The Sun King's Long Goodbye: For All His Flaws, Rupert Murdoch Is the Last Great Press Baron, with an Irrational Attachment to Print. but Could the Phone - Hacking Scandal, Heavy Losses and Uncertainty over His Successor Force Him to Sell His Beloved British Newspapers to Save the Empire?

Article excerpt

Once more, Rupert Murdoch is seen in the canteen at Wapping, east London, headquarters of his British newspapers, and heard at editorial conferences offering his views on the issues of the day. Over the past three years, Murdoch had become a remote and almost irrelevant personage, only occasionally seen in London.

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He was once a presence feared by his executives even when he was absent - in Murdoch's News Corporation, wrote the former Sunday Times editor Andrew Neil, "you are not a director or a manager or an editor: you are a courtier". Then it seemed he had taken the role of a constitutional monarch, rather than an active ruler. East of New York, authority had been delegated to his son James Murdoch, who was made chairman and chief executive of News Corp Europe and Asia in 2007.

The London operation, green and internet-savvy, increasingly bore James's stamp, not his father's. Murdoch Jr, by general consent, had won the dynastic battle over his siblings and, once death or senility forced his father from the stage, would take full command of the world's third-largest news and media company.

But, weeks from his 80th birthday, Murdoch Sr returned to take command. As his most recent biographer, Michael Wolff, has written: "He's not going to give up - is not capable of giving up - an iota of real control. And what control he does give up, he'll take back as soon as he needs it." Murdoch has never needed to take control more than he does now, in what could be his biggest crisis in 20 years.

The News of the World phone-hacking scandal - which, James Murdoch and his London executives insisted, was confined to a single, rogue reporter who had served his time in jail -threatens to spin out of control, with names of possible "victims" emerging almost daily.

In the past fortnight, most likely under orders from Murdoch Sr, News International, the holding company for his British newspaper titles, has at last acted decisively, sacking a senior executive and admitting that crucial internal emails from 2005 to 2006 - previously said to have been "misdirected" and lost in India -have been found after all.

But it may be too late. Already, out-of-court payments to Gordon Taylor, chief executive of the Professional Footballers' Association, and to the publicist Max Clifford have cost [pounds sterling]1.701. If all the alleged "victims" - and Scotland Yard has revealed that the mobile-phone PINs of 91 people were among material seized from a private detective working for the NoW- have to be paid off as Taylor and Clifford were, the effect on the company's bottom line would be horrendous. Renewed police investigations, not only into the extent of the original hacking, but also into any subsequentcover-up, could lead to more criminal charges against journalists and even senior executives.

Perhaps worst of all, the fallout from the affair threatens the biggest business deal in News Corp's history: the [pounds sterling]7.8bn bid to take full control of BSkyB. Given that News Corp already controls nearly 40 per cent of the company and as the Murdochs had swung their newspapers behind the Conservatives in the 2010 election campaign, the takeover ought to have been straightforward.

David Cameron would surely, it was said, do everything possible to stop his ministers referring the bid to the Competition Commission, just as Margaret Thatcher, also brought to power with help from Murdoch's papers, allowed him to circumvent regulatory approval for his purchase of the Times and Sunday Times 30 years ago. That is how things have always worked for Murdoch, in the US and his native Australia, as well as in Britain. If he delivered for those in office, they would deliver for him.

But the phone-hacking scandal has gained such political traction that it is increasingly difficult to see how a referral can be avoided. …