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Volume VII 1981–2002

The Murdoch Years

PREFACE

This is an official history. It has access to private correspondence and business documents that have not been made generally available to other writers or historians. Some may consider this a mixed blessing and assume that the consequence must necessarily – in the words of the accusation that used to be labelled at The Times’s obituaries – ‘sniff of an inside job’. It should therefore be stated from the first that at no stage has anyone altered anything I have written or pressured me into adopting a position or opinion that was not my own. It is an official history but not a formally approved or authorized version of events.

Indeed, Rupert Murdoch’s relaxed attitude while I probed around in an important part of his business empire contrasted favourably with past precedent in this series. Those commissioned to write the six previous volumes of the official history of The Times were closely involved in the paper’s life, a conflict of interest that certainly hindered the appearance of objectivity. The first four volumes, covering the period between its foundation in 1785 and the Second World War, were compiled between 1935 and 1952 by a team under the command of Stanley Morison. Morison was the inventor of the world’s most popular typeface, Times New Roman. He was also a close friend of the paper’s then owner, John Astor, and its editor, Robin Barrington-Ward, who went so far as to describe Morison as ‘the Conscience of The Times’. Iverach McDonald, who was an assistant editor and managing editor of the paper during the period he described, wrote volume five in 1984. Volume six, covering the years 1966 to 1981, was written in 1993 by John Grigg. He had been the paper’s obituaries editor between 1986 and 1987 and was a regular columnist. Grigg, at least, was not directly involved in the events about which he wrote. Instead, he brought the insight and flair of the independent historian of note, attributes for which he will be fondly remembered. For my own part, I cannot claim much personal involvement with the paper during the years covered in this volume. My only first hand experience was garnered during the year 2000, when I was a leader writer. As a historian, my specialist area is British politics in the 1930s.

The Times is not, first and foremost, a national institution. It is a business. Yet I have avoided the temptation to treat it purely as a corporate entity, as if its journalistic and literary output had no more cultural significance than the manufacturing of the paper on which it was printed. Consequently, I have described its journalism within the context of the world events that were its stimulation. The book, therefore, is part business history, part work of reference, part anthology. It is intended to appeal both to those interested in the paper in particular or journalism in general who want to know how The Times conducted itself during the period 1981 to 2002.

The book would not have been possible without the knowledge and assistance of The Times’s archivist, Eamon Dyas, and his assistant, Nick Mays, at News International’s impressively organized Archive Centre and Record Office. Elaine Grant and Karen Colognese were unceasingly helpful in providing assistance from the chairman’s office. Journalists too numerous to mention here have accepted my invitations to share what they know over some light refreshment. Their recollections and observations have made this book a pleasure to write. It has also been a relief to discover that the traditions of the Fleet Street lunch are not entirely a thing of the past. It is not the place of an official history to indulge the sort of convoluted tales of uncertain provenance that enliven many a hack’s memoir of the Street of Shame’s alleged glory days. Nonetheless, despite my preference for primary evidence, I have not omitted gossip where I have been able to cross reference the story and establish its basis in fact. Any errors or misrepresentations remain, of course, entirely my own.

Among the many individuals that have helped me, I should like in particular to thank Richard Spink and Tasha Browning for their indefatigable generosity of spirit. At HarperCollins, Annabel Wright has been a stalwart aid. I have profited enormously from the valuable suggestions made by Andrew Knight and Brian MacArthur whose experience of the newspaper world is exceptional. Rupert Murdoch gave me a considerable amount of his time and I appreciate the unconditional assistance he has given me. I should especially like to thank Les Hinton, executive chairman of News International, who has been a great friend of the project and unfailing in his support and enthusiasm. It is my regret that Sir Edward Pickering, grand old man of Fleet Street and executive vice-chairman of Times Newspapers, did not live to see the completion of the book he commissioned and for which he provided such sagacious advice. I dedicate it to his memory.

Graham Stewart, February 2005

CHAPTER ONE
A LICENCE TO LOSE MONEY

The Problems of Owning The Times; the Thomson Sale and the Murdoch Purchase

I

On 22 October 1980, in its one hundred and ninety-sixth year, The Times was put up for sale. It would be closed down if no suitable buyer secured a deal before 15 March – the Ides of March. Staff received notice that their contracts were being terminated.

Superficially The Times was a prize, but few who had studied the accounts would have thought so. It resembled the sort of Palladian mansion still occasionally offered for sale through the pages of Country Life. Despite the odd seedling protruding from the cornicing, the exterior still looked magnificent and the asking price seemed preposterously low. But those enquiring beyond the inventory of rare and exotic contents (to be auctioned separately) soon discovered why the previous owners no longer felt able to comply with the conditions of this national treasure’s preservation order. The lead had come away from the roof, the attic floorboards had collapsed and damp enveloped what had once been a ballroom. The costs of upkeep would be punishing and, with little prospect of a change of usage permit, the likely revenue insufficient. On hearing the news that The Times was for sale, the reaction of Rupert Murdoch, the owner of the Sun and the News of the World, was reported in the press: ‘I doubt whether there will be any buyers.’¹

It was certainly a bad sign that the share price of the Thomson Organisation, The Times’s owner, soared by £40 million on the announcement that it was offloading its flagship paper. This was particularly alarming since for sale was not only The Times and its three smaller circulation supplements but also the Sunday Times, a paper that had been profitable for seventeen out of the past twenty years. But the Sunday market leader had lost 300,000 copies through industrial action the weekend before Thomson’s announcement that it was for sale. It had lost 800,000 the weekend before that. No newspaper that lost five million copies in a year as a result of the action of those employed to print it could realize its potential.² Together, the papers – The Times, the Times Literary Supplement, the Times Educational Supplement, the Times Higher Education Supplement and the Sunday Times – that comprised Times Newspapers Limited (TNL) had made after-tax losses of £18.8 million in 1979 and £14.5 million in 1980.³ In the same interview in which he declared little interest in picking up the bill, Rupert Murdoch was quoted as describing TNL as a ‘snake-pit’.

It was hard to see what hard-headed businessman would leap at the opportunity to enter this environment. Certainly, there would be bidders with an interest in either asset stripping or wanting to turn The Times into a private toy. Middle Eastern backers expressed interest but, as Sir Richard Marsh, chairman of the Newspaper Publishers’ Association (NPA), indelicately put it: ‘I think [the idea of] The Times being owned by somebody in the Lebanon would be a joke.’⁴ Nearer home, there were some circling sharks, among them Robert Maxwell, James Goldsmith and Tiny Rowland, to whom the Thomson board were simply not prepared to sell the paper at any price.⁵

In Westminster there was cross-party alarm. Michael Foot, the Deputy Leader of the Labour Party, who had once been one of Beaverbrook’s sharpest pens, declared ‘every journalist in the country, I would think, would be deeply shocked at hearing the news’ that The Times was for sale or closure, adding: ‘undoubtedly this has created a crisis of major proportions for the free press in Britain’.⁶

The mood in the non-parliamentary wing of the Labour Movement was also glum. Meeting the members of the Thomson board two days after the announcement of the sale, Joe Wade, general secretary of the National Graphical Association (NGA) print union, whose members made up much of the skilled print labour force at TNL, said that the news ‘had wonderfully concentrated people’s minds’ and that in the last forty-eight hours he had been able to obtain a number of guarantees of continuous production. This was surprising. During 1978–9, his union had preferred to witness TNL’s papers being taken off the streets for eleven months rather than make concessions to its management. The shutdown of the papers had cost Thomson £40 million and ended only when management crumbled at the first sight of union guarantees that subsequently proved worthless. But now that his supposed antagonists appeared to be quitting the field, Wade changed his tune: ‘the Unions would prefer the Times titles to remain with The Thomson Organisation – better the devil you know’. The thirteenth-hour loyal protestation, if that is what it was, had come too late. The decision to sell was irrevocable. Wade unhelpfully commented to the press: ‘the unions frankly had grave doubts whether a realistic proposition would emerge for the transfer of the titles to a new owner’.⁷

In a rare moment of unity, the editor of The Times agreed. William Rees-Mogg had been in the chair since 1967, having been appointed shortly after Roy Thomson’s purchase of the paper from the Astor family. His father was a Somerset squire, but he was brought up in the Roman Catholic faith of his American mother, a former actress who in her day had performed alongside Sarah Bernhardt. Sent to school at Charterhouse, his precocious abilities won him a Brackenbury scholarship to Balliol College, Oxford, where he was at ease with the college’s temporal traditions; he was elected president of the Oxford Union. On going down, he worked first for the Financial Times and then at the Sunday Times as its deputy editor. He was still only thirty-eight when he became editor of The Times. Under his editorship the paper had continued to play to its strengths – in particular the authority of its comment and reflection on world events – while continuing to lag behind the Daily Telegraph in the breadth and immediacy of its home news coverage. In particular, Rees-Mogg had maintained the high standard of Times leader articles, the most memorable of which were his own work. As a seasoned commentator of the period put it with regard to Rees-Mogg’s paper: ‘One found oneself every morning in the company of a civilized, slightly barmy, humorous, usually gentle, intelligence, whose most stimulating characteristic was its unpredictability.’⁸ This last facet was now to make itself evident as Rees-Mogg decided that it had fallen to him – with the journalists around him – to save The Times.

No sooner had the news of the sale broken than Rees-Mogg summoned his editorial staff. As many of the 330 full complement as could crowded around. His deputy, Louis Heren, described the occasion as ‘almost like a revolutionary commune’.⁹ If a ‘person of good character and quality’ wanted to buy the papers then that would be acceptable, Rees-Mogg declared. But merely switching ownership from one press baron to another should not be the ‘plan to save our future’. Thomson was offering The Times and Sunday Times for sale together as a package. This, Rees-Mogg argued, was a mistake. If anything was now clear it was that the two papers were ‘by their natures so different that neither paper is good for the other’. Not only did they have incompatible audiences, ‘the industrial logic which put the Sunday Times and The Times together was mistaken industrial logic’. In any case, ‘if the Thomson family were not able to master this business why should any other individual be any more successful?’. With the example of Le Monde, which was run by a journalists’ cooperative, the editor proposed bringing the already-formed staff group known as Journalists of The Times (JOTT), together with managers, as minority shareholders in a consortium supported by a variety of financial backers. Together they would buy the paper.¹⁰

It was a bold idea. Some found the editor’s newfound conversion to worker participation perplexing, but others were enthusiastic. The paper’s Whitehall correspondent, Peter Hennessy, stood up to say, ‘I am very pleased about the powerful lead you intend to give us in our struggle and unwillingness to accept any Northcliffe-type buyer.’ Northcliffe had bought The Times from its original Walter family owners in 1908, popularizing it but interfering in its cherished editorial independence. He had also saved the paper from certain death. Within six years of Northcliffe’s acquisition of the paper, its circulation had risen from a mere 40,000 to 314,000 copies a day. It was a sign of what had happened under the two subsequent owners that, despite the massively expanding market during the twentieth century, this 1914 figure was higher than the 298,000 The Times was averaging between July and December 1980.

The Times of 23 October 1980 carried as its front-page lead story its own perilous position. Rees-Mogg wrote a signed article on the Op-Ed page (the page for columnists opposite the leaders and letters page) elaborating on his ideas in his speech to the staff. ‘Now The Times is going to fight for herself,’ proclaimed a new agenda: ‘the lesson of the Thomson years is that subsidy destroys the commercial operation of newspapers’ and that ‘I no longer believe in the virtue of a newspaper proprietorship which does not include the people who make the paper as shareholders in the ownership.’ ‘From now on,’ he announced, ‘the main thrust of my work will be to try with like-minded colleagues to develop a partnership – commercial not charitable – which can keep The Times in being.’¹¹

The paper’s letter page soon filled with exhortations from readers, often pledging the length of their active service to the paper’s circulation by way of qualification, in support of Rees-Mogg’s idea of a journalist-capitalist syndicate.¹² Barings became the project’s merchant bankers and Sir Michael Swann, Provost of Oriel College, Oxford, and a former chairman of the BBC, chaired the consortium. Lord Weinstock, managing director of GEC and a personal friend of Rees-Mogg, sat on its steering committee. If £10 million of working capital could be raised, fortified by £30 million a year revenue, it was certainly feasible that The Times could balance its books if it could cut its expenses by printing outside London’s notorious high labour costs. Lord Barnetson, the chairman of the Observer, had suggested to Rees-Mogg that printing The Times at a provincial ‘greenfield’ site could be done for £7 million a year. This was a third of the cost of doing it with the current TNL print workers at the paper’s London headquarters in Gray’s Inn Road.¹³

Of course, it was not that simple. Even if an existing provincial print works, for example the United Newspapers’ plant in Northampton, could be engaged, there would be a period of disruption – conservatively estimated at six weeks – before The Times could roll out from its new site. Readers’ loyalty had already been seriously tested by the eleven-month shutdown the previous year and another lengthy period in which the paper was off the streets was clearly something to be avoided. More importantly, the strategy assumed that the London print unions would sit back while their jobs were transferred to ‘brothers’ in the provinces. This was not in the spirit of union solidarity. Even if their fellow members in the provinces did decide to handle The Times, the print unions could then hold hostage the Sunday Times by going on strike at Gray’s Inn Road. With this, the whole Thomson strategy of selling the papers together would unwind. Even without these problems, the Rees-Mogg consortium had to convince long-term investors that it could gain access to sufficient and sustainable capital and that a syndicate in which journalists played a part would have the necessary unity of purpose to take hard decisions.¹⁴

The consortium’s best hope was to step in following the Thomson board’s failure to attract a serious bid from one of the major media magnates. This Rees-Mogg came to accept, ultimately viewing his plan as a fall-back position,¹⁵ but at the time the Thomson board watched with mounting alarm as the extent of his desire to promote his rescue plan manifested itself. The Times’s editor had a journalist’s eye for finding ways to maximize publicity (some supposed that this must have had something to do with the early influence of a theatrical mother). Gathering a television crew about him, Rees-Mogg now set off across the Atlantic. There, he hoped, he might find white knights, ready to take a share in his mission to save ‘this strange English institution’.

Having arrived in the United States, Rees-Mogg had lunch with Katharine Graham, the proprietor of the Washington Post. Despite her liberal politics, she had shown the determination to break a debilitating print workers’ strike that threatened to strangle the Post in 1975, defeating those besieging her printing plant by flying newsprint into it over their heads. Unlike Times Newspapers’ management, she had taken on her industrial tormentors and won. But, joined for lunch by her senior management, even she could not see how The Times could get out of its dire situation. Having listened to Rees-Mogg’s presentation, the verdict was to the point: ‘The Washington Post saw The Times as a potential disaster area which they didn’t want anything to do with,’ Rees-Mogg recalled, ‘although they were very polite and friendly.’¹⁶

Rees-Mogg had considered Kay Graham the sort of acceptably independent-minded proprietor The Times should be trying to attract. He had not yet spoken of Rupert Murdoch in that light. Indeed, in 1977 he had told the Royal Commission on the Press: ‘Mr Murdoch’s writ does run in his own building and, much as I respect his energy and vigour, because of his views on the proprietorial function, I would never myself be willing to work for him.’¹⁷ Less than a month before it was announced The Times was being put up for sale, Rees-Mogg had encouraged his New York correspondent, Michael Leapman, to write an attack on Murdoch’s methods at his New York Post. The article, illustrated with a Post front-page headline ‘PREGNANT MOM IN 911 TERROR’ was equally punchy:

It is nearly four years since Mr Murdoch gave the United States its first true sampling of the journalism of the lowest common denominator. That was when he bought the struggling New York Post and filled its senior editorial positions with British and Australian newspapermen, expert in plumbing the depths of bad taste which Americans had scarcely guessed at.¹⁸

Yet now Rees-Mogg made the trip to the top of the New York Post building overlooking the Brooklyn Bridge to discover whether Rupert Murdoch, owner of eighty-four newspapers including the Sun and the News of the World, was interested in helping to save The Times.

The meeting, Rees-Mogg reflected, went well. Murdoch was friendly, courteous and drank not from a mug but from an elegant china tea service. He did not let himself be drawn on exactly what his intentions were but by the time Rees-Mogg returned to Manhattan street level he had gained the impression that Murdoch was sizing up the possibility of a bid for the Sunday Times. This was good, for the whole point of Rees-Mogg’s consortium plan was that there should be a divorce in the Times family. Furthermore, Murdoch appeared to be keen to help the consortium in any practical way, perhaps even printing it at his plant in Worcester. Indeed, ‘he was sympathetic to anything that would keep The Times alive’.¹⁹

It was only the third time Murdoch and Rees-Mogg had properly met one another. Previously they had found themselves seated together at a table with the Queen at a celebratory gathering of the Press Club during which Rees-Mogg had noticed the Australian’s ability to make the Queen laugh. But their first meeting, in the summer of 1951, had been more prescient. The young Rees-Mogg, already at the age of twenty-three bearing the assumed gravitas of an elder statesman, had been walking up The Turl in Oxford when he was stopped by a ‘brash young member of the Labour Club’ who wanted to cut him in on a business venture. The Antipodean undergraduate said he was thinking of buying the ailing student newspaper Cherwell, and wondered whether Rees-Mogg wanted to invest in his scheme. Venerable title or not, Rees-Mogg replied that Cherwell was staid and boring and would never attract sufficient advertising to be an attractive business proposition. The young Murdoch countered that with drive and initiative it could be made attractive by changing the editorial content, bringing it up to date and transforming the finances. ‘You’ll never make any money out of Cherwell’ was the young Rees-Mogg’s cheerful reply. And with that mistaken prophecy, the two undergraduates went their separate ways.²⁰

Twenty-nine years later, two men were determined to put Murdoch’s profit-making expertise back in touch with a venerable, occasionally staid, loss maker. The first was one of Fleet Street’s most respected figures – Sir Denis Hamilton, editor-in-chief of Times Newspapers Limited. The other was Sir Gordon Brunton, managing director of TNL’s parent company, Thomson British Holdings Limited. Both men thought Rees-Mogg’s consortium idea was suicidal, but when they had discussed the disposal of Times Newspapers in a secretly convened meeting with Thomson’s chairman, Lord Thomson of Fleet, on 18 September 1980, Hamilton had reported the opinion that ‘Rupert Murdoch is probably not interested’.²¹ One look at the other likely bidders was enough to convince those seated around the table that it was a matter of urgency to get him interested.

Sir Gordon Brunton had got to know Murdoch through the Newspaper Publishers’ Association. The two men shared a similar attitude towards dealing with the print unions and, unlike so many of the other Fleet Street proprietors who attended NPA meetings, Brunton believed that if Murdoch gave his word on a particular action he would keep it.²² Murdoch considered Brunton ‘clear-headed and strong-willed’.²³ Besides his godfather role at Times Newspapers, Sir Denis Hamilton was also chairman of Reuters, the board meetings of which Murdoch regularly attended. It was on a flight to Bahrain for one of these meetings that the two found themselves sitting together in the aeroplane. This was a seating coincidence that Hamilton – assuming Murdoch would be taking the same flight – had carefully engineered. The long flight was an unrivalled opportunity to get Murdoch alone and Hamilton did his best to, as he later put it, ‘plant as much of a seed as possible – for my fellow directors felt that only a really strong owner who would be prepared to take savage measures, and of whose determination the unions could have no doubt, had any hope’.²⁴

In fact, Murdoch had already scented blood. Back in September, he had bumped into Lord Thomson in the Concorde departure lounge at JFK and gained from him, however obliquely, the impression that TNL would not remain within the Thomson empire for much longer. Murdoch, indeed, had greater forewarning that The Times would be up for sale than had its editor. But whether the owner of predominately tabloid titles, a man who gave little impression of wanting to join the British Establishment, could be persuaded to take the bait and rescue The Times still remained far from clear.

Whichever projection was favoured, The Times was not on any rapid course to profitability. Although it had edged into the black during the early 1950s and for one tantalizing moment in 1977, it had been losing money for the vast majority of the twentieth century. A paper with such a track record would have been shut down long ago had it not been for its reputation and the manner in which being the proprietor of The Times conveyed a position in public life that had a value of its own. Gavin Astor, who became (alongside his father) proprietor in 1964, described the newspaper as ‘a peculiar property in that service to what it believes are the best interests of the nation is placed before the personal and financial gains of its Proprietors’.²⁵ But a proprietor’s belief in his role as a national custodian was not necessarily appreciated by less sentimentally minded shareholders. When Roy Thomson bought The Times in 1966 he recognized that it would not be a cash cow and, in order not to trouble shareholders’ consciences with it, opted to fund it out of his own exceptionally deep pocket. In 1974 this decision was reversed when the Thomson Organisation’s portfolio diversified further into other interests, including North Sea oil, whose profitability dwarfed TNL’s losses. The only commercial argument for retaining The Times was that as a globally recognized quality brand, it (at least psychologically) added value as the glittering flagship of the Thomson Line. Unfortunately, in becoming a byword for unseaworthiness, it risked very publicly bringing down Thomson’s reputation for business savvy and managerial skill. From that moment on, it became a matter of floating it out into the ocean and abandoning ship.

When it came to the announcement of sale, the Thomson board maintained that although they had failed, a new management team might be able to turn the paper around. This was a predictable statement – The Times could not easily be sold by asserting it had no viable future whoever owned it. But no serious forecaster believed it could be turned around quickly. Could supposedly ‘short-termist’ shareholders be expected to understand a new owner’s perseverance? In this respect Murdoch offered more hope than some potential bidders because he and his family owned a controlling share of his company, News International Limited. Thus, so long as Murdoch saw a future for the paper, News International could carry The Times through a long period of disappointing revenue without its survival in the company being frequently challenged by angry shareholders. And given the profitability of the other stallions in the stable, the Sun and the News of the World, there was every reason to expect that the banks would continue to regard News International as creditworthy.

On the other hand, appearing to have an excess of available money also threatened The Times. Journalists and print workers who regarded their paper as a rich man’s toy could be expected to want to joy ride with it. This had been part of the problem with the Thomson ownership of TNL. Roy Thomson was the son of a Toronto barber who described purchasing The Times when he was aged seventy-two as ‘the summit of a lifetime’s work’. An Anglophile, he renounced his Canadian citizenship in order to accept a British peerage (as the future Canadian proprietor of the Daily Telegraph, Conrad Black, would later do). He took as his title Lord Thomson of Fleet – the closest a peerage could decorously go towards being named after a busy street. Not only did he describe owning The Times as ‘the greatest privilege of my life’ he announced that in acquiring it, the paper’s ‘special position in the world will now be safeguarded for all time’.²⁶ This was a hostage to fortune. Owning STV (Scottish Television) had provided much of the financial base for his British acquisitions and he had once famously described owning a British commercial television station as ‘like having your own licence to print money’. He appeared to accept that owning The Times was a licence to lose it.