Hack Attack (36 page)

Following months of pressure from the Information Commissioner to deal with private investigators blagging confidential data, early in 2008 Brown’s government agreed to toughen the law to make it an imprisonable offence. Brown was then visited by a delegation of Les Hinton from News International, Paul Dacre from the
Daily Mail
, and Murdoch MacLennan from the Telegraph Media Group, who persuaded the prime minister to shelve the plan (an interesting move from three newspaper groups who consistently denied that their journalists had ever broken the law).

The prime minister received some reward. At his party conference in the autumn of 2008, his leadership was challenged by the young Foreign Secretary, David Miliband. The
Sun
backed Brown. At a News International lunch, several
Sun
journalists confronted Miliband, ridiculing his support for a new European constitution. According to one who was there, this ended with Miliband asking Trevor Kavanagh if he had even read the draft treaty which he was attacking, and Kavanagh telling Miliband that he was stupid and rude. News of this reassuring clash was fed back fast to Brown’s camp. When he made his keynote speech, Brown swatted Miliband aside by declaring that this was ‘no time for a novice’, a line that had been dreamed up for him a day or so earlier by Rebekah Brooks when dining with Brown’s close ally, Ed Balls.

At the same time, however, Brown’s first two years in Downing Street had seen News International become more and more demanding – in print and behind the scenes – calling for more hostility to migrants and to the European Union, more ferocity towards terrorists and other offenders, more resources for British troops in Afghanistan.

When the abuse and murder of the seventeen-month-old boy known as Baby P exposed the London borough of Haringey to keen criticism in 2007, the
Sun
had campaigned publicly for its head of children’s services, Sharon Shoesmith, to be sacked. That was an uncontroversial act for a campaigning newspaper but, behind the scenes, Rebekah Brooks was phoning the Secretary of State for children, Ed Balls, and pushing hard for him to agree, if only to stop the
Sun
switching its fire on to him. ‘She was pretty blunt with him,’ according to an official who heard some of the phone calls. ‘She was telling Balls he had to sack her [Shoesmith], and it was quite threatening – “We don’t want to turn this thing on you.”’ On 1 December 2008, Balls used special powers to remove Shoesmith from her post, a decision which was later found in the court of appeal to have been ‘intrinsically unfair and unlawful’.

When Brown planned a reshuffle of his government in October 2008, Rebekah intervened, privately lobbying for the prime minister to keep her friend Tessa Jowell in post even though she was clearly branded as an ally of Tony Blair, and to block her loathed enemy, Tom Watson, who was a keen supporter of Brown’s. For whatever reason, Brown kept Jowell as a minister attending Cabinet meetings – but also kept Watson as a more junior member of government. Similarly, when Ian Blair stepped down as commissioner of the Metropolitan Police in January 2009, she is said by one source to have lobbied hard for him to be replaced by his deputy, Paul Stephenson, who duly got the job.

Beyond these high-handed interventions, the difficulty with the Murdoch organisation was that they were clearly moving very close to David Cameron. Murdoch’s former editor, Andy Coulson, was installed in the Conservative leader’s private office; Murdoch’s UK chief executive, Rebekah Brooks, was Cameron’s confidante; Rupert Murdoch dined with him; James Murdoch dined with him and met his closest political ally, the shadow chancellor, George Osborne, for late-night drinks.

By the time the long fuse of the phone-hacking scandal started to burn in July 2009, News Corp and Cameron’s team were engaged in an energetic exercise in political semaphore, each side sending out signals – some in private, some very public – indicating what each might want from the other if they were to form a relationship. These signals were particularly loud and clear on the subject which was most important to Rupert and James Murdoch: the ambition for their business to become even bigger.

*   *   *

James Murdoch never liked the BBC.

In part, this was simply the wrestler’s view of his rival. He had first worked in the UK, from 2003, as chief executive of BSkyB, where he had been forced to face the uncomfortable fact that the BBC was the only broadcaster in the country which was big enough to offer him any serious competition. Or, as he put it to shareholders in his own signature style in November 2005, after two years of disappointing results at BSkyB: ‘We have been abused and opposed by everybody – the BBC and the papers. They are still against us.’

But it was also a matter of ideology. The idea of a publicly funded broadcaster simply repelled him. In an interview with the
Guardian
in 2000, James considered the subject of the licence fee which was then delivering four TV channels, fifty-seven radio stations and the busiest news website in Britain at a cost to each household of £139.50 per year, and released a burst of neoliberal invective, declaring that it was ‘a subsidised, horrific – how shall I put it – evil taxation scheme’.

A senior BBC executive who often dealt with him recalls: ‘He just could not accept that an intelligent adult could possibly believe that the BBC is anything other than an outrage. Listening to him talk about the BBC is like listening to Richard Dawkins talk about God – “Come on, snap out of it, you can’t believe this stuff.”’

Reflecting this commercial and ideological opposition, the Murdoch network engaged in a sustained campaign of attacks on the BBC, using various means which were perfectly fair and also on occasion apparently foul. The fair end involved conventional lobbying, using public speeches, formal meetings with ministers and social access to the power elite to argue persistently for the BBC to be cut back and for BSkyB to be spared from regulation. When the House of Commons media select committee in 2005 and again in 2008 needed a specialist adviser, on both occasions the job was filled by former heads of public affairs at BSkyB, Ray Gallagher and Martin Le Jeune. When the committee’s chairman, John Whittingdale, needed funds for his local cricket club, BSkyB made a donation of £3,000.

All of that was within the bounds of standard lobbying practice, but there are signs of some fouler tactics. In 2004, when the BBC was teetering on the edge of a strike by staff, a political officer from the broadcasting union BECTU reported being approached by a lobbying agency with links to News Corp who had asked if they might be able to help in some way. This looked very much like an attempt at industrial sabotage. The union declined the offer.

At the heart of this campaign was News International’s coverage of the BBC. Towards the end of March 2009, for example, a right-wing think tank, the Centre for Policy Studies, published a highly negative report which claimed that the BBC lacked originality in its programme-making. Fleet Street generally did not bother to report it, but the
Sun
ran an aggressive news story: ‘The BBC is branded a parasite today for blowing the licence fee on copycat shows.’ They failed to point out that the report had been written by Martin Le Jeune, the recently retired head of public affairs at BSkyB.

The
Sunday Times
launched into the BBC, with a sequence of hostile stories about spending on taxis. That paper and the
Sun
also ran a relentless campaign about the salaries of BBC executives which rose as high as £800,000 for the director general, failing to mention that James Murdoch himself was being paid $9.2 million for a year’s work. A search of a database of Fleet Street stories suggests that during this assault on the BBC in 2009, the News International titles ran a total of 515 stories about the licence fee.

In August 2009, James Murdoch delivered the MacTaggart lecture at the Edinburgh TV festival. Although his own newspapers were engaged in what appeared to be a campaign of politically motivated assaults on the BBC, he insisted that news media must show ‘independence of faction, industrial or political’. He went on to damn the BBC, accusing it of leading a ‘landgrab’ and of having ambitions which were ‘chilling’ in their scale. Its expansion must be stopped: ‘In the interests of a free society, it should be sternly resisted.’ More than that, he said, the BBC should have its public funding killed off or cut severely: the licence fee should survive ‘if at all … on a far, far smaller scale’. He ended with a trumpet blast of belief in his own values: ‘The only reliable, durable and perpetual guarantor of independence is profit.’

James Murdoch also never liked Ofcom. Like his father, he never liked any form of regulation which offered any kind of obstacle to the expansion of their business. He particularly disliked Ofcom, the Office of Communications, which had been involved in giving him the political equivalent of a public spanking. Twice. First, in November 2006, when he was chief executive of BSkyB, it was Ofcom which got in his way when he bought 17.9% of the ITV commercial television network. He did it to stop the rival NTL merging with ITV, creating a beast big enough to compete with BSkyB. And it worked: his raid initially pushed the ITV share price so high that NTL could no longer afford the deal. But then Ofcom investigated and reported that the share grab had given BSkyB too much influence over broadcast news bulletins in the UK. That triggered an inquiry by the Competition Commission, who told BSkyB that they must sell most of their ITV shares. BSkyB became embroiled in years of legal appeals, and the value of their ITV holding fell through the floor.

Just as Ofcom were landing that blow, in March 2007 they struck a second time when they announced an investigation into pay TV in the UK. This was a market worth £4 billion a year, dominated by BSkyB. The Murdoch company owned the rights to key sporting events and to a huge archive of films, all of which they sold to subscribers through their own satellite platform – and also to rival pay-TV outlets. These smaller rivals complained that BSkyB exercised a ‘vicious circle of control’, charging them extortionate rates to carry their output. Ofcom were clearly willing to consider ordering BSkyB to cut their prices so that consumers had more choice about which pay-TV channels to subscribe to.

James fought back hard. Ofcom faced what one of those involved called ‘a barrage of disputation and aggression’ as BSkyB used its financial strength to hire specialist litigators, corporate lawyers, consultants and expert witnesses, all of whom submitted a torrent of reports, attempting to find fault in the regulator’s behaviour. In the background, the Murdochs used political lobbyists and their own direct access to ministers to complain bitterly about Ofcom’s role. As with their campaign against the BBC, there were some indications that they may have been tempted to use fouler means. Ofcom’s chief executive, Ed Richards, told colleagues he suspected he was the object of some surveillance. Neighbours at his home in Wales said somebody had been asking questions about him, and there were signs that someone might have been looking through his dustbins.

As with the BBC, so too with Ofcom, the assault came to a climax in James Murdoch’s MacTaggart lecture on 28 August 2009. He called for ‘a radical reorientation of the regulatory approach’ to UK media and denounced his tormentor as ‘a regulator armed with a set of prejudices and a spreadsheet’.

So it was that in the summer of 2009, with a general election due within the following twelve months, there was a special interest in a simple question: would News International be content to let Gordon Brown stay in Downing Street?

*   *   *

Gordon Brown’s camp watched these manoeuvres sullenly from the sidelines, conspicuously failing to comply with the Murdochs’ demands that the BBC and Ofcom be cut back. Some of those who were close to Brown claim that this was because they regarded the demands as illegitimate and wanted no part of them. Others say that by this time in his premiership, Brown had sunk into a mire of anxiety and dithering and that they failed to react simply because they failed to decide to do so.

It appears that Downing Street also failed to understand that Brown’s personal link to Rupert Murdoch was counting for less and less as James Murdoch continued his grab for power inside News Corp. According to several sources, father and son were now frequently snarling at each other. In February 2009, James won an important battle when Murdoch’s chief operating officer, Peter Chernin, announced that he was leaving. Michael Wolff’s book,
The Man Who Owns the News
, describes how in 2005 Chernin and Roger Ailes, the president of Fox News, had ‘ganged up’ on James’s older brother, Lachlan, forcing him to retreat back to Australia. James was not going to be pushed through the same door.

With Chernin clearing his desk, James moved aggressively against News Corp’s head of marketing and corporate affairs in New York, Gary Ginsberg, an influential figure in the senior ranks of the company and an ally of his father. According to one senior executive: ‘James went after Ginsberg in the most vicious way, denouncing his ideas as the most stupid he had ever heard, saying things like “I’ll crush you if you make that happen.”’

Although much of this was hidden from the outside world, nevertheless the gap in Gordon Brown’s defences was easy to see, and David Cameron moved in quickly. At key moments during 2009, Cameron and his spokesmen simply picked up the signals from James Murdoch’s camp and played them back, while the Murdoch team replied with their own signals of encouragement and desire, rather like two birds calling out to each other in the woods, moving closer and closer in harmony.

In March 2009, Cameron picked up the very loud call about the BBC licence fee, declaring in a speech that it should be frozen, adding a particularly seductive note that it would be difficult to keep the licence fee at all if the BBC did not make changes. The message was well received and understood by the Murdoch camp, who flashed back a response, through the
Sun
, with a news story which said nothing about the impact which a frozen licence fee might have on the BBC’s ability to produce quality programmes but reported that ‘Mr Cameron wants to curb the BBC’s bloated bureaucracy and waste of cash. He plans to choke off the taxpayer funding that gives it an advantage over rivals such as Sky.’ The
Sun
then listed the amounts which, they claimed, the corporation had spent on taxis and high salaries.