Will harsh words sting Rupert Murdoch?

Will harsh words sting Rupert Murdoch?

By Peter Bale, CNN

May 1, 2012 -- Updated 1836 GMT (0236 HKT)

Rupert Murdoch's damage control

STORY HIGHLIGHTS

• UK media regulator Ofcom says it is investigating Murdoch's status as a leading shareholder in BSkyB
• Lawmakers' report used language that may evoke comparisons between Murdoch and rival Rupert Murdoch
• Bale: Murdoch is not guilty of financial crimes -- but comparison with Maxwell will infuriate and hurt him

Editor's note: Peter Bale is the general manager of CNN Digital international. He is a former political and financial journalist who covered the death of Robert Maxwell for Reuters. He is also the former online editorial director of The Times and The Sunday Times which are News Corp-owned newspapers. Follow him on @PeterBaleCNN

London (CNN) -- Rupert Murdoch can be expected to be personally furious and potentially devastated by the partisan-but-damning judgment of a committee of British lawmakers that he is not a "fit" person to run an international business.

This choice of wording is powerful for two reasons: One immediately damaging to News Corporation and its ambitions to take full control of the prize asset of British Sky Broadcasting, and the second personally damaging for the 81-year-old Murdoch.

To hold a broadcasting license in Britain the corporation controlling the television station must itself pass a test that its executives are "fit and proper." Within minutes of the parliamentary Culture Media and Sport Committee publishing its judgment about Rupert Murdoch's behavior and deeper condemnation of the culture at News Corporation the British regulator of television and broadcasting, Ofcom, reiterated in response to a query that it is investigating his status as a leading shareholder in BSkyB.

The committee's words -- made publicly and with the protection of parliamentary privilege from legal action by Murdoch or News Corp -- also take Murdoch back decades to one of the greatest rivalries of his career with the late Czech-born publishing magnate Robert Maxwell. Critics often compared Maxwell and Murdoch in the same sentence, something Murdoch is known to hate since he saw Maxwell while alive as a charlatan. Maxwell's death led to even greater revelations that he was also at the head of a conspiracy to defraud staff pension-funds controlled by his companies.

No one has suggested Murdoch is guilty of financial misconduct in the current controversy which has spanned illegal telephone hacking, alleged corruption of police and civil servants and undue influence over politicians.

Murdoch, who values his personal reputation for probity as much as he honors the memory of his father Keith as a campaigning journalist and newspaper proprietor, will not miss the similarity of the language used by the select committee in Tuesday's judgment and that used by then Board of Trade's damning judgment in 1971 that Maxwell was "unfit" to run a public company. That judgment hung heavily on Maxwell's reputation for the rest of his life.

Of course, Maxwell did go on to run a major public company, which after his mysterious death at sea off his luxury yacht in November 1991 was found to have taken more than £400 million ($ 648 million) from staff pension funds in attempts to prop up its failing businesses.

Those who forced the tough language through into the committee report will have been in no doubt that the comparison with Maxwell would be made by those with long memories -- no more so the trade unionists Murdoch stomped on and the right-wing establishment he disdained -- and how much it would sting Murdoch.

Despite now perhaps actually being the establishment, Murdoch still sees himself as the 'Aussie battler' against entrenched interest groups
Peter Bale

Labour and Liberal Democrat members of the select committee forced the "not fit" judgment through the minority of their Conservative committee colleagues though the other stinging criticisms of News Corporation were unanimous including that it had been misled by News Corp executives. The report has no legal force but comes with the stamp of parliamentary authority and follows many months of investigation and open hearings, including with Rupert and his son James.

Based on two major biographies, it is clear that Murdoch is known to loathe any parallel between himself and Maxwell. The words of the select committee will bring that into sharp relief, providing ammunition to a section of the British establishment which has never liked the Australian publisher and seen him as polluting their vision of British life. For his part, Murdoch has historically relished taking on the effete of Britain, variously accusing them of wanting to turn the country into a museum and recently portraying the crisis swirling around him as the work of "enemies many different agendas, but worst old toffs and right-wingers who still want last century's status quo with their monopolies."

Despite now perhaps actually being the establishment, Murdoch still sees himself as the "Aussie battler" against entrenched interest groups, particularly in the highly class-based British establishment. He is likely to see the damning select committee report -- with its strong language forced through by trade-union-backed Labour politicians with a visceral dislike of his power and wealth -- in the same terms but the comparison with a crook like Maxwell will infuriate and hurt him.

And this report is only the latest wave in an ongoing tsunami of bad news. News Corp and Murdoch still have to face months of further revelations about telephone hacking at the News of the World, over-close relationships with police and civil servants and his empire and the embarrassing exposure of just how close relationships were between News and politicians of all major parties in Britain.

CNN.com