James Murdoch and the Deathly Hallows (on-going!)
Paper Boy – the irreverent insider
Never underestimate a Murdoch to spring the ultimate surprise and deliver a bigger response to a crisis than any commentator would have forecast.
The news last week that the 168 year old News of the World would close shocked the industry. This was a massive response to the phone hacking scandal, which was becoming worse each day with new and fresh revelations of phone hacking that ate away at the moral fabric of the UK.
This ‘grand gesture’ sought to stop contagion to the rest of the News Corp empire, whose ambition is to be the largest company in the world.
Industry insiders say that over the last year Rupert Murdoch has become more and more agitated about how the scandal had been handled by News International executives. Many insiders also thank God for The Guardian‘s continued tenacity to keep gnawing away at the wound.
It is beyond reasonable doubt that News of the World is not the only newspaper that should be implicated in this illegal practice. However, News International can’t complain about a ‘witch hunt’ as they were masters of the technique. In the past these sorts of issues were handled and buried with expert political manoeuvring – which begs the question of the culpability of our political system and our politicians… are they lacking the balls to take on the Murdoch Machine?
When the news first broke that News of the World was to close, Paper Boy thought it was a master stroke in attempting to ensure that News Corporation is not perceived as unfit to control a large part of the UK media landscape. However, 24 hours is a long time in this particular saga. The more the news sunk in the more you realised that this was not going to quash public outrage. Our re-found cynicism makes us believe that this quasi-altruistic response from News Corporation is a relatively small price to pay for the larger prize of total control of BSkyB.
It is understood that before this week NI had several plans to dramatically cut down its cost base. Newspaper businesses are a paper and people business; the two biggest cost variables. Rumour has it there were major plans across the commercial parts of the business to reduce headcount. As always, NI continue to try and protect their editorial budgets and no more so (and probably rightly) on The Sun, which is highly profitable and the cash generator for the whole newspaper subsidiary.
However, the closure of News of the World creates the opportunity to change a lot of antiquated and protected working practices across its editorial operations. Sadly, 200 people (mainly editorial jobs) are thought to be affected. This will increase once the commercial operation has a chance to scale back. But don’t be surprised if arising from the ashes is a new Sunday sister title for The Sun, with a more efficient and cost effective seven day editorial operation (but only once, and if, News Corporation get clearance to take over the remaining part of BSkyB). Moreover the £600 million investment a few years back on new print facilities means there will be a large amount of spare print capacity available that will be redundant.
Another alarming factor for the newspaper industry by the exit of News of the World is that the existing Sunday red tops (the Mirror, People and Star) are not brilliantly equipped to take up the slack. In circulation terms this segment of the national press has been the worst performing for some years. Expect a heavy marketing push by the Mail on Sunday to capture disenfranchised News of the World readers. In fact, this crisis could mean that Associated Newspapers could become the pre-eminent UK national newspaper group (more about this in a few weeks!).
The key thing is that there will be another ‘red top’ to go. Rebekah Brooks can’t survive as the heat intensifies. The fact that she was editor of both the NI tabloids through the period in question means she is responsible. Editors are into detail (it’s the nature of the job) and it is human nature for everyone to ask when presented with a story… “how do you know that?”. Moreover the massive pressure in newsrooms to get exclusives and to be first versus the competition puts editorial staff under great pressure.
The Matt Driscoll case (again on News of the World) saw one of the largest unfair dismissal cases in the UK. This level of bullying evident in most tabloid news rooms is stark when Driscoll was disciplined for getting a story wrong about a supposed new Arsenal away kit… compare that to the hundreds of thousands of pounds paid out in libel costs for front page headlines over the years.
But is Brooks just creating a firewall to protect James Murdoch? The apparent heir to his father is looking a little exposed. Chairman of News International (as well as CEO Europe and Asia) is not a titular role. Although James did not join NI until December 2007 after the main part of the current allegations are dated, the investigation was on his watch. It is rumoured that some members of the internal legal team involved with the phone hacking scandal were escorted from the building the day the news broke of the closure of the paper.
It would appear Murdoch junior was badly advised, misled or just wasn’t interested in the detail. For this he is culpable… but not as much as Brooks. It does make the way the pair stormed into The Independent offices last year to complain about an ad campaign seem even more foolish now. The ad read “Rupert Murdoch won’t decide this election – you will”. The Chinese have a saying… “a fish rots from the head”.