Setbacks: Rupert Murdoch

The media mogul has always had an unsavoury reputation, but he had never looked weak or ineffectual before
News Corp Chief Executive Rupert Murdoch speaks outside a hotel where he met the familly of murdered teenager Milly Dowler in central London July 15, 2011. Murdoch said sorry on Friday to victims of phone hacking at one of his British tabloids after confidante Rebekah Brooks quit as head of the media empire’s British newspaper arm. The twin steps were designed to quell an escalating scandal that has forced Murdoch to close the News of the World newspaper and drop a $12 billion plan to buy full control of pay TV operator BSkyB . REUTERS/Paul Hackett (BRITAIN - Tags: POLITICS BUSINESS MEDIA)
End of the world
Paul Hackett/Reuters

On July 19, a man ran into the room where Rupert Murdoch was testifying before the British Parliament, and hit the media mogul with a shaving foam pie. The incident may have helped Murdoch, creating some sympathy for him on a day when MPs were mostly grilling him about the News of the World phone hacking scandal and what he knew about it. But Murdoch didn’t look happy to be pitied.

The big impact of the phone hacking allegations wasn’t that they made News Corp. seem evil and unscrupulous; that was the reputation the company had already, and one that Murdoch seemed to take delight in creating. But the fallout from the scandal made him look weak for the first time ever. “Murdoch is now perceived very differently from the all-powerful media mogul,” says Claire Enders, founder of the media forecasting company Enders Analysis. “His erstwhile role as kingmaker in British politics is at an end.”

For decades, Murdoch seemed unstoppable—anything he wanted, from Twentieth Century Fox to the Wall Street Journal, he got. When he planned to bid for the British Sky Broadcasting group, success seemed a fait accompli. Instead, the allegations of rampant spying, on everyone from the dead schoolgirl Milly Dowler to Princes William and Harry, scuttled the deal, then forced him to shutter News of the World.

With his newspaper organization disgraced, gone, says Enders, is the “unique and immense political power” the company held for over a generation of U.K. politicians competing for the Murdoch endorsement. Now, the shareholders of Murdoch’s corporation may no longer share his enthusiasm for newspapers. “Owning papers, which have close to a zero margin,” Enders explains, “is only worth doing if they confer political power.”

Murdoch may not even be able to retain power by passing it on to his children. After News International chief executive Rebekah Brooks was forced out, Vanity Fair reported that Murdoch told his son, James, “maybe you should go, too,” before changing his mind “after a sleepless night.” But James, who was being groomed as his father’s successor, is increasingly on the hot seat over the scandals. And though he denies allegations he had prior knowledge of phone hacking, the scandal’s drumbeat might make it harder for the dynasty to proceed in an orderly manner.

James could yet come out unscathed, but Rupert has already lost face, as the scandal has forced him to do something humiliating: downplay his power. Although he claimed in his testimony that he was still a “hands-on” executive, his story depended on the idea that he was so disengaged from the workings of his own company that he “lost sight of” what his smaller newspapers were doing.

Stories about Murdoch’s most profitable news project, Fox News, have made it all too plausible that he doesn’t know what’s going on within his journalism empire. Fox News head Roger Ailes has been portrayed as the real genius behind its success, with Murdoch and his family looking on from the sidelines.

And post-scandal, there’s more shame to come. Murdoch has had to concede much more authority to his board, says Enders. And the hearings punctured some of the remaining Murdoch mystique by making the world aware of “his great age, failing hearing and short attention span.” No wonder Murdoch told Parliament that July 19 was “the most humble day of my life.”