The Murdoch Archipelago

by Bruce Page

  And while the planners again recalculated the formulas, a fatal blow fell. Evans decreed that the Tricycle must not use its mid-size Boeing 767s within Australia, though Ansett would use identical aircraft. The consortium collapsed – Murdoch had taken so much that nothing remained. Though it neatly joined market principle and public interest, the Tricyle wouldn’t automatically have survived due-process assessment. But no show was made of any such process: the 767 restriction was bald official endorsement of a market fix. No formal reply came when Qantas asked why it was done ‘without talking to us’. But later Evans said to Jim Leslie, the Qantas chairman, ‘Rupert was only in town for two days, so I had to make a deal.’

  And the Menadue memoirs open a further window on to Newscorp political economy – in its late, highly streamlined form. In this case aviation is outscaled: Telstra (Telecom Australia) is the country’s largest business, and the story, as the Australian Financial Review put it, concerns the country’s ‘largest strategic and financial disaster’. (That is, up to publication date in July 1997. Other papers, largely Murdoch’s, were less upset.)

  In December 1994 Menadue, who had meanwhile left Qantas, got a call from Canberra suggesting he might join the board of Telstra – government owned, but scheduled for part-flotation. It seemed natural that the caller should check his relations with Murdoch, as Telstra was proposing to move into television networking.

  I assumed [he] was asking whether I might have any conflict of interest … I said I was not aware of any conflict because, whilst I had worked for Murdoch in the past, my links were [by] then quite tenuous. It became clear to me, however, that I had misinterpreted the question. The caller was wanting to establish whether I would be a supporter of Murdoch on the Telstra board. I kept my counsel, and was appointed .

  The invitation was from a member of the Keating administration. The caller – a minister named Michael Lee – was unaware of the Tricycle conflict, which was then secret. Menadue, as an ex-News executive, was taken for a Murdoch loyalist. The government was checking for conflicts: to make sure they existed.

  This is a long way from Black Jack and his whisky bottle, or from Whitehall’s constitutional charades with Times Newspapers. By the 1990s Newscorp’s rank in the real administration was so eminent, and its terms of trade grasped so well and so discreetly, that the government itself greased its own hidden wheels. (The slight error proves it was not Murdoch’s own hand at work – he would have known not to choose Menadue.)

  Telstra, via public investment in cable and satellite links, was being readied as a huge pay-TV outlet. Before Menadue’s appointment, the search had begun for a content-providing partner, and the choice fell on Newscorp’s subsidiary, Foxtel. As the ‘world’s third largest producer, distributor and owner of films and television programming’, the parent could ‘guarantee’ content. This Telstra would badly need, for two other firms, Optus and Australis, already had Australian rights for all movie sources besides Fox. Outline agreement was made on 11 November 1994 for a partnership between Fox and Telstra, to be called ‘Foxtel’.

  But the ‘guarantee’ assumed curious form. At 3 a.m. on Christmas Day Newscorp’s primary Australian arm, News Ltd, signed an agreement giving Australis exclusive rights to supply content to the Foxtel joint venture. Telstra was not consulted about this Christmas box, which landed it with prospects of $3.7 billion excess costs over twenty years – to buy from Australis movies made by Fox and others, otherwise available competitively. Foxtel would suffer; Fox itself, upstream of Australis, would collect.

  Just after the Australis deal but before ratification of the Foxtel partnership, Menadue joined the Telstra board – seemingly, a Murdoch vote. Unmasking himself, he wrote to the chairman David Hoare that he was not ‘persuaded’ about the proposed arrangements with News Ltd and Australis. ‘My basic problem is understanding how such an agreement could be signed without being satisfied that News Ltd could “guarantee content availability”. Didn’t we check whether News could and would deliver?’ Managing director Frank Blount simply told the directors ‘the Government wants us to do the deal with News’: ministers were ‘better briefed’ than they about the likely ‘prosperity’. Chairman Hoare asked them for unanimous assent. But when Menadue objected to this ‘political pressure’ he settled for a majority vote.

  The official prosperity was as frail as Newscorp’s guarantee: Telstra suffered pay-TV losses of $818 million in 1996-7, and $166 million in 1997-8, whereupon David Potts wrote in the (Fairfax) Sun-Herald that Telstra had been ‘taken for a ride’ by Murdoch – taxpayers were bailing out a ‘scandalous’ deal. Paul Keating was by then Prime Minister, and using a famous Keatingism – Potts argued that to permit such a transaction was ‘banana republic’ stuff, but the government seemingly had ‘encouraged’ it. Now we know that the government had in fact ordered it.

  Telstra escaped larger damage when Australis collapsed, along with its touted ‘prosperity’. However, it now seems that the pay-TV network, into which vast public sums have been sunk, can only get by as a Foxtel monopoly. Newscorp has made spacious promises about diverse access to the system. Curiously, they attract scepticism. Newscorp sold out of Ansett in 1999. Ansett went bust in 2001, as the airline recession hit its padded cost-base.

  In Britain the transition from late 1980s to early 1990s was Thatcherism’s aged evening. But before nightfall Newscorp, strong in the regime’s affection, gained an essential benefaction – its way into the Sky monopoly. Central to the relationship was the MacKenzie Sun, near its manly noon, promoting superpatriotism as a patent of the Thatcher Tories, and viewed by them as a bulwark of the nation. Journalists, sharing their profession with the Sun, have preferred to regard it as a comic masterpiece – and often cite classic instances from the MacKenzie period, such as ‘FREDDIE STARR ATE MY HAMSTER’. Few shakier tales have led a newspaper. The Sun’s chroniclers Chippindale and Horrie detail the ultraspin Max Clifford had to apply to clear his comedian-client of pet-molesting without wrecking the fragile concoction – and its otherwise lucrative notoriety. As that was after publication, it was certainly a classic of Sun technique.

  On 6 February 1989, celebrating twenty Murdoch years, the Sun identified its own purpose as fundamentally serious. Its commitment was to ‘questioning’ on behalf of ordinary people, who otherwise would be oppressed by the ‘establishment’. Murdoch is reported as having been coauthor of this populist credo, which warned against danger from ‘a growing band of people in positions of influence and privilege who … wish to conceal from their readers’ eyes anything they find annoying or embarrassing to themselves’. Such people wanted papers to parrot their views, Pravda-like: the Sun would always be alert to that. And an opportunity turned up swiftly for the promise to be made good.

  On 15 April there was an event which deeply embarrassed people in ‘positions of influence and privilege’ – the Prime Minister and her spin-doctors. It was the Hillsborough stadium disaster, in which ninety-five Liverpool football fans died. Its general cause was refusal by the booming football industry to take groundsafety seriously. Its immediate cause was callous incompetence by the responsible police force. These truths were unwelcome to the government, which had ignored the specific public-safety issue and resented any criticism of authority apt to reflect on its own. It preferred Hillsborough to be the work of its victims – a ‘tanked-up mob’ was Bernard Ingham’s phrase, shaped by police briefings he and the Prime Minister had received.

  This tosh was promoted with a devious vigour unusual for British cops, but authority’s signal seemed very legible. Vile, drunken fans became the matter of confidential briefings, off-the-record chats, discreet phone calls. (Most unusually, police evidence statements were corrupted.) By the Monday after the disaster, the news agencies were freighted heavily with lies.

  Even skilled news-gatherers may fail in such circumstances, and much Hillsborough coverage was tainted. But on Wednesday the Sun distributed the official line with a gullibility all its own. Ma
cKenzie’s headline, ‘THE TRUTH’, flared over untruths such as wartime enemies cannot often have turned against British suffering, offering a level of abuse unique in national terms. ‘Animal’ behaviour had been universal, with heroic cops attacked incessantly (even when giving the kiss of life). By the Sun’s account drunks had robbed inert bodies, spouted obscenities and sprayed urine offensively about (this was presented as special evidence of malice, suggesting that the Sun’s sub-editors knew little about traumatic death and its indignities – relaxation of bladder control particularly). Anonymous quotations pictured the crowd as pitiless brutes. Stuff like this reached everyone via the agencies. Too many printed some of it, qualified variously. Only MacKenzie’s imagination generated no sceptical reflex. Eventually the propaganda was revealed, exposing ‘THE TRUTH’ for its sloppy procedure and macho culture. (As Chippindale and Horrie report, papers were more accurate where tears could be shed.)

  Now, what response to the impact of accident shows that some collection of people and machines does amount (however roughly) to a newspaper? It must be the thing MacKenzie and Murdoch claimed to be brave exponents of: ‘questioning’, pressed for the sake of those unable to ask questions for themselves. Clearly it is an extreme accident when people die horribly, and when powerful people – ones perhaps failing in their duty – say the cause is crime by the victims and their friends. In a newspaper this generates questions instantaneously, smothering the claim in ambiguity which must persist while questions stay open. Good papers resolve such ambiguity; poor ones just display it. Sadly, factors like ethnic or geographic distance subtract energy from the process. But at Hillsborough all these, for a British paper, were negligible. In the Sun, while questions gaped everywhere, ambiguity was zero. A space existed instead of a newspaper’s operational core: official lies simply flowed in, to be parroted out.

  ‘Official’ doesn’t mean they were a product of the legitimate state itself. On the contrary, Mrs Thatcher’s Cabinet asked an eminent judge to investigate, and accepted his findings. (Sir Bernard Ingham has several times offered his personal view that Lord Justice Taylor produced a whitewash, but he has not had many takers.) The propaganda came from office-holders who sought illegitimately to manipulate the state, by spreading disinformation. The Sun was their efficient vector, showing itself an official or government organ, as far as that can exist under democracy, where it requires pseudo-newspaper qualities.

  In the real world, any democratic government is a Jekyll-and-Hyde duality. It always contains a number of uncomplicated autocrats who believe the media should do what the government says: they are the overt Hyde element. Usually, they are outnumbered by liberal Dr Jekylls, who use and enjoy free media, and to whom government newspapers or government broadcasting would be a grotesque idea – until, of course, Dr Jekyll the politician has the painful experience of being made to look bad by some disclosure by the free media. (This is especially painful when undergone at the hands of public-service broadcasters using liberties specifically granted to them by liberal politicians.)

  Democracy survives just as long as the Jekylls of government resist the Hyde which they find within themselves at every moment of stress. And of course it would be a long, long step for the leaders of any industrial democracy to bring newspapers or broadcasters directly under their control. But if the idea can be privatised, it becomes immensely more tempting: pro-government publications run by private corporations, or pseudo-newspapers, on the argument of this book. It remains, so far, a narrow and difficult market. Most pseudo-newspapers contain large journalistic impurities, and cannot be depended on. Many publishing companies decline to offer a product. But News Corporation has developed a remarkably consistent brand, marketed now wherever a demand exists.

  No formal orders generated the Hillsborough propaganda. But that was rarely needed in the old Pravda days – divining what the powerful desire is rarely taxing. What was taxing for Murdoch and MacKenzie was trying to explain ‘THE TRUTH’ as the truth itself emerged – their costive apologies illuminated nothing. Comparison of their promises with the Sun’s actual behaviour suggests that linkages between words and impact mystified them – and writings from MacKenzie in more expansive mood are suggestive. In 2002 he looked back from his new status as a radio entrepreneur to the legal struggles at the Sun, recounting a case when the paper’s Bizarre column was headed ‘STING: WHY I HAVE TAKEN DRUGS’.

  It was run only because Sting was ‘a clean-living sort of guy’ and ‘we didn’t have anything else’. At once, the singer’s lawyers sent a denial. At once, MacKenzie investigated – that is, allowed his reporter to tell him Sting had confessed on tape. Nobody checked the tape. The lawyers were told ‘to get stuffed’. But they persisted, until senior counsel and legal foot-soldiers had to gather round the editor and prepare a defence. Now the tape was played, and yielded, says MacKenzie, ‘A lot of boring dribble about what great songs he sings, why he sings them and then, finally, the crunch. The Bizarre reporter says: “Tell me Sting, have you ever taken drugs?” Sting pauses and then replies firmly: “No.”‘ Almost any newspaper would have checked it pre-publication. One which wouldn’t check after the denial is hard to picture. But this is MacKenzie describing his own unique operation: no verification till the legal paladins saddle up.

  At this point cheery reminiscence changes to a flailing assault on libel law – because Sting got £75,000 damages. Outrageous: as much as the payout for losing both arms in a car crash. ‘In what way was his reputation so mightily damaged? I saw the Brits the other night and Sting received a lifetime achievement award. He didn’t look very damaged to me …’ In reality, a victim of negligence losing both arms would typically get £750,000, because the law puts damage to the body above damage to reputation. However, the law does hold that words carry responsibilities. On MacKenzie’s account they have their uses – dressing up some ‘boring dribble’ perhaps. But, to judge by the Sting case, that doesn’t attach much responsibility to them. People who share his talent for dealing with words usually feel that they matter more. Pseudo-newspapers, therefore are not quite simple to run, and have some scarcity value.

  At the time of Hillsborough Newscorp was developing satellite television as a way round the rules which had stopped Murdoch controlling the London Weekend franchise. To him they were a commercially obstructive growth. To the Thatcher administration – as we’ve seen – they were political obstruction, a forest which shielded unpatriotic enemies. The Sky business, when Murdoch bought it for £1 in 1983, consisted of a small, unprofitable northern European network. But by 1989, when it relaunched as a major British service, Murdoch and his competitors were laying immense financial bets: being convinced that technical advance was about to make satellite into another ‘licence to print money’. Their conviction was entirely misjudged, for the technology was ruinously inappropriate.

  As the Thatcher administration approached its last moments, both Sky and its rival British Satellite Broadcasting also found themselves financially moribund, their initial assault on the marketplace having badly misfired. BSB was a joint venture of the existing ITV companies and the Pearson group, owners of the Financial Times and the Economist. Like Sky, and rather like the initial Fox network, BSB based itself on Hollywood movie output – an opportunity which could be grasped because the public-service rules applying to terrestrial broadcasters were largely absent. Even had the government admired the existing television model, adapting it to work with orbiting transponders would have required very impressive legal ingenuity.

  Both BSB and Sky expected a movie-driven audience to generate heavy income from commercials (they were not technically competent to adopt encryption and pay-to-view programming). However, for reasons very much the same as those which made it difficult to regulate, satellite was hard to calibrate. Terrestrial viewing figures were (and are) imperfect, but they provided some credible basis for collecting ad revenue; satellite had no equivalent, and collected very little. By mid-1990 Sky was heading for annual
operating losses £95 million (£173.8 million now) after £120 million launch costs, and BSB was worse. Merger was their sole hope.

  It was of course unclear that a new media system should become a monopoly to bail out investors doing and daring unluckily. Unlike the newspaper case, no law specifically required a Sky-BSB merger to be tested for public-interest impact. But many politicians and television executives believed that the Monopolies Commission should investigate the satellite debacle, and seek a future which might be competitive, fitting the government’s theoretical outlook. Monopoly, however, was the government’s practical bent – a product of its political afflictions. Prominent among these was the decline of Ingham’s media ascendancy. Won over the mid-1980s press, it had bred great over-confidence, and now faced penetrative challenge from the Independent – which had not existed when Ingham had the Westminster lobby at his command, and operating quite outside it was revealing Tory Party dissent which The Times and the Sun had once been obediently happy to ignore. In this context documentaries which asked serious questions began to seem intolerable. Loathing for ITV’s Death on the Rock remained unique, but the BBC was also accused, absurdly, of assisting the IRA’s operations.

  The Independent appeared invulnerable, but perhaps not the broadcasters, and substantial blows were aimed at them – if without satisfying effect. The 1990 ITV licensing round was run as a financial auction, which could be expected to trim the funds available for troublesome current-affairs programming. This possibly began the long decline of the ITV audience, but its immediate (unpredicted) effect was to knock out the one licence-holder, London Weekend, which the Prime Minister admired. As for the BBC, hopes did exist that Professor Andrew Peacock, commissioned to look into advertising on the BBC, might suggest ways to privatise the Corporation (eliminating the communist elements Woodrow Wyatt complained of). But the professor, a free-market advocate, judged the economics unworkable, and – disastrously – suggested the BBC should be left alone.