Why Rupert Murdoch is convinced newspapers are important (whatever he said to a bunch of MPs)

Part of the Murdochs’ ‘defence’ to the UK Parliament’s culture, media and sport committee last week in the midst of the phone hacking scandal was that they were too busy to spend much time on a business – News International newspapers – that only produced one per cent of News Corporation’s vast profits.

This, of course, begs the question of why do they bother with them at all?

And the answer is: power and influence.

As it happens the (now defunct) News of the World and its daily companion the Sun have contributed mightily to Rupert Murdoch’s coffers over the years; providing the funds that allowed him to move into TV (and films) in the US with Fox and Sky (now part-owned BSkyB) in the UK.

In 2010 News Corp’s UK newspapers made £88.6m in the UK, up from £40.2m the year before, despite The Times newspaper losing an estimated £45m. In 2009 it lost a scarcely credible £88.6m and it’s been losing money ever since Murdoch bought it (and the Sunday Times) from the Thomson Organisation back in 1981.

Over this period the venerable ‘Thunderer,’ one of the world’s oldest papers and, arguably, the most famous must have lost close on £1bn. So why does Murdoch, a man more noted for his liking for (profitable) tabloid papers stick with it?

As we said above, power and influence.

Readers and advertisers may be deserting newspapers in droves but newspapers are still powerful. Politicians, you feel, would carry on bowing and scraping before them even if they were down to their last reader.

And it’s not just politicians. Big powerful businesses (and business people) are just as wary as the politicians are of their power and ability to turn round and sink their fangs in former friends. Former Labour prime minister Tony Blair called them ‘feral.’ And celebrities of all descriptions too know (or their agents know) that their fortunes depend on the whims of newspaper writers and editors.

Why should this be so in a world when everything is online (sometimes behind a paywall) and TV attracts far bigger audiences than print media does?

Most websites (excepting newspaper-owned ones of course) don’t have the resources to investigate powerful people, companies and institutions (the British Royal Family would be a good example of the latter). They may prod them with a sharp stick from time to time but the damage is usually containable.

TV journalists too are usually content to let their newspaper peers stick their necks out first before they put their investigative hats on.

But if the News of the World (as was) or the Sun or The Times or Sunday Times in the UK are on your tail then you should be worried. And people are. The delicious irony of the phone hacking scandal is that the NoW was brought down by the investigating of another newspaper, the Guardian, derided for years by the right wing press as a bunch of no-hope lefties kept afloat by a charitable trust (the Scott Trust named after the famous Manchester Guardian editor CP Scott).

The same applies to the activities of Associated Newspapers, publisher of the Daily Mail and Mail on Sunday. Under ferocious editor in chief Paul Dacre the Mail titles fulminate against what they see as liberal excesses and Tory backsliding even more vigorously than the Murdoch ones.

Labour politicians, for the most part, don’t even bother to try to cosy up to the Mail (although Gordon Brown, never a good judge of these things, briefly tried to when he became prime minister). They know that they’ll be in the doghouse soon enough.

Labour did manage to become pals with News International for a time of course, first under Tony Blair (pictured with Rebekah Brooks) and then briefly under Brown until the Sun, in an extraordinary display of brutality, abandoned Labour for the Tories during the Labour Party conference in 2009, shortly before a News international drinks reception to which the Labour top brass were invited.

And The Times? Well it doesn’t fulminate like the Sun or the Mail or campaign like the Sunday Times. But as the supposed voice of the British Establishment it wields a huge degree of influence in the UK and elsewhere. And such influence has served Rupert Murdoch well over the years.

Don’t forget that until a couple of weeks ago News Corporation’s bid for BSkyB was set to be waved through by the coalition government despite the opposition of most of the rest of the media and many people in the country. That would have added £1bn to News Corp’s profits at a relatively bargain price of around £10bn. The Times, like the others, supported the bid.

Owning The Times is akin to being able to have a word in the Government’s ear over a gin and tonic in a Pall Mall club while owning the Sun gives you the freedom to bombard Downing Street with rotten fruit. It’s a formidable combination.

It’s a shame none of the MPs asking James and Rupert Murdoch questions last week latched on to this (you’d think they would, being politicians).

Such is the outrage at News International’s antics (not least among News Corporation shareholders) that the Murdochs (or whoever ends up running the company) might decide to sell the UK papers. There are plenty of Arab sheiks and Russian oligarchs who wouldn’t mind losing millions on The Times. It’s cheaper than owning Manchester City or Chelsea.

But that doesn’t mean that the papers haven’t been of vital importance to the Murdochs and News Corporation. And in Rupert’s eyes still are.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

One comment

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    “There are plenty of Arab sheiks and Russian oligarchs who wouldn’t mind losing millions on The Times.”

    The Saudi Royals already own part of The Times. Or, at least, they own part of News Corporation which owns NI which owns The Times.

    The commercial links between News Corp and the Saudis seems to be well hidden (or, at least, never reported) in the UK. The information used to be on News Corps web site, don’t know if it still is.

    If you’re interested, Google for Rotana and just keep following your nose….