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Special report: Has Murdoch's bad apple spoiled the barrel?

Police officers stand outside an entrance to News International in London
Police officers stand outside an entrance to News International in London

By Sara Ledwith

LONDON (Reuters) - At the turn of the millennium, journalists at News International's tabloids often lunched at The Old Rose pub in Wapping. It may not have been the most charming hostelry in London but it was better than the mineral water culture of the corporate canteen at headquarters. Crime reporters from The Times and seasoned hands nostalgic for the camaraderie of Fleet Street would occasionally join the tabloid hacks for a pint of beer or a glass of wine or four.

Even then, two decades after Rupert Murdoch's purchase of The Times, that's about as close as reporters from his tabloids and quality newspaper would mix. When they were finished, say two people who used to work for the company, reporters for The Times would head to a building on one side of the road, the tabloid reporters the other.

Long before a phone hacking scandal closed Murdoch's News of the World last week, journalists from The Times, its sister paper the Sunday Times, the Wall Street Journal and even one-time Murdoch target the Financial Times have worried about the influence of the man Britons call the "dirty digger".

The concerns were always similar: is Murdoch a "fit and proper" owner of quality newspapers, and can a news empire that mixes sensationalist tabloids, TV stations and high-brow publications really work?

Those concerns are relevant again not just in Britain, where former Prime Minister Gordon Brown said Murdoch's papers had used a "criminal underworld" to access his private information, but also in the United States, where three senators have called for an investigation into whether News Corp broke a U.S. law banning bribes to foreign officials.

"People were wary of Rupert Murdoch from a very early stage because the emphasis in his papers tended to be on scandal and gossip rather than on serious issues," said Steven Barnett, Professor of Communications at the University of Westminster. "I think this latest scandal raises legitimate questions in America about whether there is a corporate culture which is more tolerant of rule-breaking."

'INCONTINENT IN BREACH OF PROMISE'

Financially, owning both high and low-brow publications makes sense -- even if newspapers made up only 19 percent of News Corp's revenues of $32.8 billion in 2010. In Britain, Murdoch's tabloids have helped subsidize The Times, which has an average daily circulation of just under half a million -- about double the readership when he bought it but below a 2001 peak of more than 750,000 -- and loses money. But do those tabloids also contaminate the Times with their crasser values or even just through their shared ownership?

That's a concern journalists at the Times and the Sunday Times had even before Murdoch, now 80, bought the papers. When he made his move in 1981 the government of Margaret Thatcher insisted on the appointment of independent directors who could veto the appointment or dismissal of an editor. A year after the takeover, Murdoch demanded the resignation of its editor Sir Harold Evans, whom he had appointed.

"He was incontinent in breach of promise," Evans, now editor-at-large at Reuters, wrote in "Good Times, Bad Times", his scathing 1984 record of his time working for Murdoch.

In 1988, when Murdoch began acquiring shares in the Financial Times, politicians from the left and right expressed alarm, accusing him of contributing to a decline in press standards. The late Lord Deedes, once a Conservative cabinet minister and former editor of the Daily Telegraph, told the House of Lords the prestige of the national press "is at a very low ebb -- the lowest I have known in about half a century of journalism."

Then-Labour MP Bryan Gould accused The Times of a lack of balance in its coverage of the story, as an indication of what could happen at Britain's premier financial daily. "No-one would trust a Murdoch FT as an impartial journal of financial record," he said.

But by and large, standards at the Times held. For many years under Murdoch it has continued as a respected newspaper. Its influence in British political circles remains considerable to this day, though it is no longer the country's institutional memory or "paper of record" as it once was.

"I don't necessarily think it would be fair to say these (tabloid) working practices infected The Times," said the former News International employee, who worked with both tabloid and Times reporters when much of the phone-hacking was under way. "It was really a hothouse environment in the tabloids. The Times had a much more polite atmosphere."

That doesn't mean reporting at the newspapers has gone unquestioned. The Times, for example, paid only belated attention to a 1998 decision by News Corp to cancel plans to publish the autobiography of Chris Patten, who had been governor of Hong Kong, for fear it would damage Murdoch's business interests in China. Murdoch denied having told the publisher to "kill the book".

Even inside The Times newsroom over the past decade, some reporters have felt that the newspaper has abandoned some of the serious political reporting of its past.

"The home news and political people felt a bit beleaguered - they were wringing their hands about 'dumbing down,'" the former News International employee said.

Under Robert Thomson, the editor between 2002 and 2007 and now managing editor of the Wall Street Journal and editor-in-chief of Dow Jones, old hands complained about the "feminization" of the paper and the need to prepare explainers with stories.

That hardly amounts to an allegation of using journalistic dark arts.

At the Sunday Times, however, run by a different set of editors from its weekday namesake, things may have been looser. Among the many revelations in the widening phone-hacking scandal was a BBC report this week that Sunday Times journalists impersonated former Prime Minister Gordon Brown to access his bank account details. News International has denied those claims and said the stories were legitimately sourced and in the public interest.

Impersonating people, or "blagging", is a common practice in British investigative journalism. While generally illegal, such practices are legally defensible if the information obtained is in the public interest.

The Times has come in for criticism for hiring a detective in charge of an early phase of the phone-hacking inquiry. Andy Hayman retired in April 2008 and reached an agreement with The Times in July that year, The Times said, because he wanted to fulfill a "boyhood dream" of becoming a journalist.

Hayman on Tuesday admitted having private dinners with people from News International during the hacking investigation, but said that there was nothing untoward about them. He rejected suggestions in parliament on Tuesday that he was in the newspaper group's "back pocket".

ACROSS THE ATLANTIC

Murdoch faced many of the old objections when he went after Dow Jones and the Wall Street Journal in 2007: his thumb prints would be all over the paper; he would use his influence to further his own commercial interests rather than in the public good; he would sensationalize the paper and suppress investigations in the interests of advertising.

Some reporters were so concerned they appealed to the Bancroft family, who controlled the paper's owner Dow Jones, asking directors on its board to vote against the deal. Even within the family, there were objections on the grounds that Murdoch, the owner of the partisan Fox News Channel and tabloid New York Post, would sacrifice newsroom independence.

To mollify the family and quiet critics, Murdoch promised he would set up an independent board that would have the power to approve the appointment or removal of the three key editors at the New York business daily.

As soon as he controlled Dow Jones, though, he appointed former London Times editor Robert Thomson to act as publisher of the Journal -- a position above the three editors protected by the agreement.

The day he took control, the Journal said in its editorial pages there was no doubt who was really in charge of Dow Jones despite the agreement to create independent oversight of the news. "This isn't intended to be some heat shield protecting Journal editors from their new owner," the Journal's editorial board wrote, referring to the committee. "We know enough about capitalism to know that there is no separating ownership and control."

Less than five months on, managing editor Marcus Brauchli resigned, to be replaced by Thomson.

Also now at Dow Jones: Les Hinton, the company's chief executive and publisher of the Wall Street Journal. Hinton was in charge of News International during the period when much of the phone hacking took place.

Under Murdoch's ownership, the Wall Street Journal has expanded with new sections and broadened its coverage to better compete with the New York Times. Since News Corp took over, the Journal has become the top newspaper in the country by circulation, beating out Gannett Co's USA Today.

REPUTATIONAL DAMAGE

Could the News of the World scandal change that?

The senators' calls could have legal implications for News Corp in the United States.

In Britain police say they have the names of 3,870 possible hacking victims, plus a database of 5,000 landline numbers and 4,000 mobile numbers. So far, only 170 people have been contacted, Sue Akers, the officer now in charge of the investigation, told parliament on Tuesday.

Advertisers fled the News of the World after the scandal broke -- one reason why Murdoch decided to close the 168-year-old paper.

Investors in the New York-based parent company sold the stock. News Corp shares routinely trade more cheaply than those of media rivals, according to a Reuters Breakingviews analysis, which found the phone-hacking affair has widened the gap between the company's market value and the sum of its parts. The Church of England, which holds around $6 million in News Corp shares, said last week it "could not imagine circumstances" in which anything less than holding senior News Corporation executives to account would ease its concerns.

There are also signs Times readers are reconsidering, or cancelling, their subscriptions, although News International is not commenting on newspaper sales or online subscriptions.

"If I worked for The Times, I would be looking for another job," one reader on Times Online wrote on Monday. "As a mere reader for four decades, I am cancelling my subscription and moving to a publication without such a despicable owner and manager. Thank you and goodbye."

"Missing you already, Tony!" Cerise Pink replied.

Even so, the financial impact from the News of the World's reputational damage may be limited. Ian Twinn, director of public affairs at ISBA, which represents Britain's advertisers, said on Monday he doubts there will be a "mass movement away from News International", not least because to drop more titles would raise costs for advertisers.

In the United States, advertising agencies so far report scant impact on the Wall Street Journal. "From our vantage point, the WSJ continues to represent an authoritative way to reach business influentials and that has not changed as of today," George Janson, director of print for GroupM, said on Monday.

"If events ... unfold to where this is an institutional practice beyond just London, obviously all bets are off -- but nothing like that has been remotely suggested."

THAT'S ENTERTAINMENT

What about editorially? Murdoch himself has said he tempers his editorial urges in his quality British paper: "I feel more restraint at The Times than I would at the (New York) Post," he said in the Guardian in 2007. "I walk around the Sun office a lot more than I walk around The Times office."

Ben Robinson, a 42-year old occasional reader of The Times for the past 25 years, said he still thinks The Times is "the fairest of the papers." It has an agenda, but is "much better at putting the opposing point of view" than the left-leaning Guardian, the paper which has driven most of the phone-hacking story.

"On the other hand," Robinson told Reuters. "I did stop reading it when I wanted to know what was going on in the phone hacking scandal, which they did their best to ignore for as long as possible."

Sir Simon Jenkins, a former editor of The Times, said that in his view, the daily newspaper "unquestionably got better" over the years. "Murdoch's overall effect on Britain has been benign," he told Reuters. "His overall effect on the quality of British journalism has been malign."

The media magnate has never made any secret of News Corporation's mission. "We're in the entertainment business," he said in the early 1990s.

(Additional reporting by Jennifer Saba in New York, Kate Holton, Georgina Prodhan, Paul Sandle, Mark Hosenball and Peter Millership in London; Editing by Simon Robinson)

(Created by Sara Ledwith)

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