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Sunday 21 August 2011

Murdoch's family, newspapers and money all at risk

Everything that the media billionaire spent his whole life building up is now under real threat, writes Ruth Dudley Edwards

According to Michael Wolff, Rupert Murdoch's biographer, Murdoch cares only about family, newspapers and money. Power matters to him too, but simply because it benefits his family and his empire.

Murdoch's family, newspapers and money are now all under threat.

The family problems began in the late 1990s when Murdoch abandoned Anna, his wife of 31 years, to wed Wendi Deng, 37 years his junior, in the process kicking Anna off the board of News Corp.

Deng is tough -- as the world knows since she decked her husband's assailant in the UK Houses of Parliament. At 21, she ran off with the 53-year-old husband of the American woman who had got her out of China: they divorced after she got the green card which gave her permanent residence.

Rupert wanted his company to stay in the family -- Prudence by his first marriage; Elisabeth, Lachlan and James by the second. However, the children couldn't stand their new stepmother. Unkind people think Deng's concern for Rupert's health is motivated by a desire that he hang on at News Corp long enough for their daughters Grace and Chloe to be contenders.

In 2007 he was forced to give each of the four older children $150m (€104m) each in stocks and shares as part of a deal that would open up the family trust to the other two.

The adult children often seem ambivalent about the company. Prudence's husband works for it in Australia but only now is she personally involved: she was appointed to the board of Times Newspaper Holdings a few months ago. Lachlan is still on the board of News Corp but left the company years ago and refuses to return. Elisabeth left too, setting up a business which she sold recently to News International for £415m (€477m). She was to rejoin the board, but now says it would be inappropriate. James resisted joining for a while but has since become heir apparent.

Meanwhile, Deng is not popular with News Corp executives, but she has heavy involvement in the company's Chinese investments.

Then there's Rebekah Brooks, whom Rupert thought of as his fifth daughter. She rose to the top of News International, the UK arm of News Corp, helped, no doubt by her rare gifts as a schmoozer. She knew that what Murdoch loved was gossip and flirtatiousness and she gave him plenty of both. Apparently Deng can't stand her and Elisabeth said she "fucked the company".

Brooks was sacrificed to save James, but as the revelations pour out from the disaffected, his position looks increasingly rocky.

A hitherto-suppressed letter from Clive Goodman, the reporter jailed over phone hacking, alleges that hacking was routinely discussed at editorial meetings, and that Andy Coulson, who later worked for David Cameron, had promised to give him his job back if he kept quiet in court about the involvement of others. His testimony is rendered more credible because he's had a payoff of £230,000 (€264,000).

And Glenn Mulcaire, the private investigator who also went to jail, is suing News International to continue paying his legal fees.

Les Hinton, Rupert's right-hand-man of 50 years who was sacrificed to save Brooks and James, is also heavily implicated by recent evidence. Several journalists and executives have been arrested. Big London legal firms who received unwelcome publicity are dishing the dirt on News International. The select committee is licking its lips. In three months, Brooks is supposed to receive £4m (€4.6m), and News International lawyers Tom Crone and Jon Chapman -- sacked to save

their bosses -- £1.5m (€1.7m) and £1.6m (€1.8m).

Crone and ex-editor Colin Myler have already accused James of being part of a cover-up. James must be fearing arrest by now.

Writs are descending on News International from all sides, and the FBI is investigating journalistic practices in News Corp.

Last week, News Corp admitted in its annual report that its reputation could be seriously damaged and that it was unable to predict what the phone-hacking scandal was going to cost the company.

News Corp's shareholders are not a sentimental bunch and they're well aware that a vast global enterprise can no longer be run like a family firm. They're bent on damage limitation. They may let the old man retire with some honour, but no other Murdoch is safe. Rupert's family is in turmoil and his board would get rid of his newspapers tomorrow if they could.

He's still rich, but seems to want to liquidate certain assets. The family ranch in California that the older children loved has just been sold for $17.8m (€12.4m).

"I understand that Wendi didn't see it in her future portfolio," said one follower of the Murdochs.

Ruth Dudley Edwards

© Ruth Dudley Edwards