Murdoch’s adventures in China

When Rupert Murdoch took control of The Wall Street Journal in 2008, he also collected a less prestigious Dow Jones monthly publication called The Far Eastern Economic Review. The New York Times called it an incidental addition to the global stable of Murdoch’s News Corp. Murdoch promised editorial independence to all the Dow Jones products as the price he had to pay for the Journal. However, it was no surprise to find a chilling effect whenever a story appeared that affected Murdoch.
The Review’s editor Hugo Restall hired Australian writer Eric Ellis to write a review of Bruce Dover’s book “Rupert’s Adventures in China: How Murdoch Lost a Fortune and Found a Wife.” The book is an insider’s account of Murdoch’s attempts to woo the Chinese Government in the 1990s and also discusses his relationship with third wife Wendi Deng. The book got a big reception in Asia in 2007 and Restall hired Ellis to review the book in January 2008. But by February, Restall got cold feet and told Ellis the book “looks more like the work of a disgruntled ex-employee rather than an analysis of the business.”
In his spiked review, Ellis said for a businessman who has left such a mark on the world’s media, Murdoch was under-analysed and his personal life off-limits. This why the book is of great service: Dover (now the chief executive of ABC’s Australia Network beaming content into Asia) was the Sun King’s chief courtier in the Forbidden City in a time when China meant everything to Murdoch.
Dover tells the story from the time Murdoch bought STAR TV in 1993 for $1 billion to the time 10 years later when Dover was sacked and Murdoch realised he could not replicate his success in China. The year 1993 after Murdoch had defeated the British print unions in Wapping, and was starting to make big money with BSkyB and the Premier League. He was also expanding his footprint in America and looking at Chinese opportunities. The 23-year-old Richard Li’s STAR TV was a satellite operation with a reach from the Philippines to the Middle East, potentially two-thirds of the world’s population.
Li never made money from STAR TV subscriptions as most users pirated the unencrypted service. He changed the model to advertising and charged big rates though no one was sure how much audience he was aggregating. Li’s father Li Ka-shung was Hong Kong’s wealthiest businessman and a friend of Deng Xiaoping. But Beijing was alarmed over the uncensored service being available in mainland China. Xiaoping told Ka-shung the business had to go and Li reluctantly sold to the highest bidder in 1993. Pearson PLC (owner of the Financial Times and Penguin Books) offered the same money as News Corp but wanted Ka-shung to stay on in some capacity. Murdoch had no such qualms.
Li never sought approval from Beijing on the sale. When the politburo found out who STAR TV’s new owner was, there was deep concern. The Chinese knew Murdoch intervened in the politics of every other country he had interests in and feared the same would happen to them. These fears intensified after a Murdoch speech Murdoch in London’s Whitehall Palace celebrating BSkyB’s new multi-channel offering. With the Internet still in infancy, Murdoch lauded the new forms of communications as a threat to “totalitarian regimes everywhere”. Orwell had got it wrong, Murdoch said, mass communication technologies did not subordinate individuals but liberated them. Telephony and satellite broadcasting, he enthused, made it possible to by-pass state control of information.
Murdoch claimed he was talking about the collapse of Communism in Eastern Europe. But infuriated politicians in Beijing knew he was talking about them. Premier Li Peng saw Murdoch’s speech as a threat to Chinese sovereignty. Within a month he banned the distribution, installation and use of satellite dishes in China, dashing STAR TV’s expansion plans.
Murdoch quickly realised the extent of his blunder. He moved to Hong Kong with wife Anna and started a long campaign of wooing the Chinese leadership. All contact with Zhongnanhai was funnelled through the State Council Information Office (SCIO) and Murdoch was allowed to meet no-one above the rank of vice minister. In 1994 he used limited transponder space on the satellite as an excuse to drop the BBC from STAR TV. He later admitted the real reason was because the Chinese leaders hated the BBC. However it changed nothing and Murdoch remained persona non grata with senior leaders.
Murdoch befriended family members of Deng Xiaoping. He got Harper Collins to publish Deng’s daughter Deng Rong’s hagiography of her father. He also feted disabled eldest son Deng Pufang in an artists’ tour of Australia. But when Deng lost power in 1994 his children were out of favour and with them patronage of Murdoch. New leader Jiang Zemin enforced the crackdown on China’s half a million satellite dishes.
Dover was in China to negotiate a joint venture with the People’s Daily. This alliance with the conservative communist organ was a peace plan tacitly approved by the politburo. The paper was under pressure to reduce reliance on state handouts and proposed a business news magazine with News Corp. But again SCIO were not across the deal and once they found out, did their utmost to ensure it would never get off the ground.
Murdoch next’s ploy was with businessman Liu Changle who bought a half share in the Phoenix TV joint venture with STAR TV. Liu cultivated key Beijing decision makers and senior leaders told Murdoch Liu was his only way into China. Phoenix proved popular and shook up the tawdry domestic TV market. But Murdoch hated Phoenix because Liu retained day-to-day control.
Murdoch looked to the new information superhighway for a solution. As Beijing wrestled with control of the internet, Murdoch started a new joint venture with People’s Daily called PDN Xinren. The first product ChinaByte was launched in January 1997 and became the most popular site in China. When the tech bubble burst Murdoch lost faith in the product and by April 2001 sold his toehold in the fastest growing internet market in the world.
Murdoch also got rid of anti-Chinese correspondent Jonathan Mirsky from the Times Hong Kong bureau. Murdoch promised The Times editorial independence but after he took editor Peter Stothard on a charm offensive of China, Southard spiked many stories from Hong Kong. Mirsky resigned citing Murdoch’s heavy hand. Murdoch also spiked the HarperCollins autobiography of former Hong Kong governor Chris Patten on Chinese instructions. Murdoch competed with great rival Time boss Jerry Levin to fawn over Chinese leaders. Finally Murdoch made a speech which was a mea culpa where he conceded cultural and social values of a country trumped open communications.
With relations warming, Dover tells the amusing story of when Murdoch met Vice Premier Zhu Rongii in Australia in 1997. Zhu asked Murdoch to tell him the story of his rise to power and the pair had an animated conversation.  At one point Zhu put his hands on Murdoch’s wrists, looked him in the eye and spoke in Mandarin. “I see when you needed to expand your business interests in the US you became a US citizen,” he said. “Maybe you should think of applying for Chinese citizenship to further your business interests in China”. Murdoch blinked when he heard the translation and spluttered a reply. Zhu burst into laughter and said he was joking.
Murdoch did apply for Chinese citizenship – by marrying his young Yale-educated interpreter Wendi Deng. Deng had the language skills but not the contacts in the politburo and the Chinese kept one step ahead of the Murdochs. As they cultivated Zemin’s Shanghai clique, the leader was replaced by Hu Jintao. Dover was on the outer now, his boss frustrated by his inability to penetrate the Great Wall. Hu closed down STAR TV’s intrusion into the Chinese “grey sector” and insisted China retain control of Chinese television, banning cooperation between local stations and foreign companies.
After 12 years, Murdoch finally admitted defeat in China. In 2006 he sold his remaining interest in Phoenix and repositioned STAR TV to the Indian market. Dover said Murdoch was a major catalyst of change in China both of its media and its attitude to the Internet (which the party wanted to ban entirely). Phoenix transformed Chinese television with its brash, downmarket programming but control remained in Chinese hands. Dover said in seeking to woo China’s leaders, Murdoch overstepped the mark. “He became too impetuous, too imprudent,” he concluded.

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