James Murdoch: The rise and fall of a News Corp scion
ON Tuesday, James Murdoch gave up his last claim to BSKYB, the company that most defined him.
He had not wanted to leave his job as CEO of the company in 2008, when his father first got the idea that James should instead run the Asian and European operations of News Corp.
At BSKYB, only 39% owned by News Corp, James was at a distance from News Corp politics and, more importantly, from his father’s incessant interference.
What’s more, BSKYB had made James. At 36, he was running a vast, successful and rapidly growing media company. The business world had noticed.
But his father had just bought the Wall Street Journal and was moving the long-time head of the company’s British subsidiary, News International, and family retainer, Les Hinton, to New York to run it.
Rebekah Brooks, the editor of the Sun and herself a family favourite, was scheduled to take over Hinton’s job, but Murdoch was not sure she was seasoned enough. He needed someone he could trust – not least of all because, at 78, he wanted to travel a lot less and concentrate his attention on his pride and joy, the WSJ.
So why not move James? He absolutely trusted his Mba-talking son (more so, in a sense, because he didn’t actually have an MBA, a degree Murdoch scorned). A father could hardly be more proud, almost in awe, of a son. And in truth, it rather rankled him that his son was getting so successful outside the company proper. Murdochs worked for News Corp. Period. Or they should.
And then, the succession: he knew he had to manoeuvre one of his children into the second spot. The last time he renewed chief operating officer Peter Chernin’s contract, he had to promise Chernin the top job if anything happened to him – a bothersome situation that needed to be corrected.
But James balked. Running the foreign divisions of News Corp and becoming merely the chairman of BSKYB was a significantly lesser job than masterminding the growth of the world’s most successful satellite broadcaster.
So, father and son negotiated: the deal they struck was that if James agreed to come inside News Corp, the company would begin the process of bidding for the rest of the shares in BSKYB that it didn’t own – which would ultimately put James in charge of the whole megillah.
Initially, Rupert didn’t want to tie up all the cash the BSKYB deal would require; nor did he want to have another fight with British regulators. But James was adamant. Most persuasively, he argued that with Bskyb, combined with all the other satellite, pay-tv assets in Europe and Asia, James would be among the most powerful people in the world television industry – and an obvious and worthy, even inevitable, successor at News Corp.
When he moved over to Wapping, the headquarters of News Corp’s British subsidiary, News International, a major part of James’ job became planning for and shepherding the BSKYB acquisition. The other big part of his job was to fend off the executives in America, and the ill-will they always bore toward the Murdoch children, at least until he got the big deal done and solidified his position.
(There had already been an internal kerfluffle when Murdoch mentioned, rather by-thebye, that it was going to be James and not, as planned, Rebekah, who would run international operations. As it happened, I was the person Murdoch told, one weekend morning when I was interviewing him in his New York apartment, and I passed the news on to his closest executives.)
Cold war
It is important to understand the cold war that existed between James and the rest of the company. He may have become one of his father’s closest advisers, but he was widely reviled by everyone else: he was the entitled, argumentative, haughty spoiler. What was clear, as soon as James came back into the company, to the top executives was that either they would survive or James would survive, but not both. (These same executives had successfully ousted James’ brother, Lachlan, a few years before.)
The tawdry phone-hacking business, of which James had only intimations of at Bskyb, but with which he was suddenly confronted when he got to Wapping, seemed most troublesome as the kind of issue that parent company executives could use to second-guess him in London. And US executives were in fact starting to ask the obvious questions about the affair.
It was in the spring of 2008 that Chernin, the company COO and still the official heir to the throne, arrived in London. James and his now ever-loyal lieutenant, Rebekah Brooks, were intent on not letting Chernin get involved with their business; they joked together about how Chernin was going to fill his time in London.
Almost contemporaneously with Chernin’s visit, James made the decision to write an outsized cheque to settle a suit brought by Gordon Taylor, a prominent UK sports official, whose phone had been hacked by reporters at the Murdoch Sunday newspaper, the News of the World.
Blocking and ousting
From this point, in addition to his focus on the BSKYB deal, James had another goal: not just blocking the interference of his adversaries within the company, but ousting them. Both overriding business goals proceeded on plan.
The acquisition of BSKYB, which would give the Murdoch family a vastly greater position in British media than the already overwhelming one it held, was being skillfully navigated in spite of significant UK opposition.
(Not incidentally, this included supporting David Cameron in his campaign for prime minister and encouraging Cameron to hire former News of the World editor, Andy Coulson, who had been implicated in the hacking affair, as a top aide – another fateful contribution to the growing outcry.)
As for the praetorian guard (and, often, wise counsel) around his father: Chernin was gone within the year, followed by Gary Ginsberg, News Corp’s savvy communications executive, and Lon Jacobs, the long-time general counsel and an important moderating influence within the company.
James was left as the second most important executive in the company, and inevitable heir. But that also left him the person most closely overseeing the company’s response to the hacking scandal – the importance of which James continued to see largely in relation to its possible effect on the BSKYB deal. When the scandal hit hard last summer, with the revelations of the hacking of the voicemail of Milly Dowler, the kidnapped and murdered 13-year-old, the primary issue on James’ mind was the deal. That, more than anything, was the worry: while nobody yet thought the acquisition could seriously be threatened, hacking could give regulators cause to delay it – and delay meant that all of News Corp’s cash continued to be tied up. (That was another matter held against James by the powers in New York: the company was paralysed until BSKYB was done.)
The decision to close the News of the World, over his father’s great and woeful objections, was a James-sponsored plan to meet the crisis head-on and defuse it. When that did not succeed, it was his father’s decision – over James’ great and woeful objections – to scuttle the BSKYB acquisition. (It had become an obvious lost cause to everyone but James.)
There are various accounts of when James understood that when the BSKYB deal died, his own career died with it. But surely, it was not right away. In fact, James almost immediately began to focus his attention on when they could renew the bid.
Meanwhile, there was worry in the Murdoch family that News Corp’s 39% of BSKYB could become a flashpoint provoking a discussion about whether James should step down as chairman. His angry defence was that he had the support of the BSKYB directors, whom he had largely chosen. Indeed, James floated the idea that he should leave News International and return to BSKYB as its chief.
It became one of the many ongoing Murdoch family dramas: James’ wilful and stubborn refusal – even as his own executives were publicly challenging what he knew and when he knew it – to recognise the vast damage to his credibility and prospects. The balance tipped ever so slowly, between him thinking that the critical issue was how to get the BSKYB deal back on the table, to realising that the more pressing issue was his own legal jeopardy.
The slow-motion stripping of each of his positions of responsibility has reflected James’ disbelief in his predicament, as well as his father’s abiding, if helpless, desire to protect his son. It also reflects the certainty of what everybody understands will happen: James’ undoing.
His exit from BSKYB brings the News Corp meltdown almost back to where it started, with everybody forced to ponder the sliding door questions: what if Rupert hadn’t bought the Wall Street Journal; then he wouldn’t have brought James back into the company; then James would not have been so preoccupied with buying all of Bskyb; then he would not have been so intent on cementing his own power inside the company to protect his deal that he lost sight of the family’s and the company’s real peril.