Inside Story

In praise of the strong proprietor

The Australian exists because Rupert Murdoch is an old-fashioned media mogul willing to follow his instincts, argues former editor Mark Day in this talk from last week’s conference on the paper’s fiftieth anniversary

Mark Day 14 July 2014 3830 words

“If there has to be a reckoning between good and evil, I will say good and some of you will say evil.” Rob Griffith/AP

I want to put the case for the proprietorial model for newspaper publishing and I have a very simple starting proposition: that without Rupert Murdoch as an old-fashioned proprietor you wouldn’t have had the Australian fifty years ago and you wouldn’t have the Australian today.

It is fashionable around the world these days to speak ill of Rupert Murdoch, but I want to defend him, warts and all. Because without his vision, enterprise, tenacity and, at times, cussedness, Australia would not have had the forum that the Oz has provided for us to debate ourselves, our directions, our legal, moral and commercial frameworks – all of which has for the past fifty years helped shape what we are today.

It is precisely the individual idiosyncrasies, the bees in his bonnet, the shifts, the somersaults, the backflips, the big calls, the wrong calls, the missteps and, yes, the triumphs, of Murdoch’s life and career that bring character and meaning to the Australian.

Rupert Murdoch has shown himself to be a great risk-taker. Not only has he bet his company on several occasions, and won, but every day he encourages risk among his editors and journalists. Risk-taking is part of his DNA and it flows through his company in many ways which I will explain shortly. It is the kind of risk that publishing companies without a strong individual proprietorial hand are largely unwilling to take. I don’t intend to make this address part of the pot-stirring argy-bargy between News Corp and Fairfax but if you look at the relative positions of the two companies, one with a strong proprietor, the other without, it makes, at the very least, a case for strong leadership.

Rupert didn’t invent the role of media mogul. There were earlier models. In the first half of the twentieth century controversy raged in America over the influence for good or evil of William Randolph Hearst, who owned a chain of newspapers across the nation and used them to pursue his political ambitions. Hearst’s papers were accused of inventing the sensational and often salacious formats that became known as the Yellow Press – a derogatory term that may have described their predilection for news from the courts and the underbelly of national life, but not their popularity. Hearst instinctively knew what people wanted and as a publisher he found no fault in giving them what they wanted. Neither has Rupert.

In Britain, the Canadian Max Aitken, who became Lord Beaverbrook, was also a single-minded press baron with extraordinary management skills. He is remembered today for his Daily Express newspaper, propagandist for the British Empire, which during the thirties was the largest-selling English-language paper in the world, with a circulation of more than three million. But Beaverbrook was more than just a press lord – he presided over the manufacture of aircraft for the British war effort and was credited with “winning the war of machines.” He was a fully-fledged political player in Britain – often wrong, but never in doubt. Just like Rupert.

Rupert Murdoch was a boy and a teenager in the era of Hearst and Beaverbrook, and these examples of press power and influence cannot have escaped him. If they did, he saw it on a smaller scale not close to home, but at home. His boyhood was built around accompanying his father, Sir Keith Murdoch, as he built the Herald and Weekly Times group into a dominant force in Australian publishing. He has told stories of sitting at his father’s feet while the old man negotiated this deal or that… how could it not occur to him that he had ahead of him an opportunity to exercise great influence?

Certainly, he absorbed many of his father’s thoughts. Only recently have we learned that the idea for the Australian was not Rupert’s, but his father’s. He explained to Paul Kelly in May that the idea of a national newspaper, able to explore the issues that united the nation, was his father’s dream. It was an impossible dream then, because technologies did not exist to allow daily distribution nationally and even if they had, the preoccupation with war and postwar recovery would have precluded it.

Even when Rupert did decide the time had come for a national paper, he was somewhat reckless. He would never have said it at the time, but I believe the Oz was founded more on a dream and hope than a proper analysis and assessment of prevailing markets. It was a leap of faith, a wild idea, a preposterous concept in so many ways that any self-respecting board would have kyboshed it before it was born. Only a headstrong young proprietor with his own skin in the game would have been reckless or rash enough to say, “Go.”

Compared with today, newspaper publishing in 1964 was a cumbersome and costly process. Reporters take their phones or tablets or laptops into the field today and their stories are captured on the first keystrokes. But in the early sixties as a copy boy I used to go with reporters to events like big sporting occasions and the reporter would type his copy; I would read it to a copy-taker in the office for the second set of keystrokes; the story would be subbed, then a linotype operator would apply a third set of keystrokes – and eventually it would appear in print, having gone through the compositors, the stereotype machines and the press crew. Today those first keystrokes can be manipulated on screen and produced as printing plates thousands of kilometres away.

In 1964 Rupert was convinced he could cobble together a national distribution system for one reason – that Maxwell Newton was already doing it on the Financial Review. Rupert reasoned if Fairfax could do it, he could do it too. He hired Max, then put his plan to his board. There was immediate pushback from the old-guard directors who regarded their job as keeping a steadying hand on the impulsive young man’s shoulders. They were the pillars of Adelaide’s conservative establishment – Sir Stanley Murray, Sir Ewen Waterman, Sir Edgar Bean – and their byword was prudence. They didn’t buy Rupert’s vision or adventurism… their job was to contain his boyish intemperance. But Rupert pushed hard and won approval – on the condition that this project didn’t put the whole company into loss. It very nearly did just that – the News Ltd profits in the year of the launch were $1.4 million on turnover of $21 million. The Oz lost $1.4 million in its first year – but it generated an extra $15 million turnover for the group. And, by the by, I have calculated that if you inflation-adjust all the Australian’s losses for the first twenty years they amount to more than $250 million, while the profitable years from 1985 to 2007 contributed around $300 million. The post–global financial crisis years, coupled with the double whammy of the online digital revolution, have led to renewed losses but overall the entire exercise has for all intents and purposes broken even. That’s in dollars – in influence, you’d have to do a whole set of different calculations.

But back to the start: Rupert’s project was conceived and developed in total secrecy, but typically, it was Rupert who let the cat out of the bag. He had decided, with Max Newton, that the new paper had to be based in Canberra, the nation’s capital. It would report Canberra to the nation, and the nation to Canberra. Its primary market would be Canberra and national distribution was almost an afterthought – something to be developed in time.

Rupert joked that he would run the Canberra Times out of town, but he was gazumped by the wily old Rupert Henderson, managing director of Fairfax, who took over and bulked up the Times. By the time Rupert Murdoch’s teams began canvassing the suburbs of Canberra for potential subscribers they found the Times deeply entrenched. They recognised that to succeed, the Australian would need a bigger market than Canberra could provide, both for circulation sales and advertising.

At an all-night planning session in Melbourne in March 1964 a plan was developed to edit and make up the paper in Canberra and fly the mattes – the cardboard impressions of the made-up type page – to Sydney and Melbourne for printing. Brisbane and Adelaide would be supplied by air. It was cumbersome and it was a great leap of faith that all the elements that could go wrong would not go wrong. They frequently did – especially in winter when fogs shut the Canberra airport regularly, provoking the need for madcap and dangerous drives rushing the mattes to Sydney along the goat track of the old Hume Highway, or to Cooma airport which was above the fogs. It was such a clunky system that the amazing thing is that it was tried at all.

The launch of the Australian was set for September. But costs mounted and mounted and one day in early July 1964 Rupert marched through the newsroom, clutching a bill for 7000 quid and declared he could take it no longer… he needed some revenue, so the launch would be brought forward. After just one full dummy run, the Australian would be born on 15 July, a Wednesday.

Can you imagine a board of crusty old conservative directors doing that? They wouldn’t have had the wit, the balls or the capacity to do it. Only a headstrong proprietor, helped along by the likes of Max Newton with all his enthusiasm and willingness to give it a go, could have called that shot and had the audacity to carry it through. Rupert had to fight his own directors and as the months passed, as the initial curiosity passed, and the costs rose and the losses mounted he had to continually ignore advice to give it all away. His senior editors on papers like the News in Adelaide begged him to stop the losses. Resentment around the company was built on the belief that Rupert was throwing away the fruits of their hard labours on this crazy project. He knew he had jumped prematurely into a space but he was determined to hold on to it at all costs.

The fact is that the Australian was launched at the wrong time in the wrong city. Two years later the distribution problems were largely overcome by the introduction of facsimile systems and the move to Sydney. Fax technology had been around since the twenties and was used extensively by the press to distribute wire photos, but it was never good enough to faithfully reproduce small type at the receiving end. The problem was overcome by the British Muirhead company when it developed a square light reader to replace the traditional round light reader, thus eliminating distortion.

Fax technology was hideously expensive to buy in those days but it delivered certainty for production schedules. But it wasn’t plain sailing – costs still far outweighed revenues and there was no end in sight for the bleeding. Circulations hovered around the 60,000-a-day level – far below theoretical break-even of 80,000 – but even when Adrian Deamer was able to get sales above 100,000 the costs of getting them there still left a big red hole in the accounts. I have no doubt that, but for one thing, the Australian would have died in the early seventies. It was sucking the life blood out of News Ltd’s finances and not only was the board worried – Rupert’s bankers were, too.

What saved the Oz in my view was Rupert’s audacious takeover of the News of the World in London. He saw an opportunity and he grabbed it. He convinced the Carr family, which held a majority shareholding in the venerable old muck-raker, with its predilection for stories about vicars in fishnet stockings, and its consequent sales of seven million a week – that he was a better ownership prospect than that terrible old bouncing Czech, Robert Maxwell. The Carrs received a stake in News Ltd and Rupert invaded Fleet Street, very quickly adding the Sun so his presses would have a seven-day operation. The Sun converted from a boring, unloved, union broadsheet into a rambunctious, cheeky tabloid and sales went through the roof. Soon, News International was throwing off millions of dollars a week – enough to support not only the Australian but, in due course, the Times as well. Those operations bankrolled Rupert’s great worldwide expansion into film, television – both free-to-air and subscription satellites services – books, inserts and online digital services.

This amazing story is well-known. Rupert Murdoch established himself a truly global media mogul and he became the most successful businessman Australia has ever produced. It is my contention that the amazing rise and rise of News Corp happened only because of the drive, the audacity, the cunning, the risk-taking and the skill of its proprietor. Can you imagine any board, preoccupied with weighing risk and protecting shareholders’ funds, going for this? Can you imagine the risk-averse Fred Hilmer [former CEO of Fairfax] ratcheting up the borrowings, betting the company on start-ups like the Australian, or BSkyB in Britain, or Fox News in the United States? Could you imagine Roger Corbett doing it at Fairfax? No. It was Rupert who drove his boards; it is he who created the culture of competition and winning that led to his greatest triumphs – and his greatest failures.

Perhaps I make it sound as if Rupert did it all himself. Not by any means. He hired smart people in the hope they would share his vision, but not all of them were resounding successes. Max Newton was a flamboyant and, it turned out, a deeply flawed individual whose brilliance was central to the early days of the Oz. But in those days Max was a warrior for free markets and Rupert was in the thrall of deputy prime minister John McEwen, the high priest of protectionism. The fact that the proprietor and the editor had diametrically opposing views meant it was inevitable there would be tears.

Rupert had learned the hard way that there could only be one boss. In 1960, he sacked his friend and mentor Rohan Rivett as editor of the News because Rivett wanted to go where Rupert didn’t. Newton left the Oz in less than a year. Walter Kommer brought stability, but not vigour and verve. Adrian Deamer unleashed new talents, new writers and new thinkers through his beautifully crafted pages, but while Rupert had originally positioned the Australian as a small-l liberal publication, he was changing his thinking in Britain. Beset by union problems – he fixed them later at Wapping – and growing in support of free-market policies, he thought Deamer wasn’t being tough enough in his calls for economic and workplace reforms. According to Deamer, Rupert told him he wasn’t producing the kind of paper he wanted. Deamer, reflecting the difficulties in understanding what his proprietor wanted when his views appeared to be in such a state of flux, said, “I don’t think you know what kind of paper you want,” to which Rupert replied, “That might be so, but I don’t want you editing it.” I think he came later to regret that because he once nominated Deamer as one of his best editors.

In those early years the Oz had a procession of editors – seventeen in the first twenty-five years. Rupert had the habit of briefing his new appointments about the kind of paper he wanted: he laid out the parameters and the policies and then, very largely, left them to get on with it. He has a reputation of being interfering – but that was not so, on a day-to-day basis. He was a visiting proprietor – the tension would ratchet up a notch or three when he came to town and he used to deliver critiques of the paper, which were often quite terrifying events. He would go through the paper, page after page, commenting on headlines, stories, pictures, placement, and he would invariably tear it – and us – apart. He would be ruthless in his criticisms and capable of leaving editors who thought they were tough as shaking wrecks. I’ve been through it more often than I care to remember, but I was always aware at the end of the process that he knew more about newspapers and journalism than I did. I wonder if that could be said about Fairfax’s chairman, Roger Corbett?

It was this hands-on approach that developed in his senior journalists the unique News culture. Put simply it is: Don’t be afraid. Don’t worry about playing it safe – playing it safe is the most dangerous place to be because it puts you in the middle and the middle is bland. The middle is death. You’ve got to be on the edge; to be competitive, you’ve got to stand out; you have to stand for something, be remembered for something, make people come back to you because they remember the stand you took on this issue or that.

There are risks in this, of course. There are risks that you can get it wrong. There are risks that some folk will be offended, and sometimes the offended ones are in a position to hurt you – by withdrawing advertising, or rewriting political rules or regulations to curb you. A board of directors would quiver at these risks, but not a proprietor like Rupert.

This approach may have had something to do with Rupert’s acknowledgement of his own fallibility. I have talked of Rupert’s successes but there were also failures. He once launched a business magazine that lasted, I think, three weeks. He launched a takeover of the Herald and Weekly Times in 1979 and was beaten off – at a handy profit, by the way. His overpriced purchases of US properties such as the TV Guide business led to the accumulation of far too much debt and he failed to ensure that it matured in a timely fashion, so when too much of it had to be repaid, he was not able to meet his obligations. That near-death experience, where the future of News Corp hung on the decision of a loans manager in an obscure Pittsburg bank owed a mere $10 million of the borrowed billions, clipped Rupert’s wings for a few years in the nineties while the underlying strength of his assets were brought to bear to bring a return to financial capacity. Then he was off again, expanding, expanding, expanding.

And then there was the phone hacking. No matter what glittering epitaph is proposed for Rupert Murdoch, it will inevitably be tarnished by the phone-hacking saga. No matter how his admirers spin his achievements, there will always be this great black cloud hanging over them.

I have mentioned the News Corp culture of risk-taking and competitiveness. No market in the world, with the possible exception of the old Sydney afternoon paper war between the Mirror and the Sun, is or was as intensely competitive as Fleet Street, or the British national press. I have no doubt that this drive to beat the opposition spawned the practice of phone hacking. Did Rupert know about it? In a way that is immaterial because he accepts – he has always accepted – that the buck stops with him. As a human being, you can understand the discomfort he has felt by being labelled the Dirty Digger and worse, or as he once said about the abuse and invective thrown at him during the takeover of the Wall Street Journal – “You’d think I was a genocidal tyrant” – but he has never complained. If the successes are his, the failures are his. It goes with the territory. He may not have hacked phones, but he led a company that did.

All this plays into the chapter of Rupert Murdoch’s life and career yet to be written. How will he be remembered when he is gone? What was his contribution, or otherwise, to the world? Was it positive or negative? Did he promote good or evil? When people look at his newspapers, will they see vicars in fishnet stockings or topless Page 3 girls, or will they see positives contributed by the Australian, the Times or the Wall Street Journal? Will they see The Simpsons or The X Files, or Titanic, or Avatar – and what will they make of that?

In my view Rupert Murdoch’s contribution to society has been both positive and immense. There are those that will say his products have pandered to the lowest common denominator – in other words, they have been popular. He learned very early that there was little profit in producing products that consumers did not want to buy. But he also balanced popular products, like the Mirror, or the Telegraph, or the London Sun, or the New York Post, with the serious and influential, like the Australian, the Times or the Journal. He demonstrated that he could walk and chew gum at the same time and along the way has provided a career for thousands of journalists, film and television producers, authors, scriptwriters and managers. There are Australians around the world in senior management positions inside and outside Rupert’s companies who would not have been able to make their marks without getting a start with News. It goes beyond just jobs – his family’s support for the arts, for medical research, for children’s health, has been legendary. Rupert used to say he made it so his mother could give it away.

I recognise that others will have a different view. If there has to be a reckoning between good and evil, I will say good and some of you will say evil. I’ll leave that question hanging for the simple reason that we are all entitled to our view and there is no definitive answer yet, but I return to my original point: the Australian exists in this fiftieth-anniversary week because Rupert was and is an old-fashioned proprietor, not afraid to follow his instincts and not afraid to take risks, and not afraid to fail. I don’t believe we will ever see that from the collective decisions of modern boards – just as I don’t believe we’ll see the likes of Keith Rupert Murdoch again. •