Phone hacking scandal deepens

[Jan Klimkowski]

Some Murdoch family gossip in the Daily Telegraph.

Not to be taken at face value.

However, Rupert did look like "an old 80" in the brief clips I saw yesterday.

The sibling squabbling sounds plausible too.

The family's control over News Corporation, the world's second-biggest media company, can no longer be taken for granted. The fissures that have characterised relations between Murdoch and the three of his six children who have at different times aspired to succeed him are reopening.

"This is implosion time," says Michael Wolff, Murdoch's biographer. "Rupert has lost his way. He doesn't have any more friends. Rupert has run his business with a particular currency: that he could use his newspapers to reward you or punish you. He doesn't have that power any more, and without it he doesn't have any currency, so from a power point of view he is bankrupt."

(snip)

Sources in News Corporation say the game is up for James in terms of succeeding his father as its head. The lack of faith displayed by father in son was obvious in a leader in yesterday's edition of The Times, part of the News International stable. In an extraordinary attack on its own chairman, the newspaper criticised James's offer to give evidence before the select committee in mid August, during the parliamentary recess, as "unnecessarily provocative".

The leader is said to have been inspired by Rupert, whose initial refusal to attend is condemned in softer terms. Murdoch junior is also facing calls to step down as chairman of BSkyB. The scandal has scuttled a bid by News Corporation to buy up the 61 per cent of shares in the satellite broadcaster not under its control.

"James is essentially out of business," says Wolff. "He cannot run the company, he is no longer the heir."

(snip)

Elisabeth and her second husband, the public relations man Matthew Freud, have often been described as friends of Mrs Brooks, but it is understood that Miss Murdoch was less than happy at the attention lavished by her father on the executive. Mr Freud denies any such friction, describing a report that his wife railed against Mrs Brooks as having "f----- the company" as "untrue" and "placed with malicious intent".

Elisabeth is said by a source at News International to have resented her father's tendency to favour her brothers in business, despite her being older. Like Lachlan, James and Prudence, Mr Murdoch's daughter from his first marriage, Elisabeth was granted $150 million in cash and shares by her father. The four share voting rights in the family trust, a privilege not extended to their father's two young daughters by his third wife, Wendi Deng.

Elisabeth is now being touted as the new heir to the News Corporation throne. Asked how the Murdochs were bearing up, Mr Freud texted The Daily Telegraph: "They are bearing up pretty well. Tough time but they have always been attacked and always pushed through. This battle perhaps not as righteous as the others!"

In addition to the select committee hearing, the Murdochs' interests in Britain are threatened by a wide-ranging police investigation and a judicial inquiry. But the ultimate threat lies in America. Could the Murdochs be ousted from the company that controls the Fox Network, 20th Century Fox Studios and the Dow Jones group?

Sam Hart, media analyst at the brokerage Charles Stanley, says: "Obviously the Murdochs will take into consideration what their large shareholders say. Until 10 days ago everybody was assuming that Rupert Murdoch's successor was going to be James. Whether he does take control now depends on the criminal investigation, and whether there is evidence that criminality went further up News Corp than seems to be the case."

(snip)

"The opinion in the US is there's no way he (Murdoch) couldn't have known what these guys get up to because he knows what they're like," says Wolff. The world, he says, will have a surprise when Murdoch sits down in front of MPs on Tuesday. "Rupert is very good at campaigning when it's in a backroom. He's good at meeting power with power. He's good at making a deal. He's not good at this other thing, which is about perception, sensitivity, image, brand. These are things that he's incredibly bad at.

"Right now the difficulty is that Rupert is incredibly old. He is an old 80, which makes him seem like 100. I just don't think he is up to it any more. I've spent a lot of time with him and it was weird. Often he's fine, but it was very hard for him to follow the track of the conversation. He's an old guy. You think, 'Oh my god, this guy is old'."