The Man Who Owns the News (52 page)

Then Lachlan announces the deal to the public with a front-page story in the
Australian
on January 22, 2008, just weeks after U.S. bank stocks have tanked as the carnage of subprime mortgages spreads to general credit. SPO abruptly pulls its financing in March. Murdoch is sure that’s the end of it, but Lachlan finds a savior in an old friend of the family, Michelle Guthrie, who used to help run Star in Asia and now has a finance gig with Providence Equity Partners.

People from Providence arrive in Sydney on April Fool’s Day, ready to do the deal, Lachlan believes, at the price he and Packer agreed on. But Providence ups the cost, and his best mate, Packer, pulls out, humiliating Lachlan.

“I don’t understand it, his brother doesn’t understand it,” Murdoch tells me. “Lachlan, from the age of four, was a stubborn bastard. He always was.”

ELISABETH

Lachlan and his sister Elisabeth form a special Murdoch club, the resignees—and indeed, Lachlan’s exit from News Corp. in 2005 and the substantial press surrounding it were managed by Elisabeth’s husband, Matthew Freud.

Like Lachlan, she is also bound to their mother. For both Lachlan and Elisabeth, there’s a fierce defensiveness when it comes to Anna, and, indeed, defense:
She
didn’t louse up the marriage, their father did. And like Lachlan, Elisabeth has set up on her own, not just in business but in identity—even brand. She’s a powerhouse. She’s a
macher
. She’s hot media stuff. Both Lachlan and Elisabeth, in Australia and London, have allowed themselves to become personalities (something their father really never was). Indeed, this is the context in which Elisabeth falls in love with Matthew Freud: He’s her image consultant. This in itself is something of a rebellion against her father. It’s a kind of insiderness that their father finds gauche (although it’s the same insiderness, in fact, that their stepmother is courting). His son and daughter are the kind of people his tabloids would naturally ridicule.

Elisabeth is, arguably, his most successful child—and his angriest. When I see her in London in the inauspicious offices of her company, Shine, which is now one of the largest independent producers of television in the world, she is as wary as Lachlan about speaking to me, and as concise in her message to her father: He’s created vast emotional turmoil and ought to thank his lucky stars he’s also produced children strong enough to survive it.

Which is, quite precisely, her own character note.

On one hand, she is the emotionally fragile woman with the difficult personal life whose relationship with Matthew Freud is likely the product of a major daddy complex. On the other hand, she’s the super businesswoman, the dealmaker, and, as well, the person who can probably best articulate her family’s dysfunction.

“It hasn’t been an easy couple of years,” Elisabeth tells me. “He still falls into stupid old habits. I mean, he’s impossible to figure. He’s weirdly awkward about things sometimes, but his heart is in the right place. He’s very old-fashioned sometimes. He finds it hard to talk about emotions. He finds it hard to say…. If somebody doesn’t know it he finds it hard to say…. He will say sorry if you call him on it, but he walks straight into it.”

It is a curious new reality: the dynastic patriarch subject to the modern language of behavior and relationships.

Part of the wherewithal to critique their father comes not just from the psychological predicament the Murdoch children have shared—in this Elisabeth sounds a lot like any well-analyzed forty-year-old woman—but also from the fact that they share his professional world. Talking about their father is shop talk—which they’ve learned from him.

Indeed, they’ve often conspired together in the workplace—they know his moves. When Elisabeth first came to London and was given a job at BSkyB under Sam Chisholm, Murdoch would have had Chisholm believe she was an underling, but then he was on the phone with her constantly and she became his back channel. He promoted his inexperienced offspring, in his stealthy ways, into his formidable tool. His children know better than anybody else how he works.

This is one of the odder aspects of the Murdoch dynasty—its relatively clear awareness of itself, and its analytic regard for the patriarch. There’s a sense that the children are intent on not being played the way he’s playing everyone else—desperate not to be his fools. Trying to figure out every step he takes.

The addition of Matthew Freud added a further ironic twist to this analysis.

After the birth of Matthew and Elisabeth’s first child, Charlotte, it was Anna Murdoch who marveled in the interview she gave in 2001 in Australia: “I thought what on earth is this baby going to be like with the blood of Rupert Murdoch and Sigmund Freud running about its veins.”

Freud added another level not just of modern personal astuteness but of media consciousness. At times, Matthew Freud almost makes Murdoch seem like an innocent when it comes to using the media. Into the world of Rupert Murdoch came a man of unspeakable craftiness, lounge-lizard smoothness, deep connectedness, superb analytic abilities, and possibly dynastic ambitions of his own. Indeed, Murdoch initially was rather horrified by him. (News Corp. executives were so suspicious of Freud that for a time they called him “Matthew Fraud” behind his back.)

Freud too has been a factor in this book—with a calculated helpfulness and a talent for insinuation. He’s contributed his own message—directed in part to his father-in-law—which is that News Corp., as it exists now, bullying and irascible, is old-fashioned, in its way a dying animal, and will inevitably have to transition to a different, cleverer, defter MO.

Variations on that are what Freud has been whispering into his father-in-law’s ear—and Murdoch has begun to listen. In fact, Murdoch has come to quite like his dodgy son-in-law, something that the dodgy son-in-law seems to take enormous pride in. In the summer of 2007 when the family is sailing around Sicily, just after the Dow Jones deal is done, a photo is taken of Murdoch and Freud arm in arm, hanging off the top of the boat. Freud gets a framed copy as a keepsake.

Freud, who grew up in the London media scene, has even drawn his father-in-law into this club (membership in which Murdoch has always been strongly averse to). Freud makes it all so…symbiotic (the one thing News Corp. has never been).

He just happened to know Prue back when she was a researcher for the
News of the World
’s “What’s On” column; he kept calling to offer her tidbits. And he happened to know
Sun
editor and News Corp. star Rebekah Wade from when she was nineteen. And Rebekah Wade happened to be introduced to Elisabeth when Elisabeth first came to London, and then…well, the three became best friends when Matthew started to get to know Elisabeth better as the BSkyB PR rep.

In short order, Elisabeth publicly fell for Matthew while she was married and with two small children (including a newborn). Then, after she left her husband, she went off with Matthew, and got pregnant by him, with Freud leaving her not long after she had their child. (This against the backdrop of Murdoch’s own marriage falling apart.)

But then Freud returned and married her before her very unwelcoming family at a very public wedding. Made all the more tense by a very pregnant Wendi. (Since their divorce, Rupert and Anna have had to see each other three times: at the weddings of Lachlan, James, and Elisabeth.)

And they started a business together. It’s an example, finally, of true media synergy: Her name and his connections jump-started a scrappy television production company. If in the beginning it was more a hobby or statement, Liz, who in theory wanted a business that would let her be a mother of (eventually) four, threw her all into it and, by dint of family cheapness and tolerance for the mechanics end of the business—its main focus isn’t making hits but licensing “formats” (e.g., reality shows) into niche markets around the world—built a significant business. Indeed, as her father pursues the
Wall Street Journal,
she’s getting ready herself to make a dramatic acquisition that will position her company among the biggest independent television producers in the world.

She has managed to build a media company apart from her father’s media company. This confuses him as much as it impresses him. He frequently imagines her moving back to New York or to Los Angeles, and he solicits suggestions for business opportunities in the United States for his son-in-law.

Elisabeth so clearly is keeping herself at bay. Of course, the very process of denying him makes her all the more alluring to him. She seems pleased with having achieved this tension.

Not too long after the Dow Jones deal is completed, Elisabeth and her father are riding horses together. Her seventy-six-year-old father is thrown and lies there motionless for a terrifying moment. Elisabeth thinks (as she will later relate to Prue):
I’ve killed him
.

JAMES

James, now destined to take over the empire (and the Murdoch children do call it “the empire”), may be the kid his father understands least of all. On James’ part, this might be calculated. A certain cat-and-mouse game with the old man. You can dodge him by talking over his head.

His record label was either a conscious or instinctive move into the one area of media that his father has no interest or experience in. Music hadn’t ever been among the Murdoch media businesses. But suddenly he had a son full of A&R talk. A semi-hipster son with his hip-hop acts and bleached blond hair, which would soon be traded in (as soon as Pop bought the record label) for sharp suits and black, thick-rimmed glasses when he got into the Internet business.

James grabbed the Internet business at News Corp. during the boom, setting himself up, in his mid-twenties, as technologist and futurist and digital leader. His father had no idea what he was talking about—but was pleased someone was doing the talking.

And then satellites. James took over the Asian satellite operation in 2000, just months after he was married. Satellites were a business his father had been successful in but which, in essence, he didn’t know beans about. The satellite businesses in the United Kingdom and Asia had been run by strong-willed managers and technical people. Murdoch had supported them from afar. Hence once more, in James’ canny appreciation of his father’s MO—dominate what he understands, find someone to trust when he doesn’t—he put himself out of harm’s way. His brother, running newspapers, was bound to be second-guessed by his father in every decision he made; James, dealing with satellites, had a much wider berth (not to mention he was six thousand miles away). Of course, James himself knew nothing about the satellite television business—except that he had taken for himself, at News Corp., the technology portfolio. On virtually any issue involving technology, from the mid-nineties on, Murdoch would seek his son’s counsel, regardless of his having no established technological expertise.

But, like so many people in the early Internet boom, James sure could talk the talk.

His father has, curiously, come to believe that James is not just so much smarter about all this stuff than he is but better educated too—which is, Oxford graduate to Harvard dropout, not exactly true.

Certainty comes naturally to James. He is the most articulate member of the family—really the
only
articulate Murdoch (the underrated Prue is his only rival). He’s all about constant, declarative conversation (although he is the only one of his siblings to put direct quotes from our interview off the record). It’s all challenge and menace. He wants to joust, clash, correct, instruct, prevail. He’s emphatic. Contrarian. No niceties.

This became a terrible problem for his brother and father during board meetings in the late 1990s and early 2000s. James, the polemicist with absolute confidence in his analytic skills, didn’t let up on Lachlan (whom he has not let up on since childhood), who, in his markedly less articulate turn, tried to keep up and defend himself. Neither their father nor the other board members ever figured out quite how to deal with these sibling rivalry events.

His powers of certainty and emphasis are directed not just at his brother; his father, among others, takes it too, with not just good grace but something like pride in his take-no-prisoners son.

Alastair Campbell in his diaries described a dinner with Tony Blair, Murdoch, James, and Lachlan early in 2002. “Lachlan,” noted Campbell, “seemed a bit shy of expressing his views whereas James was anything but.” Murdoch gave his usual, and deeply felt, defense of Israel, and James, from across the dinner table, told his father that he was “talking fucking nonsense.” Murdoch went on, saying that he failed to understand the Palestinian complaints, and James replied, “They were kicked out of their fucking homes and had nowhere to fucking live.” Murdoch then said he didn’t think James should be talking like that in front of the Prime Minister—who said later how impressed he was that Rupert let his sons do most of the talking.

James’ certainty has become part of a signature aggressiveness that he seems to think mimics, or extends from, that of his father. When I see him in London at the BSkyB offices, not long after he flew back from meeting with his father and the Bancrofts, he discusses the advantages of his father’s menacing reputation—with a pleased glint in his eye. “A little menace isn’t a bad thing.”

But his father’s menace, which is cowboy-or outlaw-style menace, has mutated in James into a sort of programmatic, techno-manager, automaton-like cultishness. He surrounds himself with a coterie of same-age, same-look (short hair, dark suit, open-necked white shirt) fellow automatons. And from his mouth comes paragraph after paragraph of super-abstracted business-speak.