In These New Times

A new paradigm for a post-imperial world

Murdoch’s malign influence demeans British politics

Posted by seumasach on July 12, 2009

Polly Toynbee


11th July, 2009

New depths have been plumbed by Rupert Murdoch‘s newspapers. If the Guardian’s revelations only concerned lurid journalism it would be disgraceful but not sinister. However, the way the police, the public prosecutor and judiciary appear to have prevented exposure of this industrial-scale bugging is a reminder of just how cleverly Murdoch companies manipulate officialdom.

Something else happened this week, something that again raises all too familiar questions about Murdoch’s extraordinary power. The evidence is circumstantial, but you may find it quite compelling.

On 26 June Ofcom published a report into the pay-TV market. After long investigation, it concluded that Sky had a monopolistic control: its 80% of Premier League football and 100% of movies from the big Hollywood studios prevent others from entering the market, and Sky sells these rights to others at too high a price. As a competition regulator, Ofcom’s job is to keep the market open. Its new ruling requires Sky to sell on its rights to all comers at some 30% less than it currently charges. BT reckons this will drop the average cost of watching top-flight football by £10 a month.

Ofcom’s boldness drew an amazed intake of breath from industry players and observers. This is the first time a regulator has seriously challenged Murdoch’s market power. Those who stood to gain – BT Vision, Virgin Media, Top Up TV and others — were delighted their protests were so bravely answered.

Sky’s chief executive replied immediately that it would challenge Ofcom using “all available legal avenues”. This time, however, Ofcom is not expected to allow Sky to use the tactic of delaying regulators in the courts for years – it must comply and can appeal afterwards. The battle is on, since historically Murdoch’s empire has stooped to manipulating regulators and avoiding taxes. How has he done that? By leaning hard on politicians, who – knowing only too well his dominant voice in newspapers – are frightened for their lives.

Sure enough, the next day his newspapers sharpened their knives. Here is the Sun’s Fergus Shanahan: “This is the world gone mad. Ofcom, the official telly regulator, says a successful and popular firm – Sky – must be penalised for doing well … This nonsense – rewarding losers by punishing winners – is Ofcom’s way of ‘improving competition’. Ofcom busybodies also have the nerve to threaten to dictate what prices shareholder-owned firms like Sky can charge. That’s despotic, not democratic, and it’s what they do in Russia.” No, what they do in Russia these days is to grant monopolies to oligarchs and that’s why Ofcom and the Office of Fair Trading exist — to prevent it happening here.

Just 10 days later, last Monday, David Cameron made a surprise speech about quangos. His team asked the rightwing thinktank Reform to set up the event at just a few days’ notice. It looked like the standard speech made by all oppositions promising cuts in “the quango state”. But one astonishing new commitment stuck out, even though it was barely noticed in most reports: “Ofcom as we know it will cease to exist. Its remit will be restricted to narrow technical and enforcement roles. It will no longer play a role in making policy.” It would be knocked back to “regulating lightly”. Had there been a great popular outcry calling for the demolition of Ofcom? Hardly, since this is obscure, techie stuff. So what was this all about?

Within hours of Cameron’s speech, leading market analysts UBS Investment Research assessed the potential impact: “This bodes well for Sky … We believe that a lighter-touch approach would result in a far better and fairer outcome for Sky, the consumer and the pay market. This could result in a valuation of over 750p versus circa 650p under Ofcom’s current proposals.” In plain English, if the Conservatives come to power and abolish Ofcom, expect a £1 share price rise for Sky – worth some £1.7bn.

The timing and content of Cameron’s speech may, of course, be purely coincidental. Former Murdoch man Andy Coulson may have nothing to do with it. I have no shred of evidence to the contrary. The Tories have every reason to dislike Ofcom chief Ed Richards, a former Blair adviser paid £400,000 a year. But behind the scenes the players in this drama, other companies, analysts and observers were stunned. Few dare speak for publication, fearing the wrath of the incoming Conservatives. Ofcom will not be drawn. The one bold voice was Peter Luff, Conservative chair of the business and enterprise select committee. “Ofcom is a bloody great regulator,” he told me. “I believe in free markets and I’m very pro-competition. It needs powerful people.”

Cameron’s office says there was “no contact with News International” about Ofcom but history should not be ignored. The Murdoch press has a long record of winning pay-back from the political leaders it backs – and it has recently swung behind Cameron. In fact, it is so ordinary that too few political commentators bother to keep remarking on the malign influence this man has had on our politics for the past 30 years.

Europe has been Murdoch’s one unwavering political obsession. The reason is commercial: the EU is the one regulatory power stronger than his ability to twist the arms of national politicians. EU law nearly stopped him launching Sky until Margaret Thatcher demanded a special exemption to let him start up with almost entirely US content. The one Cameron policy that sits oddly with his bid for centre-ground moderation has been his anti-EU extremism, greater than Mrs Thatcher’s, marching his troops out of the influential EPP group in Brussels. Murdoch has shaped our foreign policy by using his press and his political power to inflame Europhobia.

In his memoirs, John Major counts his downfall from the day Murdoch gave him the imperial thumbs-down. Blair fawned and obeyed, right from his shocking acquiescence to the Tory 1996 Broadcasting Act, which gave Murdoch total control of the digital future (later saved by Greg Dyke bringing in Freeview). The night before the crucial Iraq war vote, virtually the entire cabinet attended Sun editor David Yelland’s farewell party. Brown loses his moral compass down the back of the sofa as he courts Murdoch. All Tory and Labour leaders canoodle with the Murdoch apparat with a social desperation that demeans them and their office. This political corruption is rather more alarming than duck islands.

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