The Murdoch Archipelago

by Bruce Page

  Participants had to agree they would publicly support the guarantees if they were judged attractive. The trap could not have been plainer, and the night before Cruickshank and Donoughue implored Evans to pull out and denounce the procedure as a fix. Evans disregarded them, saying that if the guarantees were truly onerous Murdoch must either (a) refuse them, and withdraw or (b) agree them and be powerless.

  The vetting became a show-acquittal of Soviet crudity, if gentlemanly tone. Murdoch’s demeanour was submissive, and no question was disobliging. He sought to give the meeting a little of his background. Sir Keith had educated him from youth in the traditions of editorial freedom. He had not initially been able to afford the ‘best and greatest’ newspapers (this was as close as things got to a mention of the Post or the News of the Screws), but he believed he was creating one in the Australian. His respect for the two great papers he was now buying was immense, as it was for their offshoots such as the Times Literary Supplement. (Why, he had just been in Oxford and found his old tutor with copies of the TLS right back to his own time in the college.) Yes, he had heard of editors being given political orders or made to run vendettas. These were abhorrent practices. ‘If there is anything of value in newspapers it is the goodwill position they have in the community … At all times there must be editorial independence.’ No credibility was attempted: Murdoch’s performance would have looked soppy in Little Women: The Movie, and was nothing like Rupert the Rebel, sacker of establishments. But on it the panel erected a media-statesman image.

  On the constitutional question, Murdoch absolutely agreed that editors could be appointed and removed only with the national directors’ approval. Was he surrendering power in this respect? asked Evans. Indeed he was, said Murdoch. Yes, certainly each editor would have the right to an agreed budget, and freedom to operate within it. Yes, he would be brave about legal threats. Certainly journalists must receive instructions only from their editors, though he would like to walk the newsroom sometimes to make a ‘personal focus of loyalty’.

  This was victory, thought Evans, though he was a tad worried about the ease of it. Next day, Thursday 22 January, at a rather rowdy press conference, Brunton, sharing the platform with Murdoch, Hamilton and Evans, announced that The Times and Sunday Times would now be transferred to News International ‘as a whole and as a going concern’. Murdoch said he had agreed powerful guarantees, notably that editorial instructions could come only from editors.

  He wasted no time illustrating the ‘focus of loyalty’ principle. On the Saturday he arrived on the Sunday Times news floor while the paper was going to press. There was an interesting leader in which Evans said the excellent guarantees much reduced any need for a Monopolies Commission reference. Murdoch thought it could be sharpened at just one point – and Evans wasn’t in sight. Quickly he marked his proof, and handed it out for typesetting …

  The vetting panel were not naïfs. They were used to trading points back and forth against resistance – to performance falling something short of agreement. That agreement and performance might have no relation to each other was beyond their experience.

  The price was £12 million (£32.7 million today), less than the freehold property was worth. After £20 million aggregate profit for News, Thomson would receive for ten years a quarter of the annual profit exceeding £5 million. It was a wondrous bargain. But obstacles remained.

  A few days earlier there had been an exploratory meeting at the Department of Trade. Murdoch and his counsel Richard Searby discussed the Monopolies Commission issue with John Biffen, the Secretary of State for Trade, his deputy the Minister of State (Sally Oppenheim) and officials. Biffen was newly installed by Mrs Thatcher in place of the wet John Nott, but he did not have good news for her chief newspaper supporter. Grigg records that the men from News ‘had a clear impression that the deal would be referred; the two ministers seemed unlikely to budge on the issue’. This must have come disagreeably after Brunton’s confident assertions. Probably the officials saw no reason why a sound purchaser should worry about following the Roy Thomson precedent. But Murdoch had told Brunton all along he would not.

  A Monopolies (or Competition) Commission inquiry is ponderous, as Shawcross had seen, but it is also daunting, once launched under the newspaper provisions of the empowering law. The panellists are recruited openly, with little chance of fixing. The question is mandatory, and must be resolved. Is the deal one which ‘may be expected to operate against the public interest, taking into account all matters which appear in the circumstances to be relevant and, in particular, the need for accurate presentation of news and free expression of opinion’. Roy Thomson’s failure to get unanimous clearance in 1966, even with a perfect record, put the bar impossibly high for Murdoch.

  Though advisory in form the answer has an effect of compulsion. Acting on it the Secretary of State steps, theoretically, out of the political role into a ‘quasijudicial’ one, which must be discharged ‘reasonably’. This does not imply that all political decisions are unreasonable, only that quasi-judicial ones are subject to appeal, like those of a judge. Approval for a deal ‘expected’ to harm the public interest would be unreasonable, and reversible by judicial review – like the Australian Broadcasting Tribunal’s attempt to see no evil in the ATV-10 case.

  Most comment at the time was far more pro-referral than the Sunday Times leader which Murdoch checked over, but generally took it as optional – which it is for the vast majority of mergers. The legislation’s compulsory nature in respect of newspapers – Jay’s 1966 legislation subsumed into the Fair Trading Act 1972 – largely escaped notice. But Biffen clearly had been advised that approval ‘shall not be given … until after the Secretary of State has received a report on the matter from the Commission’. Nor, of course, was there anything in Brunton’s idea that the losses of TNL were relevant. That illusions of discretion still clouded judgment three months after the sale announcement proves the ill effect of there being no active, non-political enforcement of newspaper law.

  The Act provides for just one case in which reference can be avoided: ‘Where the Secretary of State is satisfied that the newspaper concerned in the transfer is not economic as a going concern’. The ‘satisfaction of the Secretary of State …’ This was a chink through which partisanship might reach to give Murdoch and Searby a different answer.

  Biffen was celebrated, as a minister and a Parliamentarian, for high intelligence and minimal personal initiative, sure to follow official advice in the absence of any over-riding imperative set by the Prime Minister. Lord Howe’s memoirs draw a wryly affectionate picture of a man for whom ‘the word was all, action at best secondary and at worst extremely painful, to be avoided at all costs’. His skill in finding the words suitable to the Prime Minister’s will was seen by colleagues as the key to their relationship: Biffen, as Lord Prior puts it, did not then have a separate political existence.

  The man the Murdoch camp turned to in their hour of need certainly understood that relationship. Murdoch was of course aware through Larry Lamb, if no one else, of Mrs Thatcher’s strong regard for him, but their personal acquaintance was still slight. The go-between was Woodrow Wyatt, with whom the Prime Minister consulted weekly, and who considered it one of his duties to increase the number of ‘pro-Margaret’ newspapers. Wyatt’s diaries record that he spoke to the Prime Minister at Murdoch’s ‘request’ and that in consequence she ‘stopped the Times acquisition being referred to the monopolies commission, though the Sunday Times was not really losing money and the pair together were not’.

  The record is somewhat complex, but not open to sensible doubt. Wyatt began keeping his daily, secret journal – for posthumous publication – in October 1985. The text cited occurs in the entry for 14 June 1987, not as a casual anecdote, but rather as an operational parallel in extended accounts of lobbying for and against Monopoly Commission decisions on another newspaper (Today, now defunct). It shows that these operations were quite professional:

 
Rupert rings … the deal about Today is nearly completed. They are writing a letter to the Secretary for Trade … He will let me know when the letter goes and if any help is needed in making sure the Monopolies Commission is bypassed. I told him that Mrs Thatcher knows about it because I have spoken to her. He says, ‘I expect she’s spoken to David Young.’

  Young.’ 9.] It also shows the coarsely partisan character of the manipulations. In 1986 Murdoch wanted Today referred – to stop a pre-emptive purchase by Maxwell, a Labour supporter – and Wyatt laid out the strategy for the Prime Minister:

  Thursday 12 June . Ring Mrs T just after 8.00 a.m. I say, ‘We don’t want Today to fall into the hands of our enemy Maxwell’ … I say to Mrs T that the reason why it should be referred to the Monopolies Commission, if it is Maxwell alone, is that whereas Rupert was the only person offering to save the Times, a number of people are prepared to have a go at saving Today …

  For ‘save The Times’ one could read ‘save Gordon Brunton’ – other saviours existed for the paper. But Wyatt in these conversations focused on broad aims like ‘having another pro-Margaret newspaper’ much more than developing the Prime Minister’s knowledge of media economics. The account of his talk with her on 14 June 1987 suggests that in 1981 she got the idea that both papers were unprofitable, even if he knew better. But without doubt he imparted to her Murdoch’s urgent desire to prevent referral. When have we ever asked for anything? was Murdoch’s rhetorical question to his agreeable biographer William Shawcross.

  On Friday 23 January, two days after the ‘guarantees’ procedure, formal application was made for approval of the transfer, with exemption from Monopolies Commission inquiry under Section 58(3) – the going-concern clause. Biffen had been several days on business in India, and was still on the way back on Friday. A number of those listening to Biffen in the House of Commons concluded that his officials were conducting a substantial inquiry into the Times and Sunday Times businesses during his absence – the basis on which things changed in Murdoch’s favour. In fact they were wrong to do so. Sir Kenneth Clucas, head of the Department of Trade, did not look into the matter at all while Biffen was away, and the chief accountancy adviser, Sir Kenneth Sharpe, never became involved.

  The financial data and analyses which Cruickshank had compiled for Warburgs were in the Department’s hands – supplied by Ian Clubb, probably on the previous Monday, 19 January – and were examined by an accounting officer named John A. Knox. The figures had not been modified in any respect, and in both Cruickshank’s and Clubb’s view they showed very clearly that the Sunday Times was a most profitable business. (Obviously TNL and The Times were in a different condition.) No discussion or inquiry came back to either of them from officials: all relations with the Department were handled by Brunton, who had no accounting qualifications.

  However, Brunton was asked to provide some further information not surprisingly, in view of his public statement that the sale was ‘as a going concern’. He contacted the Thomson auditors Price Waterhouse (now PricewaterhouseCoopers – PwC) and asked them ‘certain questions’. Sir Gordon will not say how they were framed, as they were ‘confidential’, and there is no evidence from PwC from anyone who worked on the Thomson account at the time. The auditors provided a good deal of material – some of which Biffen later used in Parliamentary argument, though without appearing to convince any independent person that it was relevant to the Monopolies Commission issue – and in this they certainly included a statement that TNL and its subsidiaries were not going concerns. This must have been true from an auditor’s viewpoint, as their extensive liabilities were no longer to be guaranteed by the Thomson Organisation.

  On Saturday, while Murdoch was checking out the Sunday Times leader column, Biffen went to stay with friends in the country. Over the weekend he caught up with his official papers, but does not recall that they included anything about Times Newspapers. Doubtless he saw from the public prints that it had become a hot issue during his absence and would have to be tackled when he got back to the office.

  On Monday the decision was made – without question as a matter of urgency, but disagreement exists about where it was made, and the Whitehall geography bears on its legitimacy. Sir Kenneth Clucas told me that it was made in the Department under the ‘quasi-judicial’ theory, and therefore cannot have gone to Cabinet, where it would have become ‘political’. Indeed, this is the cornerstone of Sir Kenneth’s belief that the Prime Minister would have held strictly to her legal training, and been quite above politicking such as Woodrow Wyatt describes. However, the fact is that it did go to Cabinet, showing his view to be overidealistic.

  There was a meeting at the Department in the early afternoon with Clucas, Biffen and Knox. Remarkably, Sir Kenneth says this was his first personal acquaintance with the matter. Neither he nor Lord Biffen remembers any detailed accounting argument – or claims to have been in command of any at the time – but both agree that the opinion of ‘the auditors’ was crucial (Price Waterhouse being a magic name). Biffen says that he looked Knox firmly in the eye and asked if he was certain that the words ‘not a going concern’ had been used.

  If Sir Kenneth’s view of this as the decisive moment was correct, one would expect Biffen to have Murdoch called in and told the news. Instead, Biffen went shortly after to the E (for Economic) Committee of the Cabinet, clearly without telling his Permanent Secretary. (Lord Prior recalls this occasion as a full Cabinet meeting, but E contains all the principal ministers, making it virtually identical.) Biffen told the gathering that Times Newspapers did not constitute a going concern; as he puts it, the committee ‘considered’ this and then ‘decided that the bid could go forward’. Prior recalls that the Prime Minister remarked approvingly, ‘This is a decision John is taking in his quasi-judicial capacity’

  The phraseology, however, Prior regarded as mumbo-jumbo. Like Lord Howe he considers that Biffen did not then have any will distinct from the Prime Minister’s – Biffen’s decisions were hers made in another form. Prior was unaware of any restriction on merger approval and feels sure most ministers were quite as innocent. He took it to be a political decision, cynically made to supplement the government’s press support. He did not like it, but thought objection would consume political capital to no effect.

  There had been no ‘investigation’, and demanding one would have taken ‘quasi-judicial’ resolution much greater than Biffen’s. The auditors’ goingconcern language had been picked up from Brunton’s discussion with Price Waterhouse and passed through to the Cabinet as a cover for a political fix. The Royal Commission’s warning proved true: diversity fell victim to the lobbyist, and the Cabinet assented to the breaking of a law which it did not know existed.

  Biffen could not bear personally to announce his change of mind, and a slightly resentful Clucas had to do it. Murdoch and Searby arrived between 5.00 and 6.00, and received the news decorously enough. Outside by the lift, however, Sir Kenneth found them rubbing their hands with more glee than he liked. His evening engagement was at the Australian High Commission, but Clucas neither understood his invitation nor recognised the occasion. It was the Australia Day party, and he spent the evening dodging Murdoch, who seemed eager to thank him.

  Next day Biffen applied his principal abilities to a Parliamentary dress for the outcome. It was hard to show that the Sunday Times was somehow not the exceptionally profitable item Brunton had described for sale. He did his best with its recent losses, but as everyone knew about the shutdown nobody was impressed. The Opposition were furious, and his own side glum. Two Tories, Peter Bottomley and Jonathan Aitken, put in devastating attacks. But Biffen was resolute within his own domain of the word, and Evans, in the gallery, felt sickened as one of the world’s finest editorial properties – more his creation than anyone other’s – was portrayed as a wallowing derelict ripe for salvage. And when Biffen moved off the tricky area of profit and value, it got worse.

  Evans had played a complex game, leaving others t
o urge reference expecting their success to unmask his own bid – while staying onside with an enlightened Murdoch who, if successful, would give him The Times. This ended up giving the Secretary of State an invincible formula against every difficulty with the Fair Trading Act.

  Biffen told the House he was not just clearing The Times and Sunday Times for salvage; he was also protecting their liberties by means far better than marketplace competition. Guarantees had been given by Mr Murdoch, whose enforcement Biffen would now assume, as a legal duty for himself and his successors. And were they adequate? He would turn to authority greater than himself, for Mr Harold Evans had said, ‘No editor or journalist could ask for wider guarantees of editorial independence on news and policy than those Mr Murdoch has accepted … The Opposition motion was to compel reference. Five Tories voted for it. But the majority went with Biffen, as the Whips commanded. And now they could feel good about doing it to help a great editor.

  The grotesque edifice was nearly complete. But there was a shudder in its gimcrack legal foundations which briefly appeared lethal. People on the Sunday Times had never thought their paper needed Murdoch. They wanted to see The Times saved, but noticed that those who claimed that the package deal was the sole possible means were the masterminds who had crashed TNL. The vetting charade troubled them. But when the leader-changing episode ensued, and was in turn followed by Biffen’s performance, they decided – sooner might have been wiser – to investigate the law for themselves, instead of trusting the people supposed to be responsible for the paper. The task was deputed to four men: Magnus Linklater, the features editor, who had the widest executive experience (subsequently he edited the Scotsman); Eric Jacobs, who had worked for several years as the paper’s labour editor and had negotiated frequently as union representative for the journalists; Charles Raw, a financial investigator of almost legendary skill and integrity, probably best known for dissecting Slater Walker’s spurious investment empire; and John Barry, later defence correspondent of Newsweek, then the Insight editor brilliant, mercurial, a fluent speaker and a fast student of multi-disciplinary questions. But without their paper they were only a band of private citizens. How could they take arms against legal abuses committed by Whitehall at the behest of two international corporations? Indispensable fortune began by offering a topclass legal team almost ready-made (a present any veteran of litigation will appreciate).