Murdoch aims for the sky

Press, 15 February 1989, Page 20

Murdoch aims for the sky

The “Independent” profiles the head of the

second-largest media empire in the world

RUPERT MURDOCH was talking about satellite television: “What it’s going to look like,” he said, "is either a bloody battlefield with a lot of red ink strewn around, or a brilliant success.” In the euphoria of the launch of the satellite service, Sky Television, it is no doubt unsporting to remind its promoter of his largely forgotten first venture into satellites nearly six years ago.

The quote is from a “Washington Post” interview in 1983, when he had just bought a majority stake in an American satellite network, renamed it Skyband, reserved space on a commercial satellite and promised in News Corporation’s annual report: “Within a few months we expect to be operating the first satellite-to-home broadcast network in the United States." Within a few months there was, instead, a lot of red ink strewn around. Mr Murdoch announced that he was abandoning Skyband because neither the technology nor the programmes were ready. He lost $NZ33.2 million on the abortive adventure, mainly in cancellation payments to the satellite operator. The episode illustrates several of the Australian-born tycoon’s chief business attributes: his ability to assess a risk realistically; to accept it if the potential reward looks enticing; to pull out quickly if there is no prospect of success — yet to remain willing to try again when conditions look better. It is evidence, too, that it is he who takes the strategic decisions in his company and does not shirk responsibility for failure.

His odyssey from the inheritance, at the age of 22, of a pair of newspapers in Adelaide, South Australia, to the control of the second-largest media group in the world (only the German Bertelsmann empire is bigger), has been characterised by a consistent capacity to surprise. His very first attempt to widen his holdings was a takeover bid for his much larger Adelaide rival. It was laughed off — although he now contrdls that paper, along with two-thirds of the Australian press. When, in the 19605, he was prevented by vested interests from buying a big-city television station, he acquired one on the edge of Sydney and beamed programmes in from there: not long afterwards he owned strong television stations in the major Australian markets.

When he sought to join the exclusive ranks of the leatherfaced Sydney newspaper barons, the all-powerful Fairfaxes allowed him to take control of the faltering Sydney “Mirror,” certain that he would run it into the ground. But he relished the cutthroat newspaper battles, and learned there the street-fighting techniques he was later to apply elsewhere.

Murdoch’s entry into the British daily press in 1969 (just after he bought the “News of the World”) followed a similar pattern. Hugh Cudlipp let him have the “Daily Mirror’s” feeble sister paper the “Sun” for next to nothing, confident that the young man could not succeed where he, the acknowledged wizard of ta-

bloid journalism, had failed. After five years, the “Sun” overhauled the ‘Mirror” and has remained the unchallenged market leader.

Again when Mr Murdoch bought the “New York Post” in 1977, that city’s sophisticated media-watchers smirked and said it was no longer possible to run a profitable evening paper there. They were right — he sold the paper last year without ever having made any money out of it — but it did provide him with an entree into the American bigtime.

Now his United States holdings include a Hollywood film studio, a minor network of television stations (for the sake of which he acquired U.S. citizenship) and a profitable magazine group. Last summer he capped all that with the purchase of Triangle Publications, and its 17 million circulation “TV Guide,” for SNZ4.S billion.

The questions commonly asked about Murdoch are why he does it and how. The first of these — what makes Rupert run? — is based on the odd, rather English premise that there is something inexplicable in a man seeking to be the biggest and best in his field of endeavour.

That he is so is partly because none of his competitors can rival his length of experience. Now 57, he has been a newspaper proprietor since he was 22, a year after graduating from Oxford. Being firmly of the view that organisations must either grow or stagnate, he has sought to expand his empire from the start. He has picked up its components mostly at random, seizing opportunities as they present themselves.

The very personal way he runs News Corporation derives partly from the circumstances of his original inheritance. His father, Sir Keith Murdoch, was a big name in Australian journalism, managing director of the “Melbourne Herald” group and a friend of Lord Northcliffe. Yet he never owned a major paper, acquiring only two small operations in Adelaide and Brisbane fairly late in life. The Brisbane papers had to be sold for death duties and the young Rupert Murdoch felt that the two Adelaide titles were little to show for Sir Keith’s distinguished life. In a decision which runs like a thread through his subsequent career, he determined that, unlike his father, he would not work for others but would keep full control of all his enterprises, setting them up in a

way that makes it virtually impossible for anyone to wrest them from him and his family. Two years ago he must have felt a sense of fulfilment when, at the second attempt, he bought out the “Melbourne Herald” group. To finance acquisitions he usually borrows from banks rather than issuing new shares that could dilute his control. News Corporation consequently has a huge debt burden of some SNZI6 billion but newspapers generate rapid cash flow and he has been able to service his borrowing without trouble so far. Moving his British papers to non-union Wapping in 1986 has made them vastly more profitable. The “Sun” and “News of the World” provide a source of cash to fuel many of his other operations. The well-planned move to Wapping (Murdoch’s example enabled the whole British press to break from the noose of exaggerated

production costs) also reflected his frustration at not being in complete charge of a vital aspect of his operation.

Under the old conditions, he could not print as many papers or pages as he wanted because of entrenched restrictions that the print unions would not surrender. His insistence on being in charge accounts for his reputation as a ruthless hirer and firer — although most of the senior people within his organisations are those who have developed with it. To subordinates he trusts, he is more accessible than most tycoons and readier to accept advice. But again, it was his reluctance to surrender control over any part of his enterprises which caused him to abandon his first venture into British television in 1970, after he had stepped in briefly to rescue London Weekend Television from collapse. As the rules of the Independent Broadcasting Authority barred him from exerting full control he pulled out.

In principle he abhors regulation, but where it exists he is adept at forging friendly relations with the politicians and

officials who administer it. His papers’ politics are pragramatlc, with a bias towards support for parties in power, or likely soon to attain it.

He has supported both major parties in Britain and Australia. Unlike the first Lord Beaverbrook, he does not own papers as part of a grand design to change the world.

While Sky will not be subject to Independent Broadcasting Authority regulation, it still looks a high-risk enterprise. Except in Australia, he has not made money from the small screen. His Fox television network in the United States, established in 1987, lost 5NZ132.8 million in its first full year and shows no sign of turning the comer yet.

Even with his skill at crosspromotion — Sky advertising in his newspaper supported by favourite news stories — it will be a long time before enough people receive the satellite signals to make the project economic. Some fear that if things look bad for Sky, it will be tempted to take the sleazy path of the “Sun” and “News of the World,” luring viewers with a mix of soft pornography and salacious gossip about the private lives of celebrities. Mr Murdoch’s attitude to his two most profitable papers has always been ambivalent. While nobody imagines that he enjoys reading them himself, he believes that it is the job of a newspaper to provide its readers with what they want, rather than what the publisher thinks they ought to want. He mocked Hugh Cudlipp’s attempts in the Sixties to improve the minds of “Mirror” readers by stealth. The tabloids do not pry into his own private life. From the occasional peeps vouchsafed, it is a model of decorum. His second wife, Anna, once a reporter on one of his Australian papers, lifts the veil modestly once in a while when she is interviewed on the publication of one of her novels. (Her British publisher, Collins, was bought by Mr Murdoch last month.) They have three teenage children, and there is a daughter from his first marriage, which ended in divorce. His personal fortune was estimated by "Forbes” magazine last autumn at SNZI.B billion down by 48 per cent since the 1987 crash but still enough to be comfortable. The Murdochs have expensive homes in most cities where he has major holdings, as well a skiing base in Aspen, Colorado. In New York they live on Fifth Avenue and in London alongside Green Park, where they have had trouble getting planning permission for a satellite dish.

If Sky finds it is forced to take the “Sun” route to success, it will come up against Lord ReesMogg, chairman of the Broadcasting Standards Council, who has only occasionally been openly critical of Mr Murdoch, although he resigned as editor of “The Times” as soon as News Corporation acquired it in 1981. Asked afterwards for his opinion of the paper’s new proprietor, Lord Rees-Mogg avoided a direct reply but commented: “I wouldn’t like to be Rupert Murdoch.” Others, less fastidious, wouldn’t mind.