In the worlds of politics as well as media, Mr. Murdoch has clearly been one of the most influential figures of our time, and nowhere more so than in Britain, where he made his mark as a newspapering revolutionary.
But Mr. Murdoch came under an unprecedented level of attack in July 2011, when a long-simmering investigation into phone-hacking by reporters at The News of the World, a British Murdoch property, exploded into a wide-ranging scandal. The firestorm was triggered by the revelation that the paper had deleted voice mail messages from the cellphone of a 13-year-old girl who was abducted and murdered in 2002, a move that had added to vain hopes that she was still alive.
Within two weeks, Mr. Murdoch had closed down The News of the World, seen two former editors of the paper arrested, accepted the resignation of Les Hinton, one of his closest associates, and abandoned what would have been the biggest deal of his career, the $12 billion takeover of Britain's biggest pay television company, British Sky Broadcasting. He had also borne the brunt of an outpouring of fury from the public and Parliament, as politicians of all parties who had long chafed under the need to win his support lashed out.
On July 19, Mr. Murdoch was questioned by a Parliamentary committee, where he began his testimony by saying, "This is the most humble day of my life." Mr. Murdoch spent much of his time insisting that he was deeply sorry over the revelations of widespread unethical practices at his British newspapers, that he knew little or nothing about them and that he had not tried to cover them up. The following day, a second parliamentary panel investigating the phone hacking scandal accused the Murdoch empire of “deliberate attempts” to thwart its investigations.
While defending his company against the myriad accusations accompanying the scandal, Mr. Murdoch insisted on August 10 that he had the backing of News Corporation’s board and would stay on as its chief executive for the foreseeable future. Meanwhile, News Corporation reported a drop in fourth-quarter profit but a robust gain for the fiscal year.
A Scandal Explodes
The furor over the extent of the alleged hacking by News of the World journalists broadened dramatically with reports of the hacking of the cellphone of Milly Dowler, the 13-year-old girl murder victim. The messages had been deleted by News of the World journalists to make room for new messages, a step that confused and agonized the police and members of her family, who took it as a sign that she might be alive.
Scotland Yard detectives were also investigating whether the hacking by News of the World extended to the voicemail accounts of relatives of victims of the bombings of three London subway trains and a double-decker bus in 2005, and relatives of fallen soldiers in Iraq and Afghanistan, and that it had paid police bribes amounting to tens of thousands of dollars for information. A member of Parliament raised allegations that nine years previously News of the World had participated in efforts to disrupt a murder investigation.
The Murdoch family announced on July 7 that it would shut down News of the World, in a move that seemed calculated to help protect the BSkyB deal. Following the arrest of Andy Coulson, a former senior aide to Prime Minister David Cameron and editor of News of the World, Mr. Cameron announced two separate inquiries into the hacking revelations, saying “no stone will be left unturned.”
Neither a series of arrests nor Mr. Cameron’s vow to rein in the press seemed to contain the fast-spreading scandal. On July 10, Ed Miliband, the Labour leader, announced his intention to force a Commons vote on the BSkyB bid, saying that he regretted having to take the step but believed that Mr. Cameron had left no other option because of his refusal to move to halt the takeover.
Former Prime Minister Gordon Brown brought new and alarming charges to the scandal, accusing The Sunday Times — one of the most prestigious newspapers in Mr. Murdoch’s group — of employing “known criminals” to gather personal information on his bank account, legal files and tax affairs. Mr. Brown said he had been harrassed by Murdoch newspapers over more than 10 years, first as chancellor of the exchequer and later as prime minister.
On July 13, News Corporation dropped its bid for British Sky Broadcasting. The deal, which had drawn fierce opposition from rivals in Britain, could have given Mr. Murdoch the ability to create an all-you-can-eat media smorgasbord, potentially packaging things from news to films to books to television sports and delivering it to BSkyB’s 10 million British customers via satellite, broadband connections or other means.
In response to requests from members of Congress and to at least one news report, the Federal Bureau of Investigation in New York opened a preliminary inquiry into allegations that News Corporation journalists sought to gain access to the phone records of victims of the Sept. 11 attacks.
On July 15, after days of mounting pressure from politicians and investors, Rebekah Brooks announced her resignation, in yet another stunning blow to Mr. Murdoch’s once all-powerful empire. It was a day of stepped-up damage control by Mr. Murdoch, who released a copy of an apologetic note to be published in all British newspapers that weekend, and also visited the family of Milly Dowler, offering an apology for the actions of his employees.
Later in the day, Les Hinton, one of Mr. Murdoch's closest deputies for decades, resigned from his posts as chief executive of Dow Jones and publisher of The Wall Street Journal, the crown jewel of Mr. Murdoch's American media empire, amid a growing outcry over the practices of the company's British newspapers. Mr. Hinton had been the executive chairman of News International, the umbrella company for those papers, from 1995 until 2007, the period when the most egregious known examples of voice mail hacking by News International employees took place.
On July 17, Ms. Brooks was arrested in connection with the policy inquiry.
Mr. Murdoch's July 19 appearance before the the select committee on culture, media and sport did not seem to have come close to answering many of the questions he faced about phone hacking in the British outpost of his media empire in 2002.
Building an Empire
After building a chain of newspaper and magazine properties in Australia in the 1950s and '60s, Mr. Murdoch expanded first to the United Kingdom and then the United States, where The New York Post has been the embodiment of his hard-charging tabloid style and conservative views.
From newspapers, he moved into the world of television, founding the Fox network, the first to break the decades-old dominance of the Big 3 networks over prime time, and the Fox News Network, movies and the Internet. In 2005, News Corporation bought the company that owned Myspace.com for $580 million, a price that seemed stunning at the time.
But one of Mr. Murdoch's biggest coups was the wresting of control of Dow Jones and Company — and its chief prize, The Wall Street Journal — from the hands of the Bancroft family in the summer of 2007. The family had long been dead set against a sale, specifically and particularly to Mr. Murdoch, whom many of them openly disdained. But, choosing a moment when the company's stock price had been steadily sagging, he made a $5 billion bid, representing a premium of roughly two-thirds of its trading price at the time. The move at once cleared the field of potential competitors and broke the ranks of the Bancroft heirs. After weeks of wrenching arguments, the family agreed to the deal essentially on Mr. Murdoch's terms.
In 2008 and 2009, the juggernaut that had been News Corporation faltered as the deepening recession cut deeply into advertising revenues — particularly at his beloved newspapers, including the Journal.
In June 2010, his company took significant steps toward charging readers for online content with the announcement that it had acquired an electronic reading platform called Skiff and had made an investment in a company that was developing pay models for newspapers and magazines.
Skiff is a company that the Hearst Corporation established in 2009 to develop an online store and an e-reader for publications. The News Corporation indicated that it was not buying the hardware plans; instead, it was interested in Skiff's ability to deliver compelling rich media layouts for newspapers and magazines on the Web.
The News Corporation, joining other media companies in reaping the benefits of a rebounding advertising market, announced in January 2011 that it had more than doubled its net income in the quarter that ended Dec. 31, 2010. The company reported net income of $642 million compared with $254 million in the period a year earlier.
The Daily
In February 2011, Mr. Murdoch unveiled The Daily, a news app that he hopes will put his News Corporation front and center in the digital newsstand of the near future. The Daily, an all-purpose publication designed solely for iPads and other tablet computers will cost 99 cents per week, or $40 per year.
For Mr. Murdoch and the News Corporation, The Daily represents something far grander and more ambitious than a new business undertaking: it is an opportunity to try to reinvent the business model for news publishing. Mr. Murdoch has emerged as one of the loudest voices on the media scene proclaiming that the future of online media would be build on paid content — that information did not want to be free.
Apple, the maker of the iPad, has given Mr. Murdoch something the entire publishing industry has been clamoring for: the digital equivalent of a recurring magazine subscription that will automatically re-bill to a customer’s credit card.
With few exceptions — one being News Corporation’s Wall Street Journal — Apple has not allowed media companies to sell more than one issue at a time through its App Store. Other publishers, which have been pressuring Apple to allow them to sell subscriptions through the App Store, are hoping The Daily is a turning point for how news applications are sold and distributed to consumers.
My Space
In June 2011, News Corporation sold the troubled social media Web site, MySpace, which it bought in 2005 for $580 million. MySpace was sold to the advertising targeting firm Specific Media for roughly $35 million.
The News Corporation had been trying since 2010 to rid itself of the unprofitable unit, which was a casualty of changing tastes.
The sale closed a complex chapter in the history of the Internet and of the News Corporation, which was widely envied by other media companies when it acquired MySpace. At that time, MySpace was the world’s fastest-growing social network, with 20 million unique visitors each month in the United States. That figure soon soared to 70 million, but the network could not keep pace with Facebook.
Murdoch in America
In recent years, Mr. Murdoch has become more of a political force than ever in the United States. Fox News has added viewers and influence since the election of President Obama, becoming an enthusiastic promoter of the Tea Party Movement and other conservative candidates.
Mr. Murdoch’s News Corporation played a larger and more directly partisan role in the 2010 elections than it is known to have played in any previous American campaign. The company gave $1 million to the U.S. Chamber of Commerce, which largely worked to elect Republicans, and its News America division gave $1 million to the Republican Governors Association.
The disclosure of the donations drew swift condemnation from Democrats and liberal groups, which cited it as more evidence that Mr. Murdoch was pursuing a political agenda. Mr. Murdoch’s more prominent involvement in American politics comes at a time when campaign finance rules have effectively been loosened in ways that require less disclosure of donations.
News Corporation officials stated that its donations are entirely separate from its news operations and are instead related to its broader corporate interests.
But the News Corporation’s donations to the U.S. Chamber and the Republican Governors Association were different for their heft and the nature of the groups, which can accept unlimited, unregulated donations to pursue hardball political campaigns.
Murdoch's Influence in Britain
Since he began building his media empire, Mr. Murdoch has been a figure of towering political importance, credited by many British politicians with the power to make and unmake governments as well as influence government policies that affect the fortunes of his newspaper and television interests.
Mr. Murdoch has used his clout to try to curb the powers of media regulatory bodies and expand his control of BSkyB. But he has also voiced strong opinions on matters of wider significance, like British politicians’ flirtation with the idea of abandoning the pound for the euro, an idea Mr. Murdoch vehemently opposed.
His decision to switch his British newspapers’ support to Mr. Cameron and the Conservatives in 2010 after backing Labour in three elections, many political analysts say, made a crucial difference in returning the Conservatives to power.
Similarly, when he dumped the Conservatives in favor of Labour in 1997, many say, he helped create the wave that kept Mr. Blair in office for the next decade.
That influence, unmatched by any other figure outside of politics, has been damaged by the phone-hacking scandal that erupted over News of the World.
The company’s decision to close News of the World will not end the scrutiny of the newspaper’s practices by the police, courts and Parliament and by a public panel of inquiry that Mr. Cameron has promised to appoint.
Together, these investigations seem likely to make for an inquisition that could run for years, causing further erosion in the credibility of the Murdoch brand and costing News International millions of dollars in potential legal settlements.
The New York Times
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