Murdoch Musings

I continue to be intrigued by the ongoing flap over Rupert Murdoch's media empire. A few more or less random thoughts:

1. Murdoch claims that, prior to the recent explosion, he was unaware of the hacking at News of the World—despite the fact that two people had been arrested and, I gather, convicted in the case. How believable is the claim?

I don't know the answer, in part because I don't have much feel for how an organization that big is run, how much information makes it to the very top level, how much is handled further down. According to Murdoch, the paper represented only about 1% of his media holdings, I think measured by income, which makes the claim at least somewhat plausible.

2. How likely is it that the facts of what News of the World reporters had been doing, in particular facts that had become public prior to the recent flap, would have surprised Murdoch? 

My suspicion is that he would take it for granted (as I do) that reporters routinely skirt the edge of the law and not uncommonly break it in the course of doing the job they are hired to do. It would be surprising if they didn't bribe police officers, sometimes with cash, to tip them off on potential news stories. The police have the information, it is valuable to reporters, markets tend to move resources to those who most value them. It would be surprising if they didn't often take advantage of illegal but easy opportunities to obtain information—for instance by getting at poorly protected voice mail messages. Nobody in the U.S. seems to be very surprised to discover that police officers spend a good deal of  time in donut shops eating free donuts—and providing the shops with free crime prevention.

Obviously this question is related to the previous one. The less surprising what was going on was, the less the reason to report it up the corporate hierarchy to the top. Especially if the people at the top were unlikely to try to stop it and had good reasons to maintain deniability with regard to knowing about it.

And it isn't hard to believe that a cover-up by someone a couple of levels below Murdoch, in a position to get the police to fail to investigate the case more thoroughly, would have included  an internal as well as external cover-up. "Police say nothing that serious happened, a couple of our people pushed too far over the line, being taken care of."

3. How much of what was being done at the News of the World was being done at non-Murdoch papers? Presumably the Murdoch people have been looking for evidence, and if they found any we would have heard about it, or soon will. 

4. Perhaps the hardest things for Murdoch to have been ignorant of were the payouts to victims of hacking to settle their claims, some of which were quite substantial. But out of court settlements, including ones where the payer/potential defendant does not admit guilt and the details of the controversy are kept private, are legal and not that uncommon in civil cases. In criminal cases they are illegal, but hard to prevent if a case raises both civil and criminal issues. For an earlier and pretty high-profile example, consider the Michael Jackson abuse controversy, where, as best I recall, criminal charges got dropped after a civil settlement, presumably because the witnesses were no longer willing to testify.

5. Finally, the paranoid thought—was the pie in the face incident a set-up? It clearly benefited Murdoch, both because it made him the victim and because of his wife's dramatic response. Setting it up would be very risky, since discovery would be a catastrophe. But if the wife just happened to know someone she was sure she could trust to do it and keep his mouth shut ...  .

6. Other thoughts from readers?

Murdoch, Media, Cops and Politics

In an earlier post, I proposed the current Murdoch flap as a potential miniseries with an ending out of modern fantasy fiction. This time I want to look at it from a more serious point of view, to try to figure out why it happened and what the longer run implications are.

The simple answer is that it happened because Murdoch got unlucky—a number of stories broke involving illegal activities by people in his employ, some of which involved not only lawbreaking but lawbreaking of a particularly offensive sort. Once it was clear he was in trouble, the pressure on people inside and outside his organization to continue covering up other past offenses became less, leading to a potential cascade.

All of that may explain the timing, why it happened when it did. But I suspect there was a deeper cause, one that will be relevant to future political press magnates as well, may even imply that there will be no future press magnates on the scale of Rupert Murdoch. We may be watching the extinction of the last dinosaur.

I start with the question of why Murdoch had as much power as he did, power not only over political actors but, as the evidence strongly suggests, over law enforcement as well.

I do not think the answer is money, although of course he had a lot of money and used it. I am not sure exactly where Murdoch ranked in the list of "X richest men," but he was not in the latest Forbes top twenty. He had more influence than people who were considerably richer than he was. Why?

In the case of influence over politicians, the answer is obvious. Electoral support from a popular newspaper or TV station is worth votes. So is the willingness of major media to slant stories in your favor, to deflect attention from your errors and misdeeds and focus it on your successes while applying the opposite policy to your opponents. Murdoch had something valuable to offer politicians; it is hardly surprising if they were willing to do him favors in exchange.

The same applies to his relations with the police. There is evidence that journalists paid police for information. But even without such payments, media coverage of police actions matters, can matter a lot, to the police. How and whether their actions are covered by the media may determine whether a particular police official looks like Sherlock Holmes or Inspector Clouseau, competent professional or  bumbling amateur. If the police end up killing innocent people, as happens all too often, or failing to catch guilty people or prevent their crimes, how and whether the story gets covered matters.

From the standpoint of economics, all of this is a consequence of rational ignorance. If believing the truth about politicians and police was a matter of great importance to every voter, the voters could presumably find reliable sources of information with which to do it, as they often do find such information with regard to matters controlled by private choice, such as what car to buy or what grocery store has the best prices today. 

But for purposes of public choices, news is mostly entertainment not information—for the good reason that, considered as information, it is not very valuable. Each voter knows that his vote has a trivial effect on electoral outcomes, hence making sure he casts it for the right, or at least less bad, candidate is not worth much. Getting a good story is, often if not always, more important than getting a true story, and under those circumstances the authors of news stories have considerable ability to influence what their readers believe is true.

Which implies that someone with control of a lot of the media can be expected to have quite a lot influence over politicians and law enforcement. Rupert Murdoch did. What changed?

What changed, not in the short run but the long, was the technology of spreading information, specifically the growth of the Internet. I take the role of the Drudge Report in breaking the Monica Lewinsky story as a useful marker. In the old days, judging by what we now know about the sex lives of various past politicians, the major media would have discretely chosen not to cover the case, there woul have been rumors in minor media, and the scandal would never have gotten as far as it did. But as news is increasingly spread through decentralized mechanisms hard for any single actor or organization to control, the power of media organization declines. Even if they still have as many readers as before, there are now other places to read things, making it increasingly difficult for them to control the flow of information.

If I am correct in this analysis—I am not sure I am, but it seems plausible—the timing of the Rupert Murdoch flap was an accident. That it happened was not. The development of alternate sources of public information was gradually weakening Rupert Murdoch's ability to get politicians and law enforcement people to do favors for him in exchange for his doing favors for them, reducing both his political power and his ability to have his people get away with doing illegal and potentially unpopular things in the course of gathering the news. Eventually his power dipped below the level necessary to sustain his policies, and everything blew up.

That, at least, is my current theory.