Clinton.

Murdoch lets Roger Ailes run Fox News. Murdoch is more familiar with newspapers than television.

Barry Diller ran Fox until Murdoch gave him a large payment to leaven. Peter Chernin then took over. Chernin is Murdoch’s “yes man”. Murdoch has little personal interest in the Hollywood scene. Indeed, Murdoch dislikes movies. Still, Murdoch enjoys how the movie “Home Alone” earned $533 million from a $15 million investment. Murdoch, though, is personally confused how his TV network has successful TV shows like “The Simpsons” and “Married with Children” that he doesn’t personally fully understand. Chernin handles the Fox matters that do not interest Murdoch.

Ion 1994, Ronald Perelman’s 15 TV stations switched to Fox in return for Murdoch’s $500 million investment in Perelman’s New World Communications, a production company that produces shows such as “The Wonder Years”. Murdoch knows to broadcast what sells. He sees the key to success in TV is viewers, not quality.

Murdoch once claimed his satellite communications would cause the Chinese government to fall. This had the result of China denying him every attempt to operate in China.

A U.S. Senate committee investigated and then absolved Murdoch of improper dealings. It was alleged he obtained favorable financing from the U. S. Export Import
Bank, during the Carter Presidency, in exchange for the New York Post endorsing Carter over Kennedy in the 1980 Presidential Primary.

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