Rupert Murdoch suffering from 'China syndrome' (2)

Yesterday our Asia correspondent Harvey Stockwin described how media mogul Rupert Murdoch was suffering from a bad attack of the "oil-lamps-for-China" syndrome, even before he decided to attack the memoirs of the last British Governor of Hong Kong, Chris Patten. But Murdoch eventually had to retreat and apologize for an action that weakened his empire.

HONG KONG (JP): In the latest James Bond movie Tomorrow Never Dies, it's no longer the wicked Russians, nor even the wicked Chinese, who seek to take over the free world. A power hungry media tycoon, willing to do anything to extend his empire, played with demoniac intensity by actor Jonathan Powers, brings Rupert Murdoch clearly to mind.

But the movie becomes truly fictional when the empire-builder tries to provoke a war between China and Britain in the South China Sea -- which gives James Bond a chance to work things out with a top Chinese agent who is, of course, beautiful, charming, and great with the well-placed kung fu kick.

In real life, Rupert Murdoch would never go that far -- he would definitely be on China's side. As pointed out yesterday, Murdoch is suffering from an acute attack of the soul-destroying oil-lamps-for-China syndrome, as a result of which capitalists do strange things as they hallucinate over the mythical Chinese market.

As he belatedly but profusely apologized, in both words and cash, to the last British governor of Hong Kong Chris Patten on March 6 for the way in which he had been treated by the Murdoch empire, Murdoch belatedly appeared to be awakening to a bleak reality: the cost of appeasing China was gravely weakening his hold on other parts of his empire.

First and foremost, Murdoch has seriously damaged what should be one of his prize possessions, the major publishing conglomerate HarperCollins. Earlier this year, HarperCollins (UK) had welcomed the first 70,000 words of Patten's memoirs, and had feted Patten and his book at a dinner for major British booksellers.

Suddenly, on Murdoch's whim, the HarperCollins (UK) editors and executives were ordered to tell Patten that the book was not lively, not inspiring, not as originally promised, and not wanted. Almost immediately, the firm lost the services of its top, widely respected editor, Stuart Proffitt, who refused to be a hypocrite, and to tell Patten the opposite of what had been already said about the book. Proffitt then told the British press why he was resigning.

Patten set out to sue Murdoch for damages arising from this obvious breach of contract.

Murdoch's executives in Britain warned him that an additional hazard would be that he would get a bad press. Murdoch did, though not of course in the pages of the British newspapers which he owns. The London Times, in true puppy dog fashion, did not even cover the story until Murdoch gave it an interview. Murdoch's own words in a leaked memo and in the interview made things infinitely worse.

Murdoch effectively destroyed HarperCollin's credibility as a great publishing house. He made it clear that he did not want to publish Patten because he disagreed with him, and his performance as governor. The need to appease China was clearly implied though not stated.

Great publishing houses give full reign to all opinions. To the contrary, Murdoch made it clear that HarperCollins only publishes his opinions. One British professor drew the obvious conclusion -- HarperCollins was no longer part of the open society. Numerous authors appear to agree with him, as they threatened to move themselves and their writings to competitors. Chris Patten was very quickly and warmly welcomed by MacMillans.

Certainly, no one writing a book on China could now expect to be credible if HarperCollins published it. As it happened, HarperCollins had already withheld from publishing a book on human rights, with a chapter on China by Wei Jingsheng, the dissident recently sent into exile by China.

Murdoch made matters even worse when, much in the manner of imperialists through the ages, he publicly blamed his underlings, rather than himself, for the way they had "screwed up" the handling of the Patten book. Murdoch made it clear that (perhaps with the advantage of hindsight) he had always been against HarperCollins publishing the Patten memoirs.

This only added to the extremely bad press Murdoch was getting, as his media empire came under critical fire in most parts of the world where newspapers are still able to stand up for freedom. Inevitably, the London Daily Telegraph, engaged in a vicious price war for survival with the Murdoch-owned London Times, was to the fore in exposing Murdoch's perfidy.

The New York Times was editorially moved to invoke the parallel with Tomorrow Never Dies, suggesting that Murdoch followed "a similar, if less violent, impulse" to the magnate portrayed in the movie. Entitled "Murdoch's Villainy", the editorial concluded by bluntly calling Murdoch's decision on the Patten book "contemptible".

More worrying for Murdoch, British politicians, notably the leader of the Liberal Democratic Party Paddy Ashdown, urged the Labor government to investigate whether Murdoch had violated the pledges of non-interference which he gave, when he was allowed to take over the London Times.

The diminution of his HarperCollins' asset, the incalculable effects of massive adverse publicity, the further loss of credibility of his own newspapers, the likelihood of increased political pressure on his other imperial possessions, -- all this must have made Murdoch realize that the cost of appeasing China could come far higher than he had anticipated, especially as Star TV in China has yet to realize its profit potential.

Conversely, since most of the criticism of Murdoch was coupled with Patten's right to criticize China, thoughtful leaders in Beijing must have noticed that, with "friends" like Murdoch, China was likely to have an increased number of verbal enemies. Additionally, the Chinese are also likely to calculate that, with Murdoch's imperial assistance, Patten's critical comments about them (in "the book that Murdoch tried to ban") are now virtually certain to be a best-seller.

Undoubtedly, it was Murdoch's sudden realization that he was losing far more than he was likely to gain which accounted for the profuse, and costly apology to Patten on March 6. In addition to getting legal costs, Patten almost certainly retained his US$83,500 advance from HarperCollins, as well as getting a fresh advance from his eager new publisher MacMillans. If Patten has been staying in France for tax reasons, he now has a financial reason for taking up permanent residence in the Cayman Islands, provided, of course, that Whisky and Soda can move there easily, too.

To soften his image, plus widespread anticipation of a looming purge in the British segment of his empire, Murdoch even apologized to his subordinates in London whom he had earlier lambasted.

Previously, the danger flowing from the far-flung possessions of media magnates was that their empires were never subject to the normal process of decolonization. Even that may be changing. Markets move in mysterious ways. Probably HarperCollins' credibility can only be restored if Murdoch sells it. If he retains it, it is likely to be a wasting asset.

Finally, having caused China great embarrassment, it will be interesting to see how Murdoch further appeases Beijing. One thing is certain. Like "Tomorrow", and James Bond, the "oil-lamps-for-China" syndrome "Never Dies".

Window: More worrying for Murdoch, British politicians, notably the leader of the Liberal Democratic Party Paddy Ashdown, urged the Labor government to investigate whether Murdoch had violated the pledges of non-interference which he gave, when he was allowed to take over the London Times.