The transcripts of the official inquiry into the culture, practices and ethics of the press. More…

  • MR JAMES RUPERT JACOB MURDOCH (sworn).

  • Sit down, please, Mr Murdoch, and if you can bring your files to hand. Your full name, please, Mr Murdoch?

  • James Rupert Jacob Murdoch.

  • I'm going to invite you to turn up your witness statement, which is dated 16 April of this year. It has 13 exhibits and has a statement of truth. Subject to one small change I know you wish to make, is this your formal evidence which you are submitting to the Inquiry?

  • Yes, it is my evidence that I'm submitting to the Inquiry. The one change -- the one correction that I'd like to make is to paragraph 3.21.

  • In that paragraph, I mention meeting with David Laws, a Member of Parliament, who is described in the paragraph as the chief secretary to the Treasury. In fact, I now realise that at the time of the meeting Mr Laws no longer held that post.

  • He resigned on 29 May 2010. Just so that we're clear, do you recall when the meeting with Mr Laws was?

  • I don't. It was in the summer or autumn of 2010.

  • No need for an apology. Thank you very much. I've made that correction and I am grateful for the obvious work that's been put into the statement that you've made.

  • In terms of your personal career history, Mr Murdoch, if I can deal with it quite briefly. You were born in the United Kingdom in 1972. You studied at Harvard University between 1992 and 1995. Your early career was in News Corp Asia. In 2003, you were appointed CEO of BSkyB. In December 2007 -- this is particularly material for our purposes -- you resigned as CEO of BSkyB and were appointed non-executive chairman, but you rejoined News Corp as chairman and CEO of Europe and Asia, and as part of this you became executive chairman of News International. Is that correct?

  • To take the story up to date, in March of last year, you were appointed deputy chief operating officer and chairman and CEO international of News Corp, which took you back to New York at the beginning of this year, and on 2 April 2012, you resigned as non-executive chairman of BSkyB; is that right?

  • Was your resignation as non-executive chairman of BSkyB related to your return to New York or was it for some other reason?

  • As I stated at the time and announced at the time, it was for the simple reason that the -- I wanted to avoid, really, becoming a lightning rod. Some people were trying to conflate issues that had happened in the past at News International with relevance to my role as chairman of BSkyB, and I thought it was better to not provide a distraction for the board of BSkyB and to resign my role as non-executive chairman.

    I remain a director of British Sky Broadcasting.

  • Thank you. The other general point: as deputy chief operating officer of News Corp, you report to Mr Chase Carey, the chief operating officer, and not Mr Rupert Murdoch, your father, who is the chairman and chief executive officer; is that right?

  • That said, are there discussions from time to time with your father about News Corporation's business?

  • Yes, we discuss from time to time quite often various business issues.

  • I'll come back to that in due course, if I may. I'm going to invite you now to summarise what you say in answer to question 6 in your statement -- this is page 02965 -- about your aims, objectives, philosophy and practice, and the way in which you've undertaken your business roles, particularly in the United Kingdom. Could you summarise that for us, please, Mr Murdoch?

  • Question 6, I think, which relates to the general philosophy and practice, is, I guess -- to summarise, I would say that with respect to operating a business when I was chief executive of businesses, I tried to foster two things, really. One was a real focus on the customer of the business, a real focus on viewers. Most of my career has been in television and the majority of it remains so, and customers, in a broad sense, and really have a management culture that is both transparent internally but also really working together to focus on those right issues.

    There's quite a lot in the witness statement as well in that question with respect to governance, with respect to the role of business. Do you want me to go into all of those things here?

  • I do have a specific question, though, about paragraph 6.6 of 02966. About two-thirds of the way through that paragraph, you say that you sought to foster an open management culture in which top executives would share information.

  • When you arrived here in December 2007, did you find an open management culture in News International?

  • When I arrived in 2007, the business was -- the business, as I saw it, had a handful of priorities to be tackled. One was a question around the business' general growth, with declining readership and a flat revenue, et cetera, but also I wanted to have a tight management team that met regularly and that shared regular information about the business, and we instituted regular executive meetings, and I think the new part of it that I started when I was there was really to include in those meetings some of the editors, so that issues around the newspapers and the titles themselves -- programmes, promotions, marketing, et cetera -- could be discussed in the open amongst everyone, and we had monthly what we call "title meetings" in addition to the executive more commercial meetings where we met regularly.

  • Did you feel, in December 2007, that you were being confronted with an open management culture, or was that something which took time to instill?

  • I think it always takes time, and each phase that a business goes through with different leadership in a business in a different time will adjust to it. I did think that it was very different from British Sky Broadcasting, which I had been running before, and I wanted it to be more collaborative.

  • In your discussions, for example, with Mr Myler about the business, do you feel that he was, generally speaking, open with you or something different?

  • At the time, I had no reason to believe otherwise.

  • Okay. 6.10. This is page 02967. You refer to the changes which have taken place since the summer of last year. You include amongst those the creation of a risk register.

  • Can I invite you, please, to look as well at your paragraph 8.5, which is our page 02970, where you state that there must be sufficient controls in place, given the legal, financial and reputational risks involved in getting it wrong.

    In your view, Mr Murdoch, were there deficiencies in News International's systems for identifying and assessing legal risk, particularly in the context of potential reputational harm for the company?

  • I think, with respect to news gathering practices, for example, the subject of -- one of the subjects of interest here, I think it's self-evident that in hindsight and knowing what we know now, whatever controls were in place failed to create the sufficient transparency around those issues and the risks around it.

    However, there were senior legal managers who, you know, had a lot of experience, who were working closely with the editors and with the -- and with the newsrooms, and at the time I didn't have a view that those were insufficient or not.

  • Apart from advice given from time to time by the senior legal manager -- that was Mr Crone -- it is right to say, isn't it, that there weren't any other systems in place, such as the ones you began to introduce in the summer of last year?

  • With respect to, in the summer of last year, some of the things that we introduced -- for example, a dedicated chief compliance officer that will now fit into a global compliance framework for the business, which I think is an important and good step -- with respect to having a board that does more than, for example, the statutory compliance requirements but actually connects the corporate centre, if you will, the global corporate centre, to management accountability on an ongoing basis, on that board, with particular legal representation on that, those things are new added things to strengthen what was -- to strengthen what we can do, but I think --

  • The question wasn't strengthening. The question was: the "system" was really only the good work of Mr Crone; there wasn't really much else in place, was there?

  • Well, I think, you know, we had really, in effect, a management board, where senior executives would meet sort of regularly, including the chief operating officer of News International and including the chief financial officer, including the editors, from time to time, and there was ample opportunity to be able to discuss these issues and surface them. So there were regular systems in place, and I think I had a -- I think I would have had a reasonable expectation that having the senior legal managers closely associated with the newsrooms was, you know, was a protection that it ultimately proved not to provide.

    In addition, I also met regularly with our internal audit department, who audited the business on a regular basis and with respect to certain compliance issues, and I encouraged them to be transparent and take the resources that they required.

  • In your position, really, of strategic oversight, did you make the obvious connection between legal risk and potential reputational damage to the company?

  • I think corporate reputation is something that, you know -- is something that is important to a business and is important with respect to a company's license with its customers, with the communities that it operates in, and obviously legal risk plays into that.

  • Did you make the other connection between legal risk and ethical risk? In other words, if there weren't systems in place to ensure that journalism took place ethically, risks might flow from that, not just legal risks?

  • Well, I was -- I think that's the right connection to make. However, I was assured that the -- from the standpoint of journalistic ethics and things like the Editors' Code and the PCC code, that extensive training had gone on and was continually going on and I was given, you know, strong assurances that those had happened, particularly in light of the voicemail interception incident in 2006. Those assurances were given to me, you know, early on in my tenure --

  • We're going to come to that, Mr Murdoch.

  • -- at News International.

  • Can I ask you this: did you read the News of the World on a weekly basis?

  • I wouldn't say I read all of it, but I -- but I read it from time to time.

  • Did you read the Sun? I'm not saying every day, but perhaps most days?

  • I tried to familiarise myself with what was in it.

  • Did you see, particularly in relation to the News of the World, any risks associated with its particular brand? Its brand included, some might say, a predilection for salacious gossip, kiss-and-tell stories, and delving into the private lives of celebrities and others?

  • I think the News of the World brand as an investigative newspaper, with exposes and the like, wasn't only concerned with celebrities and salacious gossip, but also uncovering real wrongdoing, scandals, campaigning and so on and so forth.

  • I accept that, Mr Murdoch. I said it's part of, part of the picture. But I'm focusing on this part at the moment, and the question was: did you see any risks associated with those aspects of the News of the World brand?

  • At the time, I don't know -- I can't recall discussing those risks, but I do recall, again, receiving assurances around journalistic ethics, around the code of practice, you know, on a number of occasions.

  • But reading the News of the World, as you did -- I'm not asking you to give a moral reaction to it, because that would not be the right question, but didn't it pass your mind that this sort of journalism carried with it ethical risks which could turn into legal and reputational risks?

  • I think -- I think the ethical risk was something -- and the legal risk around that was something that was very much in the hands of the editor and the decisions on things like public interest and the like were things that, you know, the editor, in consultation with legal advice, was there -- I wasn't in the business of deciding what to put in the newspapers. So it was really -- you know, I was given assurances by them that sometimes proved to be wrong, that I'm sure we'll go into, with respect to the risks that they were taking.

  • Did you, for example, know what the legal bill was, year-on-year, fighting litigation consequent upon the News of the World's particular style of journalism?

  • I'm sorry, Mr Jay, what was the question?

  • Did you know what the legal bill was?

  • Yes. In the budgeting process there were provisions for certain legal liabilities.

  • What was your reaction to the Max Mosley case, in particular -- well, there are two aspects to it. One, the result, and secondly, the large legal bill?

  • Well, I think the result of the case was obviously very disappointing. I mean, the editor had asserted that the story was both true and in the public interest, and it was later found by the court to be neither, and that was something that's a matter of great regret and something -- you know, the story shouldn't have been run.

  • And the size of the legal bill?

  • I don't remember the legal fees involved with the Mosley case.

  • I think Mr Mosley told us that his assessed bill was £420,000. Your costs would have been slightly more than half a million, I would venture to suggest. A million pounds cost, £60,000 damages -- that's a large bill, isn't it?

  • Oh, it was substantial. It was a cause for concern.

  • Did you ask anybody to consider the possibility of an appeal in Mr Mosley's case?

  • Did anybody draw to your attention the observations of the trial judge, Mr Justice Eady, about the chief reporter of the News of the World and his, frankly, blackmail tactics of two of the women involved?

  • No, it wasn't drawn to my attention.

  • Can I ask you this --

  • Do you want to add something?

  • Well, I was just going to seek to help you a little bit, I hope, which is to really situate myself at that time. News International was one of six sort of companies within the region, operating companies reporting to me at the time, and with respect to News International, you know, what I was really focused on through this period were, as I said before, the overall commercial strategy of the business. We were in the process of taking -- just the start of taking quite a lot of cost out of the business and restructuring a number of the departments and corporate structures within it, as well as developing, you know, the longer term strategy for the company with respect to its digital products and the like, and not having -- so I just hopefully can be helpful in just situating myself there. You know, the day-to-day management of the legal affairs, the court cases and things like that was something that the management -- the direct management of the company was dealing with.

  • Could I just ask on that this question: you clearly appreciated that the News of the World had suffered a very great loss, and that whether it had reputational implications was for you to consider. But did you consider making a request to say, "Well, what's gone wrong with this? What decisions did we make that we shouldn't have made? What went wrong with this piece of litigation which has cost us so much money?"

  • Would you consider that a job for you?

  • Sir, I did ask the question, and I recall being told that the problem -- because the editor was really defiant on this point. The problem had been that one of the witnesses on News International's side hadn't testified in the end and the like, and it was all a bit garbled up, but I wasn't told, for example, about what Mr Jay was asking about, the judge's specific ruling and the like.

  • But you didn't feel it was necessary to get into any more detail when your senior management team had clearly, at least according to a judge, got it spectacularly wrong?

  • Well, the question, again, of where the sort of locus of the public interest decision is is one that is very difficult, and really, the editors of any newspaper generally -- generally have that within their piece. On a day-to-day basis, it's for them to decide what goes in the paper. Certainly getting it wrong, spectacularly as that was, is something that was, you know, made clear to Mr Myler and with a strong indication that it shouldn't happen again.

  • Of course, at this stage, the News of the World was an extremely profitable business, wasn't it?

  • Was there an element, Mr Murdoch, of the ends justifying the means to this extent: that the paper produced what you believed its readers wanted, the sole arbiter was the market, and the sole touchstone was profit?

  • I'm sorry, what was the question?

  • Was there an element --

  • Oh, was there an element.

  • -- of the ends justifying the means?

  • No. I've written extensively and communicated extensively throughout my career on not just the importance of enterprise but in the way that enterprise is pursued, and it's something that I believe very passionately in, that actually the way we do business is part and parcel of the connection that we have with our customers and the communities that we're in, and I think it's important to note that in the end the profitability of the News of the World did not save it.

  • Did you analyse, though, why the News of the World was a profitable paper?

  • From a commercial perspective and a product perspective, yes. It had a connection with its readers, was popular with them and was popular with advertisers as well to reach them.

  • Self-evidently, there was something about it that the readers wanted, because we know 3 or 4 million people bought the News of the World, but there must have been something more about it which you identified as being its appeal to its readers.

  • I think there are many things about any newspaper or any television programme or what-have-you that appeal. It's the way you tell stories. I mean, in the case of the News of the World, you could be talking about a new magazine like Fabulous, which was introduced during that period, which was an expensive new investment and a glossy Sunday magazine that came along with the paper. It could be the sports coverage. There was extensive sports coverage and a heavy investment was made in that as well, and also it could be the exposes that you mentioned earlier.

  • But every reader has his or her own reasons.

  • Can I move on to a different topic, the selection of editors, paragraph 8.26 your statement. Our page 02969. You point out the only editorial staff member appointed during your time was Dominic Mohan. He became editor of the Sun in June 2009. Why did you support Mr Mohan's appointment?

  • I -- I knew Mr Mohan a bit around the business. He had been Mrs Brooks' deputy and was well-respected. He was her strong recommendation to take the post, and in consultation with my father and Mrs Brooks, I -- I supported that appointment.

  • Did you know what his political views were?

  • I didn't, actually, and I -- to be honest with you, I don't.

  • Do you suspect what they are?

  • I think the selection of an editor, Mr Jay, is not simply around political views of an editor one way or another. It's the ability of the editor, perhaps, to lead the newsroom. It's the ability of the editor to make judgments about what to put in the paper every day, primarily. It's the ability of the editor to be thoughtful about his or her readers and how they react to what goes in the paper. It is not simply a political exercise.

  • Was any part of the decision-making in relation to Mr Mohan's appointment based on this, that you felt that he understood what you and your father wanted, in particular in relation to political lines to take at election time?

  • It was not -- it was not really on my concerns. He would be reporting to Mrs Brooks, who had taken over as chief executive, and he was her strong recommendation, and well-respected, and I thought it was a good idea.

  • You knew what Mrs Brooks' position was on matters such as Europe, though, and the euro, didn't you?

  • Presumably you could trust her to recommend someone who might be in the same place, couldn't you?

  • I didn't -- the specificity around different policies and things like that, that didn't -- that wasn't something that I engaged in great substance on.

  • Okay. I move on now, Mr Murdoch, to the issue of phone hacking, which is obviously, in one sense, well-trodden ground, because you've given evidence now twice to Select Committees. Can I just establish one fact to start off with? It is right that before the Select Committees, your position was that you neither saw nor knew about the "for Neville" email; is that right?

  • That's correct. Pardon me, Mr Jay, did you ask "before the Select Committees"?

  • Sorry, when I said "before", I mean in the sense when you gave your evidence to the Select Committees. The evidence was given on 19 July of last year, and I think on 10 November of last year.

  • I'm sorry, Mr Jay. Are you asking me when I had knowledge of that email?

  • Sorry, my question may be cack-handed.

    Referring back to the meeting which took place on 10 June 2008, your position before the Select Committees on 19 July and 10 November of last year was that you were not shown the "for Neville" email at that meeting of 10 June?

  • That is correct, yes. And that's -- and that remains my position. I stand by that testimony.

  • Okay. You tell us by way of background that you received assurances -- this is 11.4 of your statement. This was when you arrived in December 2007, but the assurances were that following the introduction of a new editor, extensive training and procedures had been put in place, et cetera. From whom did those assurances come?

  • I recall being given assurances by Mr Myler and Mr Cloke, who was the director of human resources at the time, in particular about the training and procedures.

  • Was the context that Mr Myler volunteered this fact or was it something that you asked him?

  • I think in the -- I think it was probably in the context where, over the first few months, as I was coming to grips with a set of responsibilities around Europe and Asia and in the UK, I would meet regularly with some of the senior executives and they would update me on some of the things that they were doing, and Mr Cloke updated me on that, I recall, and Mr Myler gave me assurances that things were -- you know, as a new editor coming in, that was, you know, what he was doing. He had come in the year before.

  • Did he express to you any doubt as to the possible extent of phone hacking activity in 2005 and 2006?

  • No. To the contrary. The assurances that I were given were the same assurances that were given to Select Committee later, for example, that, you know, the paper had been investigated thoroughly, that no new evidence was found, that the police had closed their case and had made public announcements to that effect, so it was -- it was consistent with that.

  • And was it your general understanding that Mr Mulcaire was an independent contractor, as it were, who, certainly in relation to most of the case which was before the criminal court, was working for Mr Goodman?

  • My understanding at the time -- I didn't have much of an understanding at the time of the previous 2006 issues. I hadn't been in the company. So it was more a general awareness that a reporter had illegally intercepted voicemails, had gone to jail along with the private investigator involved, and it was a general understanding of an event in the past.

  • The first step in the chronology is a phone call --

  • Before you get to that, Mr Jay, could I just ask one question about that?

    I can understand that you might take the view that you'd been given some assurances, but here you were coming into a company new. It was a company which was associated with your family, very, very closely, obviously, and it was something that the reputational position of it was very important to you. Did you ever ask this question: "All right, I accept that you put training into place and everybody's up to speed now, but how did this happen? How did a very senior reporter, who was obviously relied upon and thought highly of, get himself into this position? Why didn't we pick it up? Why didn't our internal governance pick up that something was going wrong?"

    I'm not now talking about an investigation of the specific facts. I'm really asking whether you probed the adequacy of the internal governance that you had in place in a company for which you were now assuming responsibility.

  • Sir, I don't know the -- I couldn't say the specific language of the question and the conversations that were had, but it was clear to me -- and the question became -- that in the newsroom in the past it had not been tight enough, and they -- that's why a new editor was appointed, and the new editor, who I thought really had no skin in the game in the past, was there and had spent time to improve those systems of governance in the newsroom. But the newsroom governance, again, was really an issue for the editor and the legal manager to be responsible for, and those assurances were clear, that they had strengthened the governance to be able to catch these things in the future.

    It was my understanding that the implication of that is that previously, in 2006, clearly they hadn't been, because their position was that they didn't know about it.

  • Yes. Well, you understand the reason for my question. It's not merely what you put into place afterwards; it's why all this had got to that position, because it's all very well saying it's the last editor, but the last editor was appointed and somebody didn't pick up that actually things would go wrong under him.

  • Yes, and that was before I was there.

  • Of course, I appreciate that.

  • And I asked the new editor, sir, who was there as well to say, "What have you done to make sure this can't happen again?" and strengthening the education, strengthening the training, strengthening, really, to make sure that the journalists understood the code and what was acceptable and what wasn't, as well as our own codes of business conduct, really pushing that through more aggressively, was his answer.

  • But you didn't pick up what went wrong in our systems earlier?

  • What I tried to say was that the -- it was the absence of those things being done effectively --

  • -- was my understanding.

  • May we look now, please, at the transcript of Mr Pike's notes of a call with Mr Myler, 27 May 2008. If you have, Mr Murdoch, the document Mr Pike submitted to the Select Committee. It's page JCP7. It can be put on the screen. MOD100062420.

    So Mr Myler, if Mr Pike's notes are correct, had a conversation with you on 27 May; is that correct?

  • According to these notes, but I think -- as you know, in testimony to the Select Committee, neither Mr Myler nor I had a direct recollection of this, but I don't have any reason to disbelieve that it occurred.

  • "Spoke to James Murdoch."

    Then you can see the first little dash:

    "Not any options. Wait for silk's view."

    So are we to deduce from that that you made the obvious and sensible point: "Look, we're paying for leading counsel's opinion, he's going to give us advice, let's wait and see what he says"?

  • Yes, and I think they had already instructed leading counsel at that time to provide an opinion.

  • So there was no other option but to see what leading counsel said, was there?

  • Well, I thought it was -- I presume from this -- again, I don't have a direct recollection of the conversation, but there was a brief conversation and Myler left the conversation with me thinking that there was no option other than to wait for the silk's view.

  • There would be no point proceeding further without the silk's view, would there?

  • That seems to be what it says here.

  • Then you see the next dash:

    "One result of Goodman: CG [which is Clive Goodman] sprayed around allegations, horrid process."

    Then three individuals are named. We won't go into that in any detail.

    Wasn't it the case, Mr Murdoch, that the second bullet point we see here introduced by the dash was also information which Mr Myler gave you on 27 May?

  • No, I don't think so, actually, because I don't think there is -- first of all, there's no record of any meeting in my diaries or anything like that, so this would have been a snatched conversation, I think, when it occurred, and I don't recall any conversation around any of these things. So I think after the first line and the second line, then I think the bit below is really the conversation that Myler is having with Pike, and this is recording that conversation, is my reading of this.

  • But Mr Murdoch, your position is that you don't remember any part of this conversation, do you?

  • But I think if it had gone into all of these things, I would have remembered it.

  • And it would have been a longer -- it would have been a meeting.

  • It's certainly the evidence we received that a lot of this was the discussion between Mr Pike and Mr Myler. It's just a question of when you draw the line between your conversation with Mr Myler and then Mr Myler's conversation with Mr Pike. The point I'm gently suggesting to you is that you draw the line under the second bullet point:

    "One result of Goodman: CG sprayed around allegations, horrid process."

    Do you see the point?

  • I do see the point, but as I said, Mr Jay, I draw the line above that.

  • Well, you appreciate the significance of the second bullet point, do you?

  • Referring, I assume, to the Clive Goodman dismissal proceeding? Yes, I understand.

  • The point, put very bluntly, is that Mr Goodman was alleging that others at News International were involved. Can you see that?

  • Yes, and I was not -- I was not aware of that at the time.

  • Are you sure, Mr Murdoch?

  • Yes. So when you ask me where to draw the line, that's where I draw it, and I think the typed transcript of this makes it look like -- with bullet points and indentations, but actually in the handwritten note, the indentations and bullet points are much more -- are much less precise, in fairness.

  • I'm not sure about that. If you go to JCP5 --

  • I was just looking at it.

  • It's page 62418. One can examine this textually as long as one likes, but it does appear that it's been faithfully transcribed, at least, I would suggest to you, Mr Murdoch.

  • My view on this, Mr Jay, is that the conversation that I don't remember on 27 May would have been to wait for the silk's view with respect to the amount of damages and the likelihood of losing or winning the case. The rest of this is a conversation around all of the other issues around it, as the last line, again, you know, I think indicates. It says:

    "James would say ..."

    Ie. "would say" if he knew all of these things that he didn't. We can examine it, as you said, as long as we like. I'm trying to be helpful.

  • The very last line:

    "James would say, 'Get rid of them, cut out cancer.'"

    You have interpreted that for us, but from the perspective of Mr Myler, presumably he was of the view that Clive Goodman's allegations were unsubstantiated. Isn't that the position?

  • I don't know what his view was at that time.

  • If there's a cancer to be cut out, it would suggest that Clive Goodman's allegations had substance?

  • And if I had known about them, that's exactly what I would have said.

  • Mr Myler's evidence to us, if I can paraphrase, was that he thought there were bombs under the newsroom floor. Do you recall that evidence?

  • I recall him giving that evidence to you, yes.

  • Mr Crone's evidence was that he never thought the one rogue reporter defence was valid.

  • Their -- their assurances to me consistently were as I have said, which was that the newspaper had been investigated thoroughly, that outside people had come in to investigate it, that no evidence was found and that the police asserted that in their evidence -- in the evidence that they had had there was no additional evidence, and that was entirely consistent from Mr Crone and Mr Myler all the way through.

  • One interpretation of this is that Mr Myler was communicating to you the fact that Mr Goodman was, at the very least, making allegations in relation to the possible involvement of others at News International and he was concerned to transmit that idea to you. Do you understand that?

  • I understand what you're saying, but I -- that isn't what -- that isn't what occurred or what I recall.

  • But you recall none of this, do you?

  • I don't recall this conversation with Mr Myler.

  • The next stage is the email chain. I don't believe you've been asked about it yet by the Select Committee. It's the chain of 6 and 7 June 2008, which is MOD100053178.

  • Just before you turn to the chain, let me just interpose a question here. Can you think of a reason why Mr Myler or Mr Crone should keep this information or this concern from you? Was your relationship with them such that they may think, "Well, we needn't bother him with that", or: "We'd better keep it from him because he'll ask us to go to cut out the cancer"? I'm trying to understand what's going on here.

  • I think, sir, that -- that is my understanding of it, because this is something that I've struggled with as well, which is: why wouldn't they just come and tell me -- I was a new person coming in. This was an opportunity to actually get through this, and they didn't. And it must be -- and when I look at that exhibit, you know, those last lines, I think that -- I don't want to conjecture and I've been, you know, I'm sort of -- but I think that must be it, that I would say, "Cut out the cancer", and there was some desire to not do that.

  • I follow that, Mr Murdoch, but I think the point I would like to make about the emails is that in fact if you look at the emails, the point that Mr Pike was making about Mr Taylor alleging that it was rife throughout the organisation was a point that Mr Myler was very concerned that you pick up, which would be consistent with Mr Myler being concerned or having been concerned to make that self-same point to you on 27 May. Do you see that?

  • Well, I think Mr Myler sent me this note unilaterally, forwarded me this correspondence, and I don't believe that I read it. I didn't read it at the time. I have responded to it in minutes, and it was a Saturday, I had just come back from a flight to Hong Kong and I was with my young children at the time.

  • And I invited him to give me a call that evening after they went to bed, I assume, and I don't have a record or recollection of any phone call that occurred, but that the five minutes that he wanted with Mr Crone and myself on Tuesday, which was then the meeting of the 10th --

  • -- was set up, and I didn't -- and I didn't go through this whole email chain.

    That said, even looking at it, it, to me, looks like, you know, exactly --

  • You're now beginning to comment on it, which I'd ask you not to do, but just keep to be the question. The point is quite a straightforward one. If you look at the email from Mr Pike to Mr Crone, 6 June, timed at 17.18 in the afternoon, our page 53179, there are three bullet points. I'm only concerned about the third:

    "He wants to demonstrate that what happened to him is/was rife throughout the organisation. He wants to correct the paper telling parliamentary inquiries that this was not happening when it was."

    Are you with me --

  • Yes, I'm following you on the next page.

  • The other point being made is that Mr Taylor is, in effect, coming close to blackmailing you -- I paraphrase -- but that's a separate issue.

    Now, it is true that Mr Crone's email of 7 June doesn't address the rife issue, but Mr Myler's email to you, timed at 14.31 and 41 seconds on Saturday, 7 June, does draw your attention specifically to Julian Pike's email, doesn't it?

  • Regarding Taylor's vindictiveness, as he describes it?

  • But he's asking you to read it, isn't he?

  • I think -- I think he's asking me to read the email chain, presumably, in a view to understanding the vindictiveness -- his words -- of Mr Taylor with respect to increasing --

  • You're just carving out of this one issue. He wants you to understand the whole picture, and part of the picture, rightly or wrongly, was Mr Taylor saying, "I want to get these guys. I want to prove that this behaviour was or is rife throughout the organisation." Mr Myler was drawing your attention to that very fact, so at the very least you could ingest it, take it on board. Do you accept that?

  • That there were allegations there and there?

  • I think my experience of dealing with Mr Myler on this issue, and Mr Crone, was actually that I -- there wasn't a proactive desire to bring me up to speed on those things. If there had been, the meeting would have occurred in April when they first -- or May or whenever it was when they first saw the evidence coming through in the Taylor case.

  • They might have been a bit slow putting this to you, but when they did, it's clear from this email that Mr Myler was not seeking, as it were, to edit out the story. He was concerned that you look at Mr Pike's email and understand what was being said in the email; that's right, isn't it?

  • Again, I didn't -- I don't know what Mr Myler's mind was at this time. I do know that when I did speak to him about it, it was solely with respect to increasing their authority to negotiate the settlement with Mr Taylor.

  • At the meeting on 10 June, was there an agenda?

  • No, other than to update me on this litigation proceeding.

  • Is it normal, Mr Murdoch, not to have an agenda for any meeting, even one of this sort?

  • Many meetings don't have a written or agreed agenda other than a general heading.

  • At the meeting, do you think that Mr Myler drew your attention to the email that had been sent on Saturday?

  • I don't, and I don't recall a discussion around that.

  • Is it possible that the email, particularly Mr Pike's email, was being regarded as the agenda for the meeting?

  • If it was, it wasn't what was followed. The conversation is one that -- on the 10th was a brief conversation that I've described at length.

  • Did Mr Crone arrive with a file?

  • I don't remember if he had a file or not.

  • Did Mr Myler and/or Mr Crone refer to potential reputational damage to the company?

  • There was -- there was a discussion -- I shouldn't say a discussion. It was referred to that it would be in the best interests of the business not to have this matter from the past, from a few years ago, be dug up again and dragged through the court, but it was more as far as -- it was more in the spirit of -- that here was an issue that happened a few years ago, it's all in the past now, it's all finished, and we don't want to have to go through that again.

  • Well, you see that's the bit I don't follow, Mr Murdoch. If it was only a question of repeating what had been yesterday's news, namely the Mulcaire/Goodman story, then there was no additional reputational damage to the company or risk of it. The point was that this was new, that the Gordon Taylor litigation would create the possibility, indeed the probability, of fresh reputational damage to the company because it involved others at News International. Do you follow that?

  • I follow -- I follow your -- your question, but that's not what I was told at the time. What I was told in that meeting was very clear, was that there was a piece of evidence that linked the voicemail interception of Mr Taylor to the News of the World, and this was a new fact, that this was a case that was going to be lost absolutely without question. I was given strong legal advice that it should be settled, and in addition I was told that there was a leading counsel's opinion that had established the amount that was at risk and it was established in that meeting that because the case would be lost, and in order to, you know, not have to litigate a case that would be lost and drag up all these things, a painful episode in the past and what not, that, you know, the strategy should be to settle, and I got strong advice on that subject and I followed that advice.

  • Did they make it clear to you that the terms of settlement could be confidential?

  • I can't recall -- I can't recall any of the specifics of a discussion around confidentiality, but it was my assumption that it would be a confidential settlement, as many are.

  • Did you not make the obvious connection that a confidential settlement, at whatever sum, would remove the risk of reputational damage to the company?

  • Yes, well, for -- my understanding at the time was that both sides sought confidentiality.

  • As for the evidential strength of the new evidence, weren't you told that the new evidence related to others at News of the World?

  • Weren't you told that the evidential strength of the new evidence, the "for Neville" email, was that it related to others at News of the World, namely that Mulcaire was working for others at the News of the World?

  • No. No. What's now known as the "for Neville" email was important for two reasons, as I've said in the past. One reason was it was a direct link between the News of the World and Mr Mulcaire's activities with respect to Gordon Taylor. That is what was told to me. There was another reason, which I now appreciate: that it linked to wider journalists and perhaps could have been the thread to say there was more going on there, and that part of it, that part of its importance, was not imparted to me that day.

  • Was the email produced on the day?

  • So you don't have any recollection of Mr Crone at the very least showing you the first page of the email, which was the gist of the evidence he gave us? Is that right?

  • No, I don't have any recollection of that, and I think -- well, I don't need to go into his testimony, so sorry.

  • Did either Mr Myler -- or it would be more likely Mr Crone -- mention leading counsel's opinion?

  • Did they mention leading counsel's opinion in the context of the reputational damage to your company if the case fought, in particular because the new evidence demonstrated that the case went beyond Mr Goodman?

  • Although you've now seen paragraph 6 of Mr Silverleaf Queen's Counsel's opinion, which makes that very point?

  • Yes, I have now seen it but I did not see it at the time, nor was it produced to me.

  • Were Mr Myler and Mr Crone calm or anxious during this short meeting?

  • Um ... I would say -- it's a subjective judgment. I would say more on the anxious side. They were eager to be able to leave the room with a notion that they could settle this case at a higher number.

  • The truth is, Mr Murdoch, they were very keen that you settle. They were very keen to transmit the message to you that if you didn't, there was serious reputational risk to the company. Are we agreed thus far?

  • I think the primary purpose, as you -- I wouldn't put it in that order, no.

  • I would suggest that the reputational damage was inextricably linked with the fact that this wasn't a rehash of old news but was something new.

  • That is not what they communicated to me.

  • Were you surprised that an offer, £350,000 plus costs, had already been made without your authority?

  • I don't know when I discovered of that offer, but they had told me -- I think that they did say that they had made attempts to settle this case already, and indeed we know that they made repeated attempts to settle the case before that meeting.

  • Yes, but you must have known at the meeting where the parties were inasmuch as an offer had been made, yet Mr Taylor had rejected it. You knew that, didn't you?

  • And you must have known in what amount the offer had been made?

  • I presume so, but I don't know exactly what the number was they told me.

  • Well, we know from Mr Crone and Mr Myler's evidence that the figure was £350,000. Didn't you think that that was an extraordinary amount of money for this sort of allegation, even if proved?

  • Well, I really didn't have any way to situate that amount of money with respect to the allegation. I hadn't -- I wasn't a lawyer, I hadn't been involved in these sorts of cases, and indeed the Queen's Counsel opinion had put the potential liability, including costs at, you know, a very large sum as well.

  • Yes. His figure, paragraph 17, was:

    "The court might award a sum at any level from 25,000 to 250,000 or possibly even more, although I think this extremely unlikely. My best guess is that the award will be either 100,000 or about 250,000, depending on the personal reaction of the judge."

    Now, that must have been communicated to you, Mr Murdoch, wasn't it?

  • The opinion was not shown to me. It was -- I remember --

  • I didn't say it was shown to you. I said that that must have been communicated.

  • Yes. As I said, I recall their description of the silk's opinion being that the number could be upwards of -- I think I recall a number 425,000, so they said half a million to a million pounds, with costs in it.

  • No, no. His figures are net of costs.

  • No, they described to me with costs, Mr Jay.

  • Don't worry about the costs, because the 350,000 which has already been offered was net of cost. It was 350,000 plus Mr Taylor's legal costs, but Mr Silverleaf was saying:

    "... any level from 250 to 250,000, or possibly even more, although I think it's extremely unlikely."

    My question to you was that that must have been communicated to you.

  • Not the gist of the likelihood of that.

  • But wasn't that the whole point of waiting for leading counsel's view, to know what value he placed on the claim?

  • Yes, and I was told that leading counsel's view was that it was -- I can't -- I think they gave it to me with costs, and I remember that it would be in that range.

  • This just confuses it. It would have been cack-handed and frankly ridiculous to have given you a global figure. They would have said, "He's saying worst case 250K plus costs." They must have told you that, Mr Murdoch.

  • That's not -- that's not what I recall.

  • Did you not ask them: "Why has the sum of 350,000 been offered without my [that's your] authority?"

  • They -- the management of this litigation, of this legal affair was something that I think -- you know, it was reasonable for me to leave it to -- the editor and the senior legal manager had a lot of experience to do this.

  • What's the point of having a limit of authority if people are going to go over it by a factor of ten?

  • And they came to me to get -- because it was getting to a number where they thought they had to talk to me about it. It wasn't at my -- it wasn't at the top of my mind exactly where their legal authorities were. There was a budget of a million and change or more -- I can't remember -- for legal settlements at the News of the World, and it was within that, and I was briefed on it, as I have described, and left it to them to negotiate.

  • Weren't you concerned that the sum of £350,000 had been offered -- well, it was probably a slightly lower figure -- without there being counsel's opinion? I think it's fair to say that the offer of 350,000 was made on 6 June. Counsel's opinion is dated 3 June. So I think the evidence was that the 350 postdated counsel's opinion, but earlier sums had been offered without counsel's opinion. Did that not concern you?

  • I don't remember when I found -- what I knew exactly about the previous numbers of settlement attempts, but I do know that, you know -- and it seems to be in this -- that when it came to my attention, I thought that they should wait for counsel's opinion.

  • Did anybody tell you at the meeting words to this effect: "This guy is trying to blackmail us"?

  • I don't recall those words.

  • Or anything like them? Is that your evidence, Mr Murdoch?

  • I don't -- I don't remember those words or words like that. It was -- it was a short meeting, and what I can say --

  • "He's holding us to ransom because although his case is worth much less, he knows that we know that the reputational harm to the company would be so great that a vast overvalue of the claim has to be made by way of settlement to get rid of it."

    Wasn't that communicated to you?

  • No, that's not the gist of what was communicated to me.

  • Doesn't that very fact emerge from the next file note, JCP13, 10 June. JCP13 is 62426, which is really Mr Crone reporting back to Mr Pike. Mr Pike is running the litigation. Mr Crone is reporting back on the meeting you had. Do you follow me, Mr Murdoch?

  • It says:

    "Tom, meeting with JM and CM. JM said he wanted to think through the options."

    That suggests that you hadn't come to any settled decision to conclude the litigation when the meeting ended. Isn't that correct?

  • Yeah, I looked at this and was trying to think what that -- what that could mean, and I do -- and I have -- I do think there was something that had to wait before it could -- there was something about going back to Mr Mulcaire's attorneys to discuss -- because he was a co-defendant and -- the legal ins and outs of it I don't remember, didn't know at the time, but it may have just been: "Well, let's just have a think about it for a day or see if you come back and it can be done at that level." I don't -- I'm conjecturing.

  • Well, the natural and ordinary meaning of this was that you wanted to ponder what you'd been told. Would you not agree?

  • Yes. You sit on it for a bit and think about it, but there was a reason for the gap there, which was their -- they had to go and have a discussion with Mr Mulcaire's attorneys, I believe.

  • Look at the next line. I'm going to have to read it out in all its glory. I'm not going to censor it:

    "CM moving towards to tell Taylor to fuck off. On the end of drip drip -- do a deal with them -- paying them off plus then silence [either that says 'fails' or 'falls']."

    The first line, that's pretty clear that Mr Myler is angry because he knows that Mr Taylor -- or at least it's his perception that Mr Taylor is blackmailing your company. That's fair, isn't it?

  • Look, it's hard for me to testify, Mr Jay, to what Mr Myler thought in a conversation relayed by Tom Crone to Julian Pike and written down here. I just don't have direct --

  • But this is Crone reporting back to Pike, and Crone is reporting back Mr Myler's view at the meeting, isn't he?

  • I don't -- I don't -- I don't know.

  • But what else could it be, Mr Murdoch?

  • Well, I think Mr Myler -- I mean, if it says here that Myler was moving to not want to settle, that wasn't what was communicated to me at the meeting, which was that -- I had strong advice to settle the case at the numbers which were suggested.

  • But this is a strong indication that Mr Myler was getting extremely hacked off by all of this because he felt that he and the company were at the wrong end of litigation which was amounting to blackmail, frankly, because you were having to pay far too much money to get rid of it, and that message was communicated to you, wasn't it?

  • No, it -- the -- as I've said to you, Mr Jay, the part of that message around paying over the odds and so forth was not communicated to me.

  • But the reason why you ended up paying by a factor of possibly ten, if not 20, over the odds to get rid of that case was because if you didn't get rid of it and you fought it, the reputational risk to the company was vast because there would be allegations that these activities went beyond Mr Goodman and Mr Mulcaire. Do you understand that?

  • I understand what you're saying, and I'm telling you that that was not what was communicated to me in that meeting.

  • It looks as if there was a further calculation that Mr Myler was doing in his mind and was discussed at the meeting, where also there was a risk here because even if you did pay off Taylor, the silence -- which is everything going quiet -- might not happen. In other words, there might be further litigation, and therefore your strategy would end up in tears in any event. That must have been discussed at the meeting, Mr Murdoch, wasn't it?

  • If all of those things, Mr Jay, were discussed at that meeting, if the purpose of that meeting was to brief me and bring me up to speed on all of these allegations on the whole story from 2006, from years before I was there, then (a) it would have been a much longer meeting and it would have had an outcome that was different.

  • Maybe not, Mr Murdoch, because if this note is correct, you wanted to think through the options. So there was no need for a longer meeting, but what there was need for was for you to ponder what to do next.

  • But I just don't -- I think -- I think -- frankly, if the purpose of the meeting and the agenda of the meeting was to go through all of those things -- the Goodman allegations, the history of voicemail interception litigation, the prosecutions from 2006 and 7 -- it would have led to -- it would have been a longer meeting, and in fact they wouldn't have been trying to settle it ahead of it. They would have told me as soon as they had the evidence.

  • Well, do you accept at least this: there are two possibilities here, and it will be, of course, for Lord Justice Leveson to decide in due course. Either you were told about the evidence which linked others at News of the World to Mulcaire and that this was, in effect, a cover-up, or you weren't told, or you didn't read your emails properly, and there is a failure of governance within the company? Do you accept that those are the only two possibilities?

  • I don't think -- I don't think that. It was very, very -- I think I've been very, very clear on this point, of what I was told at the time, the eagerness that these -- these people had to settle this case, as you've mentioned, and I was told sufficient information to authorise them to go and negotiate at a higher level, and I was not told sufficient information to go and turn over a whole bunch of stones that I was told had already been turned over. I was given repeated assurances, as I've said, that these practices -- that these -- that the newsroom had been investigated, that there was no evidence. I was given the same assurances as they gave outside. I've been very consistent about it and I don't think that, short of knowing that they weren't giving me the full picture, I would have been able to know that at the time.

  • I now move on to July 2009 --

  • Just before you do that, let me ask this question, because this goes to the issue of culture, which I have to think about. Had you been told: "We don't think there's anything in any of this, but there's a lot of mud going to be thrown and it's going to be very unpleasant and therefore there are reputational risks which we think you ought to be aware of, but on the other hand the amount of money being sought is ludicrous" -- obviously to some extent it's hypothetical, but what I'd been interested to learn is what your attitude would have -- "is", actually, not necessarily "would have been" -- to buying off reputational risk with more money than would otherwise been justified?

  • My attitude would have been to find out the facts around what the mud-slinging was. My attitude would have been to say, "Let's understand those allegations, let's see -- you know, show me that those are wrong" and so on. I think if you do fast-forward to 2009, you know, the company -- and I think too strongly, as I said, you know, did see some of those allegations come, asserted that investigations had been done and so on, and I think, you know, it would have been -- so to the point of a -- the point of a governance failure or not, that Mr Jay was asking, I think I would have gotten the same answers, which is that it had been investigated, it's all been done, the police have said there's nothing there and so on.

    By the time I arrived, the whole issue of 2006 and 2007 was -- was packed away, if you will, and the company's defence, that it was a rogue reporter, that it had been investigated and the police had closed the case, was already and had been firmly in place for a while, so ...

  • Yes, I was actually asking a slightly different question. I was asking for your reaction, as the person responsible for the overall running of the company, to overpaying litigation to protect the company from reputational risk.

  • I think if the -- I don't think you would want to do that. I think you would want to pay to settle out -- make out of court settlements to avoid costly litigation and the risk of losing litigation. With respect to confidentiality, there is a variety of reasons to be interested in confidentiality in these out-of-court settlements and they're not that unusual, so I wouldn't do that.

    What I would be concerned with was, with respect to the reputational risk, you know, what its nature really was and, you know, were -- and to try to understand the real facts of what was going on around the place. And that's what I'd be concerned with today.

  • The Guardian article online on 8 July and in print on 9 July, I think that was drawn to your attention at the time, wasn't it?

  • Yes, it was. I was away, I was in the United States at the time, but I received a telephone call about it.

  • The Guardian article alleged that Mr Taylor had been paid, in effect, hush money.

  • Didn't you make the connection in your mind between at least that allegation and your involvement in the events of 10 June 2008?

  • And what did you think?

  • I asked the question: "Is this true? What's going on?" And the answer came back.

  • And the answer was?

  • That it wasn't true, that there was no other evidence, that there -- you know, this is a -- you know, this has been investigated to death and this is, you know, a smear. And I think you saw the statement made by both the company at the time, as well as by the police at that time. At that time, I had just -- a new chief executive had just been appointed for News International and the handling on the ground was in London and I was -- I was not there.

  • Are you sure Mr Myler didn't reiterate to you in July 2009 what the reasons were for the settlement on 10 June 2008, namely: "We had to pay this man so much money because of the risk to the company"?

  • No. They came back and said, "These allegations aren't true."

  • What was your reaction to the Select Committee report, February 2010, which was to the effect that it was inconceivable that Mr Goodman acted alone?

  • The -- again, at the time, managing the Select Committee and the communications and all the things around News International was not my direct responsibility at that time. There was a full-time chief executive in place. But my reaction was that -- and I was told -- what I was told that it was -- what the company then communicated, which is that it seemed to be over the top, that the allegations, you know, were -- that this was something that was politically motivated, and something that in the Select Committee evidence I was clear about my regret about, you know, is we should have taken that Select Committee report more seriously.

  • Were you aware of the Clifford settlement in March 2010?

  • I was -- I was -- I was aware of it in small detail.

  • It was a large amount. It was £1 million, wasn't it?

  • Well, there was a -- there was a -- my understanding was and I was told that there was a litigation pending with Mr Clifford but that it was decided that -- really, there was a commercial relationship with Mr Clifford that he and the chief executive wanted to establish, which was a re-establishment of some relationship in the past and that it seemed better to focus on that and not have this litigation and this arguing in court going on, and that's the limit of my understanding of it.

  • In January 2011, as a result of the disclosure process in the Sienna Miller litigation, you became aware that the one rogue reporter defence was no longer tenable; that's right, isn't it?

  • Yes. There was a disclosure in the Sienna Miller litigation.

  • What discussion, if any, was there about this within News International, in particular with Mr Myler?

  • There was -- well, there had been discussion leading up to that -- that litigation happening and the question of risk there. The company had, many months before, said that if any evidence emerges in these civil litigations, the company will act decisively and move quickly on it and that's exactly what the company did.

    I don't think I was present in discussions with Mr Myler at that time, but I can go and check that and come back to you.

  • I think it may go a bit wider than what you've just said, Mr Murdoch. We have a Select Committee who, you say, after the event was proved right but made a very serious point. You have the Guardian article of July 2009. Your immediate reaction was to -- frankly, to rubbish that, at least in your mind, and here evidence was coming out which showed that all these articles and Select Committees might be right after all. Didn't that cause you any concern?

  • It did cause -- it did cause concern, and actually the coming out of the evidence in the Sienna Miller litigation was of great concern and it's why, you know, the company moved and I insisted that the company move quickly to reopen an internal investigation into the issues around it, to act against the employees that were implicated and immediately suspend them, which was done before the new year, and move to bring in new counsel to get to the bottom of what was really going on. And as soon as we had that evidence, we acted very quickly, and I wish we had had that evidence earlier.

  • You refer in paragraph 15.2 of your statement to an aggressive defence. Do you feel that that is or was a cultural problem, either within your papers or the press as a whole?

  • I think -- I wouldn't say it's -- I wouldn't say that it's simply in our -- in News International's newspapers, but that's not to excuse it. I did sense, in the time that I was sort of involved in these newspapers, that the culture between these papers is very tribal and the competition is seen as very much a zero sum game, and that might lead to a culture where being too aggressive, knocking back allegations and not being as thoughtful and forensic about allegations is there, and that's why -- I mean, if I think about really one of the big lessons learned here is that no matter where something comes from, even if it's a commercial rival or someone who has a political gripe or whatever it is, that being more dispassionate and forensic and understanding that those circumstances don't make an allegation untrue is very important.

  • Do you feel, in hindsight, that the News of the World in particular was characterised maybe by a cavalier or swashbuckling attitude to risk, that that was almost inherent in its brand?

  • I don't think I would -- I don't think I would say that, that it's inherent in its brand, but I do think that knowing what we know now about the culture at the News of the World in 2006, for example, and that -- well, at least that we know about the alleged, you know, widespread nature of these poor practices, that it must have been cavalier about risk, and I think that's a matter of huge regret and something -- we have to have systems in place to try to make sure it doesn't happen in the future.

  • Okay. I'm going to move on now to a separate topic, which is dealings with the politicians. I think the best way to deal with that is to start with the issue of meetings.

  • Mr Jay, at some stage we're going to need a break. Is that a convenient moment?

  • We'll just have ten minutes.

  • (A short break)

  • One last question, the meeting on 10 June. Did you take notes at that meeting?

  • I don't think so. I don't have any. I've looked for them.

  • Thank you. Meetings with politicians. JRM9, first of all. Our page 02952. This time we are within the PROP folder. Do you have it there, Mr Murdoch?

  • There was a meeting with or rather a conference call with the then Prime Minister, Mr Blair, on 7 October 2005. It was at your instigation, was it?

  • That's my recollection, or our public affairs people.

  • You say:

    "... possibly EC proposals concerning sports rights, although I don't recall precisely."

    There are rumours going around that the broadcasting rights in relation to the premier league would be split; is that correct?

  • At that time there were a number of -- I wouldn't say rumours going around. There were a number of interested parties, who wanted to see the European Commission's intervention into Premiership football selling, which was really intervention against the Premier League itself, to be changed again.

  • Yes, but that would have direct and obvious consequences for BSkyB, wouldn't it?

  • Yes, and I recall the telephone conversation a little bit, not exactly, but I think that's what it was about, and I think it was a normal and appropriate or legitimate bit of business advocacy. There were a number of parties -- the FAPL, British Sky Broadcasting and others -- who thought that a further intervention into the otherwise vibrant market for sports rights was unnecessary.

  • One can describe this in a number of ways. You can use the term quite fairly "business advocacy". It could also be described as lobbying, couldn't it?

  • It could also be described as a private conversation with the Prime Minister, making it clear the commercial concerns of your company and that he should register and understand them. Is that right?

  • I think -- I think it's not so much the commercial concerns of the company, but yes, I think it could have been entirely consistent with public statements that I would have made, or others on behalf of the company would have made, and, you know, nothing in communicating additionally would have been inconsistent with the company's view on a further intervention into the market.

  • Was the purpose of the call in any way to bring Mr Blair onside in the sense that if the European Commission did intervene, then the British government should avail BSkyB?

  • No. I think it was just -- it was -- in conversations like this, I would have said this is just to make the Prime Minister aware of these issues -- it's a major British franchise, football playing -- and that -- you know, it would have been unclear whether or not he was aware of what some of the proposals that were flying around were like, and that's all.

  • You wouldn't have either the bad taste or lack of sophistication to make a direct request of the Prime Minister, and if you were to do that, he would probably ignore it, but you are subtly communicating to him, are you not, your concerns on behalf of BSkyB and making it as sure as you could be that he would at least understand them. Would you agree?

  • Yes. The purpose would be to -- hopefully for senior policy-makers, the Prime Minister in this case, to understand that some of these policies might have adverse consequences for British football. English football, in this case.

  • They would certainly have adverse consequences for your company, wouldn't they?

  • Potentially. I mean, it is important to note that the European Commission's work on this really was around the way that the FAPL sells. It wasn't a question of the way that we or BSkyB or any others bid. It was the structure of the auction itself that was the concern.

  • If we look at JRM9 again and your meetings with Gordon Brown, they appear to be largely of a social nature; is that correct?

  • Yes, that's correct. Remember, on the middle one, 15 December 2008, I don't remember, but he would have -- you know, he would have told me lots of things about the economy and the like.

  • When was it in 2009 that News Corp began to hatch the idea to acquire the remaining shares in BSkyB?

  • It was probably pretty late, actually. It was probably -- I remember there was a meeting in the summer time about it in Los Angeles, in sort of August, but that was sort of where it was coming -- starting to come together, thinking: would it be possible to do that?

  • I'll come back to that. Then with Mr Cameron, it's probably best to deal with this chronologically and therefore please look at JRJM10. These are meetings with leaders of the opposition. We can see a number of meetings, page 02863, in 2006, 2007, 2008. Who's Mr Adlington?

  • I don't remember. I think a banker who was in -- you know, assembling business leaders to listen to the leader of the opposition talk about his attitude towards enterprise, if I recall.

  • At an early stage, did you have any doubts about Mr Cameron's suitability to be Prime Minister?

  • I don't think I would have thought about it in that way, really. I met him occasionally. Most of these were sort of social events or dinners at other persons' house and things like that, and he would have, as the leader of the opposition, and speaking to anyone around the media, would have been -- or business leaders, would have been advocating the rightness of his ideas, I should imagine.

  • Is the purpose of these meetings at least twofold: first of all to understand where Mr Cameron was coming from, in terms of macro-economic policy? In other words -- well, it's self-explanatory. Was that part of the purpose of these meetings?

  • I think just in general, the direction -- I think politicians generally, they like to communicate their vision of policies and what they think is the right thing to do, both economically, for business, for society, and they generally try to convince anyone who will listen that they are right and not wrong.

  • Yes, but before the Sun in particular would think of supporting Mr Cameron, it would need to be satisfied that he was on the right page in relation to macro-economic policy?

  • I should think any newspaper would be considering what policies were being put forward and making their own judgments.

  • Wasn't there also this consideration, Mr Murdoch: that you'd be keen to know where Mr Cameron stood on issues which would directly affect your company and your companies?

  • Not really. I wouldn't really have raised specific things with him about that, other than consistent -- you know, my position on industry policy and things like that have been pretty consistent and pretty public, so --

  • Wouldn't you want to know his views about regulation, whether it's TV regulation, Ofcom, press regulation, competition plurality? Wouldn't you want to know his views about that?

  • I think more generally one would like to -- it's more generally an approach to enterprise, an approach to -- not so much macro-economic, but approach to business and how businesses work and how they create jobs and the like.

  • But why wouldn't you want to know his views about those matters?

  • Well, I might want to know, but the purpose of these meetings wasn't necessarily to find out. They were -- discussions were on a broad range of subjects, from foreign policy to other things.

  • I'm sure you'd wish to range over a number of topics, but it would be to the commercial advantage of your company, and some would say your duty, to find out where Mr Cameron stood as leader of the opposition on these matters, wouldn't it?

  • I'm not sure where the leader of the opposition stands on issues is a commercial advantage to a company. I think that the policies that these political leaders espouse, they generally do publicly.

  • It occurs on two levels --

  • They have a platform, and they --

  • Yes, of course it occurs in the public domain, and Mr Cameron did indeed set out his position on these matters in a public forum, but wouldn't you also wish to find out privately what he might say? Moreover, in a private context, he might tell you more?

  • No, Mr Jay, if what you're getting at is some sort of a judgment about a political leader with respect to specific legislation or specific policies around our business, that's really not -- that's not the way I do business. I would have been interested and flattered to be invited to a dinner that the leader of the opposition was at and I would have been curious as a person in the room and listened to what he had to say about a variety of topics.

  • At the time when the BSkyB bid was hatched in the mind of News Corp, you say towards the back end of 2009, didn't it, even as a matter of intellectual curiosity, occur to you that it would be interesting to know where Mr Cameron stood on matters of regulation which might have an impact on the fate of that bid in due course?

  • Not really. I mean, we did an assessment of the regulatory risk, but that's a legal assessment around what a process might look like, would there be regulatory issues, competition issues, et cetera. It was not a narrow political calculation around that, because the legal risk would have been established and we would have made a judgment on that basis.

  • But Mr Murdoch, a company as sophisticated as News Corp, with the quality of advice available to it, didn't it do two calculations, one on the basis of a Tory government and one on the basis of a Labour government?

  • I think not with respect to -- not with respect to any transaction, clearance of a transaction, specific regulation or anything like that. But certainly you would look at the general political direction a country was going in, as we would in any place, if it's Turkey or India or wherever, to see: is this a place where our enterprise can be pursued?

  • It could be Mali or outer Mongolia. It doesn't matter. But in relation to the United Kingdom, you would be thinking, particularly as an election is coming up: how is this going to play out, this bid, if on the one hand you have Cameron, and on the other hand you have Brown? Surely that calculation must have been carried out?

  • With respect to the offer to make a proposal, the bid, the idea to bid for the shares we didn't already own, that wasn't part of it. There was a view later on, when it was thought that it was likely that we might attempt to do this, to not be -- to try to avoid becoming a political issue in the middle of an election, but not with respect to what the likely or possible outcomes of the election were.

  • Because Mr Murdoch, a bid of this sort, its merits are examined on two levels. There's the legal analysis, where you may be advised that your case was strong. I'm not asking you to comment on that. Then there's the political dimension, which is: "However good the legal case is, we still have to get this bid through because of the opposition we might face on the political stage." That sort of discussion must have taken place, mustn't it?

  • Yes. I mean, it takes place with respect to what sort of regulatory scrutiny a transaction is going to come under, and you make an assessment around that, and certainly while on the regulatory side, on competition issues and plurality issues, we were confident of the legal case, we were alive to the risk that politics or commercial interests might influence opposition or arguments made against. But, you know, we rested on the on soundness of the legal case.

  • Is your evidence to this Inquiry that you thought that a Labour government, reelected in 2010, would be more favourable, more well disposed to, to the BSkyB bid than a new Conservative government?

  • I don't think government's approach to the bid was something -- which government's approach to the bid was something that was necessarily high on our mind. There would have been -- we had -- between New York and London, we had legal and public affairs executives working tightly on this, and they made an assessment that from a regulatory perspective there was -- you know, that it was a sound transaction and that we would be able to get it through.

    There was a question about how long it might take, what sort of references were made, what sort of -- would it go to the Competition Commission or not, and that would impact the length, or a phase 2 European transaction, for example, but it was more duration, not really likelihood of completion that we were concerned about.

  • On 10 September 2009, you had drinks with Mr Cameron at a place called the George, and the topic of the discussion was the Sun's proposed endorsement of the Conservative party. Do you see that?

  • Was it made clear to Mr Cameron that the Sun would be endorsing the Conservative party?

  • It was made clear to Mr Cameron by me that after discussions with the editor and the leadership at News International and my father that that autumn, the Sun would either be endorsing the Conservative party or certainly, you know, moving away from its traditional or recent support of Labour, as it had been through the summer.

  • Yes. This must have been welcome news to Mr Cameron, mustn't it?

  • Yes. Did you discuss the timing of the Sun's endorsement?

  • We discussed it at the end of the -- the plan that the editors had was that it would be at the end of the conference season, if it happened, because we wanted to -- the editors wanted to see what things came out of the conferences, particularly the Labour conference, whether or not they would -- what they would say.

  • Wasn't there a discussion that: "We'll endorse you at the best possible moment"? The worst possible moment for Mr Brown, as it happened, the very day of his speech to the Labour party conference.

  • Was there discussion on that basis?

  • I don't remember the specificity of that, but for clarity, I think it was the day after was the article. It was really more focused on Labour's record than it was an endorsement of the Conservatives, the one that you're referring to that you put in the evidence. It was the day after the speech and it was really about Labour's record.

  • Is it your evidence that either at that meeting or before you had not discussed regulatory issues with Mr Cameron?

  • At that meeting I certainly didn't.

  • At previous meetings had you discussed them?

  • I don't believe so, actually.

  • Later meetings with Mr Cameron, we can see these on page 02864. There are general references to topical subjects, politics. Do you think regulation might have been discussed?

  • Which -- these are on 7 November and 23 December?

  • No, they're before the election. It's on the second page of JRM10, our page 02864.

  • Oh. I think more -- I think actually more politics, just leading up to an election, was more of a topic. I don't believe we discussed any specific regulation and certainly if anything came up, it would have been entirely consistent with the public -- you know, the public advocacy that I and the company had undertaken at that point.

  • Okay, but once he becomes Prime Minister, which was, as we recall, in May of 2010, you've recorded here two meetings with Mr Cameron, back to JRM9, page 02952. There's a lunch at Chequers, with your family on 7 November 2010.

  • One may accept the general social conversation. You don't recall any discussion of the BSkyB bid, do you?

  • Not of the BSkyB bid, no, not at all.

  • But then on 23 December 2010, there was some discussion, according to your witness statement at paragraph 3.19. Can we just be clear about this occasion? Was it at the home of Mr and Mrs Brooks?

  • Yes, it was. It was 23 December at their home.

  • Yes. About how many people were there?

  • I can't remember the exact number but it was in the teens. Maybe a dozen, maybe 15 people.

  • It was two days after the revelation that Mr Cable might not be approaching the BSkyB bid with an entirely open mind, if I can put it in that way.

  • Oh no, it was two days after Mr Cable had been removed from his responsibilities with respect to it after showing acute bias.

  • Fair enough, Mr Murdoch. You're entitled to put it in that way. So the issue, the fate of the bid, was very much in your mind on 23 December 2010, wasn't it?

  • It was. It was a big question mark about what would happen going forward, but there was no discussion with Mr Cameron other than as I've detailed in my witness statement, which is simply he reiterated what he had said publicly, which is that the behaviour had been unacceptable, and I imagine I expressed a hope that things would be dealt with in a way that was appropriate and judicial.

    Our only concern during this period was that the correct and appropriate legal test was applied to this transaction, and I would have said it to anyone who would listen. But it was a tiny side conversation ahead of a dinner where all these people were there. So it wasn't really a discussion, if you will.

  • So it just took a few moments; is that right?

  • That's my recollection, yeah, and I include it here for completeness.

  • Fair enough. Then other ministers. The meeting with Mr Laws after, you've kindly told us, he resigned as chief secretary of the Treasury. So it was after 29 May 2010, presumably after the bid was announced; is that right?

  • Was the purpose of the discussion to see if the Liberal Democrat part of the Coalition could be brought on side?

  • No, not so much to be brought onside. I had been attempting and requesting to meet with the minister, Mr Cable, in charge of the portfolio under the -- it's a quirk of the Enterprise Act in this area that the politician himself, the Secretary of State holds the responsibility to make the decision. It's not a question of a regulator or an independent body or anything like that; it's the Secretary of State himself who can do that. I had been requesting a meeting with Mr Cable. I was told that I wasn't able to have a meeting with Mr Cable and his advisers with our team as well to talk about the transaction, so I reached -- our people, I think, reached out to Mr Cable's advisers, who suggested that we talk to various senior Liberal Democrats.

  • Can I ask you a general question about the timing of the bid. We know from what's in the public domain that News Corp approached BSkyB regarding its interest in acquiring the publicly owned shares of BSkyB in June 2010; is that correct?

  • Which is one month, thereabouts, after the election. The internal consideration began the previous year. Was it part of the News Corp strategy to at least wait until the outcome of the election?

  • I think it was to wait until the election was completed, regardless of the outcome, such that a transaction of this size, some $12 million, didn't become a political football, and that was the goal. But the primary driver for the timing was really (a) the affordability of it, being able to do it. We had taken some time to really husband our resources carefully. It was contemplated it would be an all-cash offer and that took a little while to save up, if you will, after -- over a number of years. Also, there was a gap because in 2009, you'll recall, with the financial crisis, with the uncertainty around the environment, you know, large scale mergers and acquisitions activity was a hard thing to get your head around.

  • And furthermore, in 2009 -- and forgive me, Mr Jay, but it's important because I think I know where you're going, but every summer the BSkyB board, the independent directors, meet together to talk through long-term strategy and the like, and we wanted to do it ahead of that, or around that time when the board was all scheduled to have a few days together, so it could be done completely and properly with the board.

  • Yes. I think you said that you needed to save up over a number of years; is that right?

  • Yes. The company did, yes.

  • So it suggests that the BSkyB bid was at least in embryo over a number of years, doesn't it?

  • Well, you know in 2009, in late 2009, when we started to really have proper discussions about it was where we were, but it was -- in 2007, the company acquired Dow Jones for $5.5 billion in cash, and to contemplate a transaction of this size in the immediate aftermath of that, and given what happened in 2008 and 2009 with respect to the global financial crisis, would have been difficult. So in 2009 and 2010, we realised this was something that we could actually do.

  • I'm sure there's a difference between aspiration and reality, but in terms of aspiration, BSkyB had been on the radar of News Corp for a number of years, hadn't it?

  • Well, it had been more than on the radar. The company founded British Sky Broadcasting some 20-odd years ago.

  • What I mean by that is the acquisition of the remaining publicly owned shares in BSkyB. That had been on the radar for a number of years?

  • It had long been an aspiration, since the merger with BSB.

  • When I refer to the outcome of the election and your desire to await that, part of your calculation, wasn't it, was a preference, at least, for a Conservative victory?

  • I think -- I don't think it's controversial to say that generally speaking, with respect to an approach to enterprise, the free market and so on, that the Conservatives tried to make a case that they were the better option for that.

  • Having committed the Sun to the Conservative party on 30 September 2009, it would not have been a desirable outcome had there been a Labour victory, at least as regards the fate of the BSkyB bid, would it?

  • I think the -- I think it was never a calculation, the BSkyB bid and the Sun, if that's what you're saying. There was never -- we never made -- and I would never have made that sort of kind of a crass calculation about what the newspapers did. It just wouldn't occur to me.

  • You describe that as a crass calculation, but I would suggest you would make the sophisticated calculation of preference for a particular result in the General Election as regards what might work best for the fate of the BSkyB bid. You would at least do that, wouldn't you?

  • Or what might be best for the British economy in general, which would lead you to the view that you were happier or less happy to invest. And that was my -- I don't know if my personal politics matter to you, but that would have been my view, yes.

  • We know from your witness statement, paragraph 3.23.1, that you had telephone calls to or with Mr Jeremy Hunt, who was the Secretary of State for culture, media, Olympics and sport, on 10 November and 15 November 2010. It's our page 02962. You also say you don't recall whether the conversations related to BSkyB; is that right?

  • That's right, I don't recall. There would have been a number of agenda items for the minister for culture, media and sport that, you know, the company -- the minister would have sought lots of input on from the industry in general, and that was where it was. He didn't have any authority or any remit with respect to the BSkyB transaction at that time, but if I did say anything to him about it, it would have only been to seek assurances that the appropriate legal test was applied and that this didn't become a political issue.

  • This was, I think, shortly after the European intervention notice, wasn't it?

  • The -- I can't remember the exact date of the European intervention notice, but I do remember -- I think it was -- I can't remember. I can come back to you on that. Actually, no, I have a schedule of this. The European intervention notice, I'm sure you already know, Mr Jay, but it's ...

  • Yes, 4 November, yeah. So it was a little while after that.

  • Well, not that long after it, was it?

  • So it might have come up with Mr Hunt.

  • Mr Hunt was, of course, a huge ally of News International, wasn't he?

  • I wouldn't describe it that way, no. I don't think so.

  • According to what was then on his personal website, he was. You've seen that, haven't you, Mr Murdoch?

  • Yes, I saw it in the evidence you put here. It's the first time I'd seen it.

  • "Like all good Conservatives, Hunt is a cheerleader for Rupert Murdoch's contribution to the health of British television."

  • I don't think you have to be an ally of the business to conclude that. It's the fact.

  • Well, there's a bit of opinion wrapped up in that fact, isn't there?

  • The cheerleading part, yes, but the contribution has been significant.

  • I think the point I'm making, I hope very gently, is that Mr Hunt was onside. It is true that he did not have, as it were, jurisdiction over the bid, because that lay with the Secretary of State for BIS, Mr Vince Cable, but the purpose of the call, I would suggest to you, was to see if he could oil the wheels a bit; isn't that right?

  • No, I don't think so. I think it would have been -- I don't remember those particular calls, but I think there might have been a desire to update him on the process and what we were hearing. It might have been to say -- to talk about everything from next generation access to others. I don't have the record in front of me.

    One call was about a meeting that he cancelled at the last minute, and I think he apologised for having to cancel the meeting because his lawyers had told him not to, but I don't know if it's one of those calls.

  • Okay. Look at tab 53 in the bundle we've prepared for you, our page 01962. It's a record of earlier meetings with Mr Hunt before the election.

  • Tab 53, did you say? Sorry.

  • It is in my version of the bundle. It might be tab 52 in your version. I'll give you time to turn it up. It's the list of the meetings with --

  • I see them on the electronic system. Is that them?

  • It is, I hope. The first meeting on 12 October 2009 --

  • -- you discussed, amongst other things, the reform of Ofcom, didn't you?

  • I think he had -- there's a whole agenda here of a number of things that were discussed.

  • Yes. And reform of Ofcom, of course, was one of them, wasn't?

  • It it's on the list there, yes.

  • And at the next meeting, 12 February 2010, new Communications Act, media regulation. Can you recall anything about that?

  • No, I think it was the opposition government's -- the opposition's view, and I think they've stated in public that they were going to have -- think about, in the first term if they were elected, a new Communications Act and I think even the Labour government had talked about updating the Communications Act as well. This would be a normal agenda around -- you know, Mr Hunt describing what his agenda was, largely, around things like the local TV network, anti-piracy, around copyright, next generation access, et cetera, and I think he was very publicly on the record of saying that he wanted to look at the system of regulation under DCMS as well, in particular Ofcom.

  • The last item of the agenda here is BBC funding structure and governance.

  • That also was discussed. Did you, previously to this, persuade Mr Hunt to drop what was then Tory policy, to top slice the BBC licence fee?

  • No. I've never thought that top slicing was a good idea and I've been very consistent about that and very transparent. If I were asked -- and I might have been at that meeting -- I would have told him my views on top slicing, which is that it's not a good idea and it's better to keep an intervention concentrated and measurable, which was the same position that the BBC had as well.

  • Later on, after the election, in October 2010, there was a licence fee settlement with the BBC where I think the upshot was that the licence fee was frozen for a number of years. Was that something which you discussed with any member of the Conservative or Coalition government?

  • I don't remember if I -- I don't remember if I did. But if I did, I would have said that they should have gone through a proper process. The schedule for renewing the licence fee was the following year, when they could have consulted widely with the industry and stakeholders and they didn't do it. I was very upset when they announced that settlement.

  • Regardless of the process, it was an outcome which was in the interests of BSkyB, wasn't it?

  • Not necessarily. I don't -- I think the whole industry would have welcomed -- including BSkyB -- a process of wider consultation and discussion around something as important as that.

  • Did you have -- in relation to Ofcom, this is -- any contact with ministers or officials in relation to the changes announced in October 2010 that reduced Ofcom's role and cut its budgets by 28 per cent?

  • Again, was that an outcome which News Corp would have favoured?

  • Look, I've often said -- and I've been very, very consistent about this -- that the scale of intervention by -- particularly in media regulation is very large and I don't think there's anything that would surprise anyone about my views on that at this point. Anyway, I think most of Ofcom's bill gets put back to us anyway, so it wouldn't really make a difference.

  • It's been said of you that you are, perhaps were, a close friend of Mr Osborne. Is that right?

  • We were -- we have been friendly. I wouldn't say I was a close friend of his.

  • One newspaper article says you have children of the same age, you get on well. This is a piece in the Guardian, I think you're aware, dated 30 September 2009.

  • Tab 63 in my version of this bundle. I hope it's the same place.

  • Yes. As I've said, I'm friendly with Mr Osborne, the Chancellor.

  • Have you been to the Chancellor of the Exchequer's sometimes described as grace and favour home at Dorneywood?

  • I have once, yes, with my family.

  • Have you had discussions with him at any stage about the BSkyB bid?

  • I think I had one discussion where it might have come up, which was around the -- which was during the process, which would have just been to be grumpy about it taking a long time and being referred to Ofcom, which I was very clear in public about at the same time. Nothing I would have said to Mr Osborne would have been in any way inconsistent with our public advocacy on the subject.

  • Is it possible to differentiate, though, in any way between what you describe as your public advocacy and what takes place in private? The purpose of the former is obvious and entirely appropriate. The purpose of the latter may be said to seek to gain some unfair or covert advantage in relation to your opponents.

  • Would you agree with that?

  • I don't think that would be -- that would not be the way that I would do it. I'm pretty -- you know, I look at this and say -- listen, I like to be direct, I like to have a clear set of principles that might guide how we think about a marketplace working, what we do, what the regulation is like. I like to lay it out publicly and if views are sought or consulted on in those areas, I'll say the same thing. I think it's legitimate sort of advocacy, if you will, of positions that -- you know, for policy-makers that's important, and I think all business leaders would take the same approach or I think they should.

  • The press clearly have an enormous megaphone and they can promote the views that they think are correct, and the evidence of the 10 September meeting, which you've spoken of, was clearly very important. But do you think that you obtain greater access for yourself as a businessman because you have the weight of press interests behind you?

  • I certainly don't know what all of the other meetings that the Prime Minister or these people take in general. I think it's true to say that politicians and people around the political class, if you will, are very, very eager to get their points across and they definitely like to talk to the press, and we've seen the schedule of the Prime Minister's meetings with all the different journalists, editors, appropriates, et cetera. There's a lot there. But from the standpoint as a business person, I don't think I've personally experienced that because actually I haven't -- I haven't actually spent that much time with politicians personally, and certainly most of my interaction with these politicians has been around British Sky Broadcasting, where the sort of politics of news and things like that don't really fit in, and the vast majority of my career has been as a -- you know, as making television here.

  • Oh, I understand that, but do you think it might have been an advantage when you've been discussing BSkyB and making television, and the contribution that BSkyB has made, that actually News International have other interests which have been capable of at least potentially making a difference?

  • I don't think there's any evidence of an advantage with respect to the way we've operated our business and the way that the business has been regulated and governed in the country. I just don't think -- I really just don't think that's there. I think it's a question perhaps for the politicians about how they saw it but certainly for me, I would really -- you know, I just wouldn't link the two. I just would never do that. I think the press and the newspapers have to make the decisions on behalf of their readers and in the context of the country and what they think is right, and you know, I need to be able to win the argument, if you will, for British Sky Broadcasting and others, or I did at the time, on the merits of the business and of the legal case, if it's a merger or other things like that, and that's all I would ever seek to do.

  • In your discussions with politicians before the General Election, particularly the last one, was it not obvious to you that they were very interested in whether you would be supporting their party in due course?

  • I don't think I was ever asked directly about that.

  • That wasn't the question. The question is whether it was obvious to you that they would be very interested in knowing whether your newspapers would support their party in due course.

  • Yeah, I think all politicians would be interested to know that, and would seek the support of newspapers and the media. That's very much part of their -- the way they see their job, as communicators and, to use Lord Justice Leveson's phrase, to be able to avail themselves of that megaphone, if you will, for their own policies and purposes. I think that's reasonably evident.

  • There's an ever-changing balance of power here, but in a run-up to an election, it must occur to you, as a sophisticated individual, that the balance of power is more with you than with them because they are so interested in knowing whether your newspapers are going to support them. Would you agree with that?

  • I hope that's not the case, because -- you know, I hope that they don't think that's the case, because we live in an environment of just such extraordinary choice in media sources. We look at customers multi-sourcing a variety of news from all over the place. I just don't think that there's that kind of -- the very old-fashioned sort of view, if you will, of kind of big media proprietors and -- being able to dominate the landscape. I don't think that exists any more. I think in Westminster sometimes it might feel that people still believe that but I just think it's not the case.

  • Mr Murdoch, I'm not actually concerned with reality, because one could never prove --

  • I'm not so sure that you mean that, Mr Jay. Or at least you may not be, but I certainly am.

  • Let me put it in these terms: one can never prove that because a newspaper, even one as important as the Sun, supports a political party, that has a causative effect on the outcome of an election, but in terms of perception -- and I think you've just confirmed this through your last answer -- politicians believe that, don't they?

  • Whether or not they believe it, I think it doesn't change the fact, as I think Lord Justice Leveson was suggesting, that they seek -- and that I would suggest -- I don't think I've ever had a conversation with a politician where he or she didn't try to convince me of the rectitude of their views. And is that -- I think that's true of pretty much anyone they talk to, but I would say probably particularly people with any direct or even indirect relationship with the press.

  • Are you agreeing or disagreeing with me that there's at least a perception in the minds of politicians that the support of a paper such as the Sun is or may be important?

  • I can agree with you that there may be, if that's the question, but I think really it's a question for them.

  • But in terms of your analysis of the timing of something like the BSkyB bid, weighing up the pros and cons, it would be part of your assessment, wouldn't it, as to the power you can exercise over politicians at a critical time, which is in the run-up to an election?

  • No, absolutely not. It would not be a part of our assessment that we would exercise our power over politicians that you believe is there. That is not the case.

  • Because, of course, after the election the tables are turned somewhat. The power is more with the politicians, isn't it, particularly if you need their help in relation to a commercial project such as the acquisition of the remaining shares of BSkyB?

  • I wouldn't concede that the table was there to turn, Mr Jay. As I said earlier, I think the power is with the law of the land and the policy-makers around it, and you have to assess the environment and whether or not an investment is advisable or not and you have to assess the regulatory environment and try to play as straight a bat as you can, or a very straight bat indeed.

  • I'm sure a straight bat is usually the best way forward, but you accepted some time back, Mr Murdoch, this morning, that the way these bids are dealt with in the regulatory sphere is not just a legal issue; it is also a political issue, isn't it?

  • Well, I think there's always the risk that a transaction or a business activity can be politicised, if you will, and that concerns around the environment around something can be there. Yes, that's the case.

  • It's more than a risk. If you look at the history in relation to News International, whether it's 1981 with the Times, 1987 with Today, 1990 with the original merger of the two companies, there has always been a political debate which has gone on in parallel with or alongside the legal or substantive debate, hasn't there?

  • I think, unfortunately, there has been a political debate, and my concern, as I've been involved in business in this country, has always been to try and keep the debate on the legal side and actually to look at facts and merits and -- I'm pretty square on this -- and be consistent with respect to how we legislate, how we regulate industries and how ultimately we can create, you know, an environment for better investment and more jobs in these industries. That's been my concern.

  • But you would be aware, Mr Murdoch, that although doubtless you would wish to keep the debate solely to the legal issues, it would be inevitable that the debate would spit over into the political domain, wouldn't you?

  • As I said, I don't -- may I ask you to clarify, Mr Jay? Because I don't really understand. There are many debates, so -- there's debates around whether or not a transaction may or may not act against the public interest, which we dealt with last year. There are debates around how sports rights are sold. There are debates around -- and then there are debates around politics, and sometimes politicians can have a view. I mean, we definitely -- you know, when we started to invest heavily in domestic English cricket at BSkyB, there was a political angle -- early day motions, people saying it should be kept free-to-air and all of those things -- and I thought my job at that time, as it is now, was to say, "No, from a legal perspective it's entirely appropriate for English cricket to be broadcast on Sky, from the standpoint of the sport, from the standpoint of fans and so on and so forth."

    So I always try to bring it back to what's legally sound, what are the right arguments for industry and to try to make the political debate one that's less relevant, because it sometimes isn't based in what's right or legal or where the right jurisdiction is.

  • Okay. Can I touch on one other politician. It's the First Minister of Scotland, Mr Alex Salmond. You had lunch with him in January 2011 and there's a letter which followed, 26 January 2011, from Mr Salmond. Do you recall that?

  • Do I have that letter in my bundle?

  • It may be in your tab 92.

  • Just let me have a look.

  • It's our tab 93 in Mr Rupert Murdoch's bundle.

  • The letters in January, yes.

  • How many people do BSkyB employ in Scotland?

  • Oh, some thousands. I don't remember the number off the top of my head, but I can come back to you with the exact number. About 5 or 6,000, if not more.

  • I think I've seen reference somewhere to as many as 18,000 --

  • The 18,000 is the total British Sky Broadcasting direct employment base. There are more that are indirect.

  • In relation to him, after the 2007 election when the Sun in Scotland did not support his party, News International and Mr Salmond, his party, became closer, didn't they?

  • In 2007? That was before I was there, I'm afraid, so I don't --

  • That's part of the history, but --

  • I don't know what the relationship was like.

  • I only met him much more recently than that.

  • Okay. Can I deal with one discrete issue. It's tab 67 of the bundle we've put together for you. It's an event which allegedly took place at the Independent.

  • You recall this?

  • Yes, I recall this story.

  • They say that you went around to the Independent's offices and swore at them, owing to an article which said:

    "Rupert Murdoch won't decide this election; you will."

    Is that true or not?

  • That's not correct, Mr Jay. Would you mind -- may I just give you my version of events?

  • Is that what you'd like?

  • Succinctly tell us what happened, Mr Murdoch.

  • I'd had a meeting in the building. They're in the same meeting as Associated Newspapers, and I'd had a meeting at Associated, which was in the article. We went downstairs and I was -- I was upset and concerned because the Independent had not run an article about this but had put up a lot of giant billboards around England with -- that I'd seen pictures of, with that message:

    "Rupert Murdoch won't decide this election."

    And I thought they were really personalising an agenda against my father and my family that I found inappropriate. I'm always a direct person and I think if you have the opportunity to tell someone to their face that you have an issue, it's much better than whispering or saying you're upset to somewhere else, particularly because I knew Mr Kelner and I was concerned about it.

    So I went into the front door of the Independent and they don't -- they didn't really have a desk or a reception area, so you're automatically -- or a lock, frankly. So you're automatically in the middle of the newsroom, which I wasn't intending to do. I didn't storm in anywhere.

    I found Mr Kelner, who was at one of the desks there and I said, "Could we speak to you for a minute?" and then we went into his private office and shut the door and I told him off my concerns and whether or not I used colourful language I wouldn't dispute. But certainly there was no storming and none of this happened out in the open in the newsroom, and I was particularly upset because Mr Kelner had particularly been availing himself of the hospitality of my family for years and I thought this was beyond the pale and not a decent way to go about his business.

  • Okay. Before we look at the detail of the BSkyB bid, can I ask you about the issue of specialist advisers. Was Mr Osborne's specialist adviser, known as Spad -- his name is Mr Rupert Harrison. Was he known to you?

  • I don't have any recollection of Mr Harrison. I just don't know.

  • Your or News Corp's head of corporate communications, someone called Mr Matthew Anderson, would it be fair to describe him as a lobbyist?

  • No. Mr Anderson is a communications and marketing executive who deals with public affairs, which would be, as you say, lobbying -- the public affairs people who interface with government would report in to Mr Anderson alongside brand, marketing, press people as well.

  • As a means of improving the prospects of the BSkyB bid, did you instruct Mr Anderson to have contact with any of the specialist advisers of Mr Hunt or Mr Osborne?

  • I think there was a regular -- generally speaking, at the public affairs level, it was Mr Michel, who reported to Mr Anderson at that time, who dealt with the direct contact with the political level with special advisers and people of that nature. To my knowledge, that's where -- that was sort of the PO Box for the company there.

  • In terms of how News Corp/News International operate, we're going to hear obviously from your father tomorrow. We are going to hear that he's had some meetings with politicians. We know that you have some meetings with politicians -- you've told us about them -- but particularly in the period 2008 to the General Election in May 2010, would it be fair to say that Mrs Brooks, as it were, bore the brunt of the majority of meetings with politicians because of her relationship with politicians?

  • I've seen the schedule, I think, of the Prime Minister's meetings in that period and I can't remember exactly, but she would have been closer to those issues than I was.

  • Was it part of the general way of --

  • -- working, as it were, that Mrs Brooks might report back to you as to the outcome or the fact of any discussions with politicians and then you would report anything important back to your father?

  • From time to time she would report to me about a discussion that was relevant, but she would also communicate directly with my father with some frequency.

  • When you had discussions internally, particularly in September 2009 within the Sun -- you cover this at paragraph 8.6 of your statement -- and those discussions involved the political editor of the Sun and Mrs Brooks and yourself, and I think your father may have been involved as well -- did the discussions involve any assessment of who might win the next election?

  • The discussions in late 2009 or whenever it was, around that, there was a question of what the Sun's position would be. Through that summer, if you recall, there was quite a lot of back and forth and the Sun was writing extensively about their view on the management of the conflict in Afghanistan and British troops, et cetera. I mean, that was of some general interest at the time, and leading up to the decision around not supporting the Labour party, after having supported them in two elections previously before I was there, I was involved in some of those discussions really around what the paper's position would be, not necessarily the likelihood of who would win, but obviously, you know, in those meetings we would have been kept -- someone would have said, "Well, the polls say this", or: "It's like this or that", that sort of business.

  • That in particular was why the political editor was there, wasn't it, so that you could be advised as to the likely outcome of the next election so far as anybody could assess such an imponderable?

  • But also to hear the relevant journalist's view on the individuals involved, the quality of their policies, how he thought the readership and the readers were feeling, to have input.

  • So the decision is multi-factorial, but one factor amongst many is: who is going to win? Is that fair?

  • Yes. I think you try to see the mood of the country.

  • Okay. Now, the BSkyB bid itself. You cover this in paragraph or section 3 of your statement, which begins at 02957 this. This is quite intricate and a lot of it we don't need to delve into, although we're grateful to you for setting out the history here.

    In terms of the legal position, do I have this right: that there was a competition aspect which would be dealt with in Europe, as it were, and a plurality aspect, which would be dealt with by the Secretary of State? So far so good?

  • Yes. There was the opportunity for the competition aspect to be requested -- for the member state jurisdiction in the UK to request jurisdiction of that, but it was seen as an unlikely scenario that it would be granted anyway, as this was primarily a merger of European television platforms.

  • The competition aspect within Europe was resolved in News Corp's favour in December 2010, wasn't it? The date is 21 December.

  • Well, it was resolved without having found that the theories of harm were relevant or credible.

  • So in terms of the law, you were left with the plurality aspect, which I understand contingently or separately might have a separate competition issue. But let's concentrate on the plurality aspect. News Corp's position was: owing to what happened a couple of years previously, in litigation involving the Competition Commission which went up to the Court of Appeal, a decision had already been made that there was really no plurality issue because News Corp already owned 39.1 per cent of the issued share capital of BSkyB; is that correct?

  • It's correct that that was one of the things that was relevant to that, but that was -- we didn't simply rely on that precedent, which was -- in fact, that was the precedent, but also on the merits on the -- the underlying facts of the case with respect to an assessment of plurality in the marketplace between 2003, when the relevant provisions were put into law, and 2010, when it was to be tested again, because the test is around the sufficiency of plurality, the sufficiency of the number of news providers in a marketplace.

  • Can we agree this much, Mr Murdoch: that certainly from News Corp's perspective, whether or not News Corp were right -- News Corp may well have been right -- News Corp had a good case in law on the plurality issues?

  • That was the advice that we received and that is my belief.

  • But I think as you've also accepted, running along parallel lines was this potentially explosive political issue. The political issue was generated by the fact that there were people out there who had it in for News Corporation and News International; that's right, isn't it?

  • Well, it was more than that, Mr Jay. It was not just a political issue; it was a commercial issue, and the point you made before about there being competition dimensions to plurality was a very relevant point here.

    The press outside of News Corporation, the other newspaper proprietors in the marketplace, had a very, very distinct commercial fear around bundling and cross promotion in particular, and around the size and scale of News Corporation's interests in the UK if the acquisition had been completed. That is a pure competition argument. They turned that, very effectively, into an argument that the future competitiveness of their enterprises would be at risk if this new competitor were present, and therefore plurality was at a risk at some point in the future. That's a dynamic assessment of plurality that has nothing to do with the relevant legal test, so it is relevant and it's important to note that it is commercial, not simply political. In fact, it is primarily commercial.

  • From the point of view of your competitors, that's right, but if you're looking at the perspective of politicians, there are politicians out there, some of whom are cheerleaders for News International -- and we've seen reference in someone's personal website to that effect -- and others possibly who aren't so warmly disposed to News Corp, News International. You must agree with that?

  • Yes, that's true. There are differences of outlook.

  • So the purpose of any lobbying which is going to take place is to try and ensure that those who are onside remain onside and perhaps communicate things to you, and try and win over those who are not onside; is that right?

  • I think in any situation, any business is going to -- yes, is going to try to advocate the merits of its case, be it an investment case or a regulatory case, to a wide audience of policy-makers who may or may not be in a position to have some input into it.

  • In terms of the chronology, which I am going to take quite shortly -- those who wish to study it I would invite to read your witness statement, which will be put online, and there are no points of fact which I would wish to dispute in terms of what happened publicly. You've already referred to this. 21 December 2010, the then responsible Secretary of State, responsible in a quasi-judicial role for determining the bid, Mr Vince Cable, was replaced because he was reported as saying that he had declared war on Mr Murdoch.

  • Yes, among other things.

  • Yes, and then Ofcom reported on 31 December 2010 -- this is paragraph 3.13 -- in a way which wasn't altogether favourable to the bid. They were, in effect, recommending a reference to the Competition Commission, weren't they?

  • And Ofcom were perhaps in the camp -- and you perceived them to be such -- of being slightly hostile to be interests of News International and News Corp, rather than being one of its cheerleaders. Would you agree?

  • I don't think -- I think it's important not to conflate News International and News Corp here.

  • No, no. It's always News Corp.

  • The primary engagement with Ofcom was around BSkyB and the relevant regulators since they were set up, and look, it's fair to say that -- and we've made extensive submissions to this point to Ofcom and to DCMS and the OFT -- that we had real issues with their analysis and I've included that in my evidence.

  • Once Mr Hunt acquired responsibility for adjudicating on the bid, there were two -- I can describe them as formal meetings with him. They are minuted. They're in the bundle. The first is on 6 January 2011, which is JRM5. It's our tab 6, I think.

  • We can identify the personnel present. I don't think this -- is this your note or the Secretary of State's notes? Do you know?

  • I believe this is the Secretary of State's notes. This is the minutes from DCMS. I think so. I think that's what it says in the index.

  • The Secretary of State is there. Various other persons within his department. His specialist adviser, Mr Adam Smith is there. Do you see that, Mr Murdoch? He's someone who is going to feature somewhat in the narrative.

  • Then in terms of your team, the News Corp team, someone called Mr Frederic Michel is there. He's the director of public affairs, and his role was to lobby in support of the bid, wasn't it?

  • His role would have been on various issues. He was a liaison with policy-makers. That's what a public affairs executive does.

  • Had he been hired in May 2009?

  • I can't remember when he precisely started.

  • The detail of this is not going to matter much, but the Secretary of State indicated, on the basis of counsel's advice, that he was minded to refer to the Competition Commission. There was then consideration given internally to offering undertakings.

  • Those were offered on 18 January 2011, and the purpose of offering them was to remove or at least mitigate the plurality concerns, wasn't it?

  • Yes. It was -- essentially the Secretary of State had said he had received the advice from Ofcom that said he should refer the thing. It's within his remit under this particular part of the Enterprise Act for him to take that and weigh it up with any undertakings that might or might not be able to deal with the issues. Given the length of time that the Competition Commission review would take, we decided, rather than go through the lengthy process of trying to win the arguments with the Competition Commission, we would simply offer an undertaking that solved the issue, even though we didn't concede that there was an issue there, and the undertaking was a substantial structural undertaking around separating Sky News from the transaction entirely, not changing its ownership structure at all, and investing ample, you know, significant sums in its continuing operation over a ten-year period. So it was a major concession that the Secretary of State had extracted in the process.

  • There was another meeting with the Secretary of State and his officials and specialist adviser and your advisers on 20 January 2011, which I don't think we need look at, but the question of undertakings was certainly mentioned.

  • What happened subsequently is that Ofcom were asked for advice. There was a public consultation. There was some issue about the undertakings, and therefore you revised the undertakings. A second consultation was launched on 30 June 2011 for a period ending on 8 July 2011, but then, unfortunately, on a number of levels, the Milly Dowler story was published on 4 July 2011. Is all that more or less correct?

  • As you frankly and clearly state in your statement, really, the atmosphere was such that the only commercial decision you could take at that stage was to withdraw the bid?

  • And that's what you did. Thank you.

    That gives us the framework. We're now going to look at some evidence your father provided in response to a statutory notice. As that evidence relates to emails and material that was sent to you and your father had no direct involvement with it, it's more appropriate that we deal with it with you, Mr Murdoch. This is KRM18.

  • Mr Jay, I think some of them were sent to me, but not all.

  • Not all of them were sent to you.

  • But you've had an opportunity to review them?

  • Yes, I have, just recently.

  • KRM18 runs to 163 pages, but it require a word of introduction, and it's this: I mentioned Mr Frederic Michel about five minutes ago. He has put in a witness statement on 18 April 2012 and he makes the point -- and therefore let's proceed on this basis, at least presumptively, that he's correct -- that in relation to the period 24 December 2010 to July 2011, exchanges which, at least on the face of this material, appear to have taken place with the Secretary of State in fact took place with the Secretary of State's specialist adviser, Mr Adam Smith. Do you follow me, Mr Murdoch?

  • Yes, I'm following you.

  • So with that health warning, if it be one, we can have a look now at this exhibit. I think the other important health warning is that it's sometimes difficult to understand this material without knowing what was going on in terms of the currency of the bid and the formal, albeit commercially confidential, information which Allen & Overy, on behalf of News Corp, were submitting to the Secretary of State and Ofcom. So at appropriate times I will introduce that so at least we understand precisely where we are with this material.

    The first page is 01642, page 1 on the internal numbering. 15 June 2010. This appears to be a conference call, you and Mr Michel and Mr Cable; is that right?

  • That's correct. I am not sure if I recall Fred being on the telephone or not, but he was there with me. It was a direct call to Mr Cable from me on the day that we announced the proposal to make an offer.

  • "Vince Cable call went well. He did say he thought 'that there would not be policy issue in this case'."

    And then Mr Michel has written:

    "We should have recorded him!"

    Well, in a sense that is ironic on at least two levels.

    "He didn't seem much on top of it. He had seen the newspapers but not the announcement. JRM [that's you, of course] told him in relation to the size of our group [et cetera] Cable appreciated."

    Can I ask you about this lower down:

    "Cable said he was coming as planned tomorrow evening."

    Do you recall what that's about?

  • I think it's the annual -- we used to -- well, we have done -- we have the custom of doing in June, around this time, a sort of a summer party for pretty much everyone. It's advertisers, some politicians, partners, executives in the business, et cetera, their spouses and so on.

  • It's like a big party that we throw.

  • The next page, 01643. This is, again, Mr Michel to you. Mr Anderson is copied in, and we've discussed who he is. So it's Mr Michel speaking:

    "Had a call from Hunt's adviser."

    This is at a time when Mr Hunt had no role in relation to the decision; is that correct?

  • That's correct. He didn't have a role in the decision until the end of December.

  • That's right.

    "Said there shouldn't be media plurality issue and believed the UK government would be supportive throughout the process (despite what the Standard, for example, is suggesting this evening). Keen for Jeremy [that's obviously Mr Hunt] to hear your feedback on his speech when you meet."

    And then there's reference to a speech. So it's pretty clear that you were receiving information along the lines that the UK government, as a whole, would be supportive of News Corp; is that right?

  • I think -- no, I think Mr Hunt had publicly said at some point around this time that he personally didn't see any issues but that the relevant Secretary of State would be handling it. So I don't think there was anything -- there's no special information or anything like that in there.

    And again, I think -- it looks to me like there were other items on the agenda, as I had said, things like next generation access, which is the NGA, notion, et cetera, and there was a normal sort of customary back and forth between a public affairs executive and people at DCMS on a regular basis.

  • Although it's right that certainly in law, the decision lay exclusively with the responsible Secretary of State, isn't the message here from Mr Hunt's adviser that to the extent appropriate, or perhaps even inappropriate, the UK government would be supportive throughout the process?

  • I mean, I just don't -- I don't think it is necessarily inappropriate at all. I think it's just -- you know, this is one part, the DCMS part of the government, saying, "Look, we don't see any issues here, we'll probably be -- it's going to be fine", which was consistent with what Mr Cable had told me on the telephone.

    There was an attempt to -- a public affairs executive often tries just to listen and then reports back what he hears. People call around topical issues around the business if there's a transaction, particularly if there's a particular regulatory or policy outcome that could be bad, for example, a big intervention or something like that, and a public affairs executive is the point person for those officials to have discussions.

  • Okay. As we move through this bundle, we're going to see that none of your applies to these emails from Mr Michel, the reason being that it was difficult to prepare the bundle apparently in a way which could include them. They have been made separately available to me and they'll be published online as soon as possible. None of your replies is of any interest apart from one, and that I will come to in due course. Are we agreed?

  • The next page. It's Mr Michel again:

    "Jeremy just called."

    It looks as if it's Mr Hunt speaking directly to Mr Michel. Would you agree?

  • I think -- I don't know who he spoke to and I wasn't on this -- I'm not copied on this email, so this is one that I don't have any direct knowledge of at the time. This is Mr Jacobs, who is the general counsel of News Corp globally, who was very closely involved in the regulatory and legal process here, Mr Palker, who is the European level general counsel, regional, and Andrea Appella, the regulatory affairs lawyer for Europe as well.

  • It looks as though you had a chat with Mr Hunt on 15 June 2010, doesn't it?

  • Yes, and I think that corresponds to the record that we saw earlier, does it not?

  • I believe so, but it's not critical. Was the BSkyB bid discussed during that chat, do you remember?

  • I don't. I don't remember. I think -- but I mean, it was in those days around the announcement of the bid, so I'd be surprised if it weren't, and I would have taken the same position that I took publicly and that we took with anyone who would listen.

  • Okay. The next page, 01645. We're moving now to 28 July 2010. This wasn't copied in to you, it appears, Mr Murdoch, but we can see what Mr Cable was apparently saying or reported as saying by people very close to him:

    "He is [very] keen to be seen as the most pro-competition Secretary of State and as we know, he is very much anti-regulation. On our particular issue, he strongly believes the deal doesn't change the market situation or would have any impact on media plurality."

    So either Mr Cable changed his mind or the sources close to him were flatly wrong?

  • I think he actually said later on that all of the advice that he received around -- the official advice from Whitehall, he described it, was very, very clear that there were no issues. He said that in the newspaper interview in July of 2011, and I think it was submitted in evidence from a freedom of information request, the advice from his advisers at the time, which drew the same conclusion after a consultation with Ofcom and the OFT. So I think that would have been the advice he had gotten. He later referred to receiving other advice, I don't know what it was, that obviously informed him to act differently.

  • Okay, the next page, 01646, 15 September 2010, Mr Michel to your adviser but you're copied in. It relates to a blog that Mr Robert Peston put online to the effect that Ofcom was expected to review News Corp's bid for Sky, which plainly would be of concern to you. What Mr Michel is saying:

    "Jeremy Hunt is not aware and thinks it's not credible at all. He is checking now."

    So Mr Michel is finding out either from Mr Hunt or his specialist adviser what Mr Hunt's view is about this blog. Are we agreed?

  • It seems that he's trying to find out where -- if Mr Peston's information is credible, somebody -- you know, from Hunt's adviser or whoever. It's important to put in context that during this time I was repeatedly seeking an official proper meeting with Mr Cable so that I could make the legal case and give the business rationale, and we were not able to have that meeting, so we had very limited means of communicating.

  • So the way you did communicate was through your cheerleader, Mr Hunt, to find out what was happening around this bid?

  • I think that's unfair. Mr Michel, as a diligent public affairs executive, communicated with many people across the political spectrum, as is evidenced in this exhibit.

  • He picked up Mr Peston's posting at 17.22 and seven minutes later was already reporting that he'd checked through to DCMS. Is that fair?

  • I think that's what the codes say, yeah. He had asked -- it was of some concern, Mr Peston's report, and Mr Michel would have called who he could to find out if it was true. That would have been his job.

  • I quite understand your mindset, Mr Murdoch, that you weren't getting anywhere with Mr Cable -- or at least that was your perception -- so let's find out what's happening with other secretaries of state who might be able to come to your assistance. That's what you instructed Mr Michel to do.

  • No, I think this email, Mr Jay, doesn't show that at all. It simply says -- this is simply trying to find out if it's true.

  • Okay. If I move forward a couple of pages to 01648.

  • I don't have those numbers, I think, Mr Jay.

  • Number 7 on the internal numbering.

  • This one seems to be out of sequence, I'm afraid. I apologise for that. I should have spotted this earlier. It's 23 June 2010:

    "Vince has been advised by his team it would be better to meet with you once things have settled down on the Sky process in order to avoid any media questions on the purpose/content of the meeting."

  • That's making the point that Mr Murdoch made a moment ago, that he wasn't able to have a meeting with Mr Cable, isn't it?

  • Yes. And I wanted a proper meeting, the kind that you described before as minuted, et cetera. I wanted to be able to formally make my case to the Secretary of State.

  • Mr Michel found out some more about Mr Cable, at least his department's view, at 01649, the email of 27 September 2010.

  • This is likely to be page 8.

  • Mr Michel spoke to Mr Cable's -- it was probably his junior minister who sat in the Lords, who I think is Lord Oakeshott, isn't it? Do I have the right individual? Lord Oakeshott.

  • I now read this so say that it is Lord Oakeshott that he was referring to but I don't know -- it doesn't say that in here, so I might not have known that at the time.

  • The one point that's particularly interesting -- if you look at the second bullet point:

    "He is thinking through the media plurality aspects of the transaction, influenced by three main issues which are colouring his judgment: the way Sky News handled the General Election coverage and the quality of news debate ..."

    Then there's reference to the News of the World ongoing saga and then:

    "A very strong pure political pressure from Lib Dems and Labour over the way the Murdoch press has treated his own party/policies and Labour over the last 12 months."

    So this looks as if a strong political favour, as perhaps was entirely predictable, is entering into this process. Would you agree?

  • Yes, and it was very alarming because none of those three bullet points have anything to do with the proper legal test and the question of the sufficiency of plurality.

  • But this may be said to be part of the risk you took, that the way your press treated the Lib Dems and Labour over the previous 12 months had not been exactly favourable. All the more reason to hope for a Conservative victory and not have the Conservatives saddled with the Lib Dems, as indeed had occurred; would you agree?

  • Mr Jay, I think it was perfectly reasonable and indeed appropriate for me to have an expectation that a government minister acting in a quasi-judicial role would take into account the appropriate evidence, would look at it properly and apply the right test and not get into this stuff. Look, maybe I'm -- you can call me naive about it but I thought actually that these senior ministers are serious people who try I to do their jobs.

  • Mr Murdoch, this is absolutely key. You have one government minister who says, "I don't like the way the Murdoch press has behaved and I'm going to hold that against them", but the obverse of that is another government minister, Mr Hunt, who is treated in a rather different way by the Murdoch press. His thinking is going to be exactly the converse to Mr Cable's and that is all part of your calculation, isn't it?

  • I don't think there's anything in Mr Hunt's communication in here that would suggest that he did anything other than apply -- way later on in this process, when it was negotiating the undertaking in lieu, that at every turn Mr Hunt took the advice of the independent regulators, Ofcom and the OFT in particular, at every single decision point.

  • So the point I put to you didn't really enter into your calculation at all? You've told us that you were outraged by what you read here in relation to Mr Cable, and yet the obvious converse of that is you would expect someone you did support to show you favour rather than disfavour --

  • It all fits together, doesn't it?

  • I'm sorry, Mr Jay, that is absolutely not the case and the question of support of an individual newspaper for politicians one way or another is not something that I would ever link to a commercial transaction like this, nor would I expect that political support one way or another ever to translate into a minister behaving in an inappropriate way, ever. I simply wouldn't do business that way.

  • Okay, Mr Murdoch.

    Page 10 on your internal numbering, our page 01651. We're just going to note this one because you weren't sent it. It's just one of the bullet points here, about two-thirds of the way down. It says:

    "Advised to brief all the key Lib Dems in coming weeks and go through the impact of the transaction is the key since it was made clear that the media agenda has had a very negative influence on the decision-making process."

    Are you with me on that one?

  • It may be Mr Laws was part of that briefing process, wasn't it?

  • Uh ... again I can't remember the date of the Laws meeting, so I don't know, but certainly we were advised -- this is Mr Cable's adviser and his advice being given, and he was advising saying, "Listen" -- the way I read this is Mr Cable, quote, hasn't himself seen the relevant as in details but he's basically taking a political view, and this adviser says, "I advise you to brief all the key Lib Dems in coming weeks", and given the fact this was coming from Vince Cable's adviser, that's what Mr Michel would have tried to do, as a public affairs executive, to try and be reactive to the advice he was getting from the Secretary of State's people.

  • Sir, would that be a convenient moment to break?

  • Yes, certainly. We'll say 2 o'clock. Thank you.

  • (The luncheon adjournment)

  • Yes, Mr Jay.

  • Mr Murdoch, the emails at pages 16 and 17, 01657/01658 didn't go to you. It's clear that behind the scenes, efforts were made to work out who was the best person to speak to close to Mr Cable, who therefore could be lobbied.

    The answer came at 01659, page 18, which is an email which did go to you:

    "Mission accomplished."

    This is Mr Michel, of course, to you.

    "Lib Dem MP, former Sky employee, with major Sky customer centres in his constituency and around, will contact Vince Cable to ask him to bear in mind the economic investment point of view rather than getting influenced by political games, especially in times of austerity and a very difficult economic environment for those areas. He will also emphasise the opportunity for Cable to show the maturity of the Lib Dems as Coalition partners, working for the long-term, and will draw from the coalition government experience Lib Dems have had in Scotland."

    Then we can see the second bullet point:

    "Alex Salmond is also very keen to put these issues across to Cable and have a call with you tomorrow or Wednesday. His team will also brief the Scottish press on the economic importance of News Corp for Scotland."

    I think you did have a conversation with Mr Salmond about it, didn't you, Mr Murdoch?

  • I think I did, but Mr Jay, I don't -- I think you characterised page 18, the note that starts "Mission accomplished", as somehow the answer to who to talk to with respect to Mr Cable, and I don't think the two are related. For clarity, I think the -- 16 is Vince's main adviser suggesting that Lord Oakeshott be contacted or others or -- and then this is a separate point on 18, which is Mr Michel, who basically started speaking to some Scottish politicians where, as we discussed earlier, British Sky Broadcasting is a major employer, to make some of the economic arguments with respect to investment. I think we have to recall that this merger was about the creation of a pan-European digital television platform with major operations in the United Kingdom, and particularly that meant potentially quite a lot of operations and an increase in operations in Scotland, where technical support, IT, service centres, et cetera, were located for British Sky Broadcasting as an important employer there, and it's entirely straightforward to reach out to --

    It's entirely straightforward and normal for a business to reach out and advocate legitimately the economic benefits of a transaction or a business, as it -- as it were. I don't see that there's anything related to the other piece in this email. This is just legitimate advocacy.

  • Did you, as part of that process, have any discussion with Alex Salmond shortly thereafter?

  • I had a discussion with Alex Salmond at some point in here, making many of the same points as well as, I'm sure, other agenda items.

  • Thank you. Can we look at our page 01662, your page 21. Not an email you were copied in on.

    " Vince's adviser just called me, unprompted. We discussed the state of the process. He promised to make sure he has read the BIS submissions by Thursday afternoon. He will then schedule a face-to-face chat."

    So I think that's a reference to the adviser who is going to read the submissions. Indeed, the adviser did read them, page 22, our page 01663, because the adviser texted Mr Michel, stating that it was his view you'd put up a very strong case which would stand you in good stead on this.

    The next page, 01664, this time you are sent the email, but on 8 November 2010, which was four days after Mr Cable had issued a European intervention notice. Do you recall that?

  • Yes, and I'd note that the previous email I think is on the day or thereabouts when the European intervention notice was put, saying that our case was strong with respect to our briefing.

  • The gist of the email 01664, page 23 -- this is a call with Mr Cable's main adviser, really along the lines, if I can paraphrase it, that they didn't want a meeting at that stage between News Corp and Mr Cable. You can see:

    "They also want to be able to say they took an independent view. Asked me to be in touch regularly in coming weeks, if only to provide him with any evidence/materials we would like Vince/him to read."

    Then we can see at the bottom:

    "I also have follow-up calls scheduled with David Laws and Clegg on this."

    Mr Cable was taking an appropriate line, wasn't he, in terms of not wishing to have a meeting? He wanted to take an independent view; would you agree?

  • No, I actually think it would have been entirely appropriate -- and it's the reason that I sought it -- to have a meeting with Mr Cable and his advisers to be able to lay out some of the issues as we saw them and to be able to lay out both the rationale for the transaction and also our analysis of the relevant plurality and competition concerns. It's self-evident in what emerged over the next 12 months, namely in -- I guess it was December when he was removed but then interviews that he made afterwards, that he was taking other people's advice, which is very frustrating because, really, you know, all we wanted to do was be able to sit down in a proper way and say, "Here are the issues. You, the Secretary of State, should consult on this and you should be listening to -- we know you are going to be listening to and informed by all the different noise around. Please sit us down and let us make our case."

  • Page 24, 01665, Mr Michel to you. Mr Michel had a meeting with Rupert Harrison, who, I think as we established before lunch, is the special adviser to Mr George Osborne; is that right?

  • That is what you said earlier, yes.

  • This was a way into finding out what was going on at a high level, and we can see that from the text of the email:

    "Confirmed tensions in the Coalition around Vince Cable and his current policy positions. Vince made a political decision ..."

    This is the issue of the European intervention notice.

    "... probably without even reading the legal advice, as confirmed also to us by Vicky Price and David Laws yesterday."

    Do you think it's appropriate, Mr Murdoch, that here you are getting confidential information as to what's going on at a high level in government?

  • I think -- I think -- what I was concerned with here was the substance of what was being communicated, not necessarily the channel by which it was being communicated. Mr Michel's job was to engage with special advisers and at a political level with Westminster, to put it broadly. That is what a public affairs executive does. He reports back what he's been told, and at no point in here did he or the company put forward anything illegitimate or inappropriate. We just -- I was concerned here with the substance of what I was hearing. I thought you were about to ask: "Do you think that it's appropriate that he took the decision without reading any of the legal advice?" That's --

  • That speaks for itself. I'm not going to comment on that.

  • That was the thing that stood out to me in all of these communications. It was the substance of what was being communicated more than reflecting on the channel.

  • Maybe this is your view -- and I'm not saying whether it's right or wrong: that if Mr Harrison is prepared to speak to Mr Michel and speak indiscreetly, that's a matter for Mr Harrison, but Mr Michel is simply doing his job?

  • Mr Michel is reporting back what he's hearing. In some cases he's calling people and in others, as you just referred to an email, he's receiving telephone calls unprompted, and a channel of communication exists that is just additional to, really, the important channels which were the voluminous submissions that we were making to the Secretary of State and to his people, and to whomever else asked for them.

  • It's also clear from this email that Mr Salmond was onside as well. That's consistent with the previous email. I'd like to move forward, please, to your page 26, our page 01667.

  • 15 November 2010. Michel to you:

    "Jeremy [that's Jeremy Hunt] tried to call you."

    So it looks as if Mr Hunt was trying to call you, Mr Murdoch, directly. Is that your understanding?

  • That seems to be what it says, that Mr Hunt tried to call me.

  • "He has received very strong legal advice not to meet us today as the current process is treated as a judicial one (not a policy one) and any meeting could be referred to and jeopardise the entire process. Jeremy is very frustrated about it but the Permanent Secretary has now also been involved."

    What did you understand by that?

  • I understood that there was a meeting scheduled with Mr Hunt and presumably his advisers and I certainly was bringing along my public affairs executive, and then it was cancelled because of advice that, as a minister, he shouldn't meet with someone who had an issue before the government.

  • What was the date on which Mr Cable's responsibility passed on to Mr Hunt?

  • And again, Mr Jay, you know, I was seeking to have entirely transparent conversations with policy-makers and around the place, because by this point we were obviously extremely frustrated by the things we were hearing. I'd also add that a lot of the communications that were coming back from government and from politicians I took with a grain of salt, given the fact that we had been hearing many, many sides -- people were speaking out of different sides of their mouth, it seemed to me, in all the communications that we've come up to.

  • Aside from the point that Mr Hunt didn't have carriage of the decision -- at this stage it was Mr Cable -- what you were being told here was that the government was receiving strong legal advice that as this was a judicial process, meetings were inappropriate. Did you understand that to be the case?

  • I understood that that was the advice he was getting. It said that he was frustrated and I was frustrated by it as well, because there was nothing inappropriate, I thought, about being able to advocate a reasonable position, which was that the government should be applying the appropriate legal test, particularly when we had already heard, as we saw in the emails before, that perhaps that wasn't the process that had been followed earlier. I would also --

  • Whatever the position before, Mr Murdoch, you were being told that as this was a judicial process and not a policy issue, it was inappropriate to have certainly formal meetings, and by parity of reasoning, informal meetings, because that had the propensity to subvert the judicial process. You must at least have understood that.

  • But I didn't have any informal meetings. This was, I understood to be, that Mr Hunt would not be taking direct meetings from hereon in.

  • So you understood that it was inappropriate, because this was a judicial process, to have formal meetings with the Secretary of State, did you?

  • That seems to be what this says. I didn't agree with the points, and I was -- you know, and I'm sure I know what you're coming to. I was displeased with the decision.

  • The email from Mr Michel continues:

    "My advice would be not to meet him today, as it would be counter-productive for everyone, but you could have a chat with him on his mobile, which is completely fine, and I will liaise with his team privately as well."

    Which suggests: well, if you do it surreptitiously by direct mobile phone contact, then no one will find out about it. That's what this is telling you, isn't it?

  • I didn't make it -- I didn't take it to mean surreptitiously. I took it to mean that maybe a small telephone call, if he wanted to speak to you, would be fine. But there was no understanding in my mind that a telephone call would replace a meeting that was to be substantive, where we could make the case that we wanted to make.

    And I'm sure, by the way, there were lots of other things on the agenda to meet with Mr Hunt on at that time, most notably the IP review, the Hardwicke(?) review, next generation access, networks legislation -- all of the normal things that actually we weren't able to discuss at all because of this idea that we weren't able to have government meetings.

  • Did you have a conversation with Mr Hunt on his mobile phone or otherwise?

  • I believe he called me to apologise for cancelling the meeting but -- I don't have a specific recollection, but I think that's what's in the records.

  • Your reply, which is the one reply which may be relevant, timed at 12.02 in the early afternoon:

    "You must be fucking joking. Fine. I will text him and find a time."

    So you were angry?

  • As I said earlier, I was displeased.

  • Did you get advice as to what a judicial process such as this meant and also what it would be or would not be appropriate for News Corp to be doing in relation to officials and ministers who were responsible for that judicial process?

  • With respect to judicial process, my understanding was that the Secretary of State had a responsibility to take into account the advice that he was receiving from his advisers and that they would receive submissions from various parties in putting that advice forward to him.

    Our only concern in this -- and I think a lot of these communications as we'll keep going were really around that, around the process itself, to -- because, remember, under the Enterprise Act here, this was unchartered territory. We hadn't really done this before with the Secretary of State doing this, and so the timetables, how many submissions, what other bodies would be consulted and what wouldn't be consulted at different phases in it was something that was, you know, a matter of dialogue with the relevant authorities as we went through it.

  • Which is why again -- you know, which is what a public affairs executive does, is try to have an understanding of those things and keep the process moving along.

  • The next few pages, starting at 01668, show that Mr Michel was also trying to work on the special adviser for Mr Cable, and Mr Wilkes, who was Mr Cable's special adviser, was saying that that would be inappropriate.

  • Are you on pages 27 and 28?

  • Yes. He refers, for example, to his being sure that "we're both equally interested in staying within the bounds of proper conduct". So he's warning Mr Michel to lay off, isn't he?

  • But I think Mr -- I mean, I can't speculate, I wasn't on any of these emails, but actually what we've seen, given the process that the department for business innovation and skills had gone through, they didn't want any dialogue and they didn't want any -- they didn't want to have anyone talking to them about the process because they hadn't had one.

  • I think a proper reading of this email requires a look at the one at the bottom. Mr Michel is saying to Mr Wilkes:

    "Well, so that means nobody else has spoken? You've not met anybody else?"

    Asking somewhat pointedly, and he's responding:

    "Well, as happens, I don't think I have, and of course we have to stay in proper conduct."

    And then the top one says:

    "Well, I understand. I was only being cheeky in a friendly way."

  • You weren't copied into those emails. The next email that was sent to you was in the early evening of 15 November, page 01672, your page 31, when Mr Michel tells you:

    "Just had a conversation with Vince's main adviser regarding meetings they might have had with the complainants to the transaction, given rumours we hear."

  • That he might have had a meeting?

  • I am sorry, where are you in this? I apologise, Mr Jay.

  • I've just read out the first sentence. I think at one stage -- I'm not sure exactly when -- there was a meeting between Mr Cable and the complainants to the transaction, wasn't there?

  • We understand that to be the case, but it's being -- they're saying it didn't happen here. This group of people -- I don't think the FT, although they were sort of outside it, had very publicly come together. I think they'd called themselves an Alliance -- they capitalised it -- and they had a PR firm and a legal firm, Slaughter & May, that was doing a lot of lobbying on the other side.

  • On 17 November -- it's not within these emails -- you gave a speech at Barcelona. Do you remember that?

  • It was a presentation at an investor conference.

  • Do you appreciate that presentation was interpreted by some as a threat to government over a reference to the Competition Commission?

  • I think it was miscast as that in the UK press. At the time, the initial wire stories and things like that -- and I've gone back and looked at it -- actually played it pretty straight. It was simply an argument about the economic benefits and an argument about potential disincentives to invest around lengthy and uncertain regulatory processes.

  • That wasn't a gentle message to government to get on with it, was it?

  • It was a clear message to say that uncertain and lengthy regulatory processes were a disincentive to invest and they made it harder for businesses who have a lot of choices to invest around the world, particularly News Corporation, to make decisions to invest in those areas where that uncertainty existed. I think any business person would agree with that, and anyone would think it entirely reasonable to advocate that position.

  • Page 32, 01673, email Mr Michel to you, 19 November:

    "Lord Oakeshott. Was told today by Cable's adviser to approach any meeting with Lord Oakeshott as a proxy for Vince Cable, an intro discussion on the substance of Rubicon ..."

    Is Rubicon the internal company name for the acquisition of --

  • Yeah, it was just a project code name on internal documents.

  • "... and the possible way forward."

    The next email:

    "I will have a session with Hunt's adviser next Wednesday to update on Ofcom process and next steps."

    Why was there continual interaction with Mr Hunt at this stage, when he didn't have responsibility for deciding the bid?