This is why Murdoch’s empire, particularly in the UK, was so dangerous, but also why it was more fragile than any of us could have imagined. It could get away with many things while its owner was willing and able to use his publishing outlets as blunt instruments to scare politicians and to demagogue public opinion. But wielding power doesn’t win many real friends. When the Milly Dowler gap appeared in Murdoch’s lines, it was in fact many of his putative allies who were first into the breach.
My own little theory is that Murdoch was like an invasive species with a selection advantage of unbridled aggression—something like a hammerhead let loose in the koi pond. The swaggering-but-resentful Aussie thing is certainly part of that, especially given the sclerotic, inbred nature of elite society that we are witnessing in the UK (a fun side note: remember when David Brooks said that was an awesome thing? That was two months ago). But it’s also that Murdoch just never bought into —indeed, he sneers at it—the ethical edifice that journalism as an institution built up over the last half a century or so. He’s hardly the only one, but few so aggressively laid bare their disregard for standards, both journalistic and societal. Journalism should question and challenge power structures and elite opinion. One paradox of Murdoch is that his business innovations have done just that, while his journalism has been subverted to corporate ends. Few, can say with a straight face that Murdoch’s influence hasn’t mostly been corrosive, both for journalism and for society. His disregard for the standards of both was his biggest competitive advantage.
I don’t know what you can do about that other than report it out, as Nick Davies and The Guardian, to their everlasting credit, have done. That, and hope that everybody eventually catches on. (Isn’t it surprising that after all that’s been written about Murdoch, it will be investigative reporting that does him in? Not to us.) The great irony of Murdoch is that the insurgent himself became entrenched, and did nothing other than seek to further entrench himself in the power structures. But demagogues and other entrenched powers eventually overreach and collapse, especially when given a good shove by a free press and democratic institutions, or else they just wither away. It may take way too long, but it will happen—and it appears to be happening here so far.
For Colvin, writing from a very Fortune point of view, News Corp.’s collapse was an inevitable result of its corporate governance structure. That’s, of course, a symptom of the core problem at News Corp., which was Murdoch’s drive to wield power, damn the rules. But it’s also revealing about the company’s ethos.
While Murdoch owns just 12 percent of the company’s shares, he retains control of the company via supervoting shares that give him 40 percent of the votes. It’s technically possible for the other 60 percent of voting shares to overthrow him, but it’s realistically unfeasible, particularly because Murdoch’s close Saudi ally Prince Alwaleed controls 7 percent of the votes, as Colvin points out.
Dual-class structures are not uncommon in family businesses gone public, allowing them to cash out shares while retaining control of the firm. They’ve been especially common in the news industry.
The Sulzbergers control The New York Times, the Grahams control the Washington Post, and the Bancrofts controlled The Wall Street Journal with dual-class structures. It’s no accident that our last best papers were protected under such ownership structures.
Still, let’s face it, some families are better stewards than others. When The New York Times got in real trouble a couple of years ago, the Sulzberger family killed the dividend that helped line its pockets. The Bancrofts strangled The Wall Street Journal, insisting on $83 million a year in dividends in good times and bad.
Combine an antidemocratic voting structure with a board composed to keep it under Murdoch’s rule, and you get a corporate governance nightmare. You get a NotW. Colvin:
Ultimate responsibility for protecting News Corp.’s 48,000 total shareholders thus rests with a board comprising three directors named Murdoch (Rupert plus sons James and Lachlan; daughter Elisabeth is scheduled to join next year), four additional News Corp. employees (COO Chase Carey, CFO David DeVoe, executive VP Joel Klein, and senior adviser Arthur Siskind), two former News Corp. employees, and seven other directors, including a 31-year-old opera singer, Natalie Bancroft, from the family that owned Dow Jones, which News Corp. bought in 2007. News Corp. says her “youth” and “female perspective” bring value to the board. Under such guardianship, it’s unsurprising the stock has disappointed investors; it has underperformed the S&P 500 over the past five and 10 years…