Will Murdoch get ITN?

Spectator, The, Nov 18, 2000 by Peston, Robert

Much depends on Tony Blair, but, says Robert Peston, the Dirty Digger's relationship with the government is not what it was

IN July 1995 a senior Labour official ushered me to a corner off the Burma Road, the Commons corridor where the parliamentary lobby has offices. `We've got an important story for you,' he muttered.

This was in the brief honeymoon period of my early days as FT political editor, when Tony Blair's minders still believed I would do the decent thing and put positive spin on stories I was given. Anyway, it was a tale worth hearing: Tony Blair had agreed to address Rupert Murdoch's triennial conference for senior News Corporation managers.

By flying across the globe to Hayman Island off the Australian coast, Blair hoped to end 15 years of continuous antiLabour hostilities by Murdoch's Sun newspaper. Meanwhile, Murdoch was putting the Tories on warning. John Major's government had irked him with new rules on cross-media ownership, limiting the ability of his newspaper and television interests to expand in the UK.

The courtship culminated in the decision by the Sun to back Blair in the 1997 general election. There could have been no more powerful symbol that the Tories were marginalised. So, with another election looming, Blair seems to be taking an uncharacteristic risk by publishing - in the next two or three weeks - his own White Paper on media ownership and regulation.

Of course, there will be nothing in the White Paper expressly designed to hurt Murdoch. Blair is not naive. But the paper may encourage greater competition against News Corp while continuing to restrict Murdoch's own ability to buy. There are signs that Murdoch is spoiling for a fight over this, possibly to scare the government into letting him acquire ITN or another television business.

Before getting on to the detail of all this, it is worth nailing a particular conceit of some of Murdoch's henchpersons. They insist that News Corp is now so enormous throughout the United States and the rest of the world - it owns a film studio and television network under the 'Fox' brand, Star TV in the Far East, the HarperCollins international publishing business, and literally hundreds of other businesses big and small that the UK is of peripheral interest to Murdoch. The semi-official line is that he is preoccupied with creating Sky Global networks, a worldwide digital satellite business currently under construction.

But the facts don't fit. I was struck that the first businesses he mentioned in News Corps annual meeting in Adelaide last month were his British newspapers, which were `doing brilliantly'. To put that in perspective, last year his UK operations contributed more than a quarter of News Corps total operating profit of A$2.74 billion (1 billion). A senior News Corp executive told me that `Rupert remains extremely interested in the UK and its politics'.

It is too early to talk about Murdoch returning to the Tory fold. And the truth is he will probably end up backing whichever party looks set to win. `It's a one-horse race at the moment, isn't it?' said one of his lieutenants, indicating that Murdoch would support Blair if the election were tomorrow. But his relationship with the government is less warm than it was. Wendi Deng, his young Chinese wife, who has become a great power within News Corp, told a friend of mine that she and hubby thought the Prime Minister was now `too much like Clinton'. This could be serious: Murdoch detests the US President.

Blair, for his part, is cultivating Murdoch less assiduously than hitherto. One of the Prime Minister's advisers explained: `In opposition we tried harder with Murdoch, because all we had was persuasion; we had no track-record, no power.'

Intriguingly, if Blair has backed off, the breach has been filled by the Chancellor. Gordon Brown is close to Irwin Stelzer, Murdoch's friend and adviser, and it was Brown who saw Murdoch a fortnight ago, an encounter which has provoked some amusement in government. The objective was not to try to woo him on the euro pointless - but to persuade him that `corporate Europe is moving towards us, becoming more Anglo-Saxon, more flexible' (in the words of a minister). I am informed that Murdoch, who remains wary of the government's pro-European position, was not hugely impressed. `There is a big hole in Rupert's chest, and Gordon is trying to take a thorn out of his toe. It's bonkers,' says a Whitehall source.

Downing Street is also keeping an eye on a flirtation between David Yelland and William Hague. At the risk of baldism, Labour detects a worrying affinity between the slaphead Sun editor and the Tory leader, though, in the words of one Labour official, `we think Yelland is freelancing on this'. And Blair can take heart from comments by one of Murdoch's confidants that Murdoch regards Hague as `bright, but too young' and `lacking control over the Tories'.

Even so, Blair cannot take Murdoch's backing for granted, so Downing Street has been keeping tabs on the culture department and the DTI, which have joint responsibility for the White Paper. This exciting document will redefine the `media market' to take in the whole of Europe, and it will stress the importance of having lots of different media companies (`diversity') in the UIC Rather than treating newspapers, television and the Internet as discrete markets, the White Paper proposes that they should be seen as different 'channels' in one multimedia market.