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Matthew Freud Will See You Now


On the night of July 2, Elisabeth Murdoch and her husband, Matthew Freud, threw a party at their country estate on the outskirts of London. According to an account in the Daily Mail, guests watched a boxing match in the château’s private screening room and test-drove a vintage Jaguar across the grounds. The U.K.’s top political operatives, such as Conservative Steve Hilton and Labor politician Peter Mandelson, mingled with celebrities, including pop singer Lily Allen, director Tim Burton, survivalist Bear Grylls, and TV host Piers Morgan.

Murdoch, a 43-year-old TV executive who several months earlier had sold her production company, Shine, to News Corp. (owned by her father, Rupert, and a Daily Mail bête-noire) for $673 million, gave a welcome toast. News Corp. executives, including Elisabeth’s younger brother James and his top lieutenant, Rebekah Brooks, mixed with the politicians and stars. Guests were invited to sleep over in the 22-room mansion. They were tight as Freud’s leather pants.

Over the past quarter-century, Freud, 47, has built up the largest independent public relations firm in London, Freud Communications, predicated on the unrelenting cultivation of London’s most successful strivers. Proximity to power is Freud’s lifeblood. “Freud is a legendary networker,” says Danny Rogers, the editor-in-chief of PRWeek. “He combines business with politics with celebrity. It’s quite a powerful nexus.”

Even as the midsummer soiree blurred into the early hours of July 3, however, this elite world was about to tumble from its axis. That same Monday morning, the Guardian reported that in 2002, correspondents at the Murdoch-owned tabloid News of the World had hacked into the voice mail of Milly Dowler, a missing 13-year-old girl—and in so doing had inadvertently disrupted a police investigation and given false hope to the family of the murdered teenager. The story, coupled with mounting evidence of widespread reportorial misconduct at News of the World, touched off a wave of populist outrage.

For the Murdochs and News Corp. (NWSA) the fallout was swift and damaging. Within two weeks, News Corp. executives shuttered the profitable tabloid. They also dropped their $12 billion bid for full control of the lucrative pay-TV service British Sky Broadcasting. And they announced they were nearly tripling, to $5 billion, a buyback plan to try to reverse the plummet in the company’s stock price. The collateral damage continues in smaller ways. In late August the New York State Comptroller rejected a no-bid $27 million contract between the New York State Education Dept. and a News Corp. subsidiary, citing concern over the hacking scandal.

Along the way, the Murdoch arm of Freud’s well-heeled menagerie descended into a forearm-biting scrum. Brooks resigned from her position overseeing News Corp. newspapers in London and was arrested. Her boss, James Murdoch, the deputy chief operating officer for News Corp., testified in public and was subsequently accused of misleading Parliament. Freud’s acquaintance, Prime Minister David Cameron, fought off accusations of inappropriate intimacy with the Murdoch family, encapsulated by his decision in the summer of 2008 (revealed in expense records) to hop aboard Freud’s private jet and fly to the Aegean Sea for a gathering aboard the Murdoch family yachts.

And yet, as journalists and investigators have worked to unravel the knot of connections at the center of the phone-hacking scandal, Freud has largely kept his name out of the coverage. Which is impressive, because he is so responsible for lacing the Murdoch family into contemporary British society. “The Murdochs, in their nature, are not glamour-pusses,” says Michael Wolff, the author of the Murdoch biography The Man Who Owns the News. “The Murdochs in London are a Matthew Freud creation. It was Matthew who promoted these people into this incredibly rarefied status and built the social circle around them. He turned them into the Kennedys of London.”

Not long ago it was a given among News Corp. watchers that James Murdoch would someday take control of the family business, which last year earned $2.74 billion in profit on $33.41 billion in revenue. Now the calculus of the Murdoch succession has changed. James’s handling of the phone-hacking mess has made his ascension look uncertain, and Elisabeth has emerged as a rival, so long as she can put to rest claims—including a shareholder lawsuit—that her father overpaid for her production company.

In the months to come, as various parties jockey over the future of one of the world’s largest media companies, Elisabeth will enjoy one advantage. She will have in her corner a tenacious operator. Few people are more at home in a crisis than Freud. For years, corporations around the world have paid Freud large sums for his advice on how to navigate treacherous situations. If he can deftly steer himself and his wife through News Corp.’s conflagration, Freud could emerge as a central force in the future of the company—the husband-adviser to the News Corp. throne.

 

Freud was able to plug the Murdochs into London’s clubby elite, meal-by-meal, party-by-party, even as he was profiting from their influence, thanks to his combination of ambition, business savvy, and family pedigree. His early encounters with celebrities took place while he was still in diapers. He was born in London in 1963, the youngest of five siblings in a wealthy and accomplished family. His father, Sir Clement Freud, was a famous writer, politician, broadcaster, and grandson of Sigmund. His uncle Lucian was the preeminent British painter of his time.

Freud was not a strong student growing up, and he dropped out of school in his late teens. He did not complete college. In 1983, after doing some publicity in the music business, Freud started a public relations firm, following in the footsteps of his relative Edward Bernays, who is often credited with founding the profession. (Freud declined the opportunity to be interviewed for this article.)

Freud’s early clients were minor entertainers. For years the business struggled. His first big account was Hard Rock Cafe International, which subsequently led, in the early 1990s, to a job representing Planet Hollywood International, a chain of restaurants that leveraged its celebrity investors, including Demi Moore and Bruce Willis, into an effective marketing gimmick.

Doling out access to famous clients, Freud soon realized, was a great way to build relationships with Fleet Street reporters. Those alliances, in turn, could be leveraged on behalf of less sexy clients with deeper pockets who would otherwise struggle to get publicity. Sigmund Freud had become famous enabling people to gain access to their motivations. Matthew Freud would become rich brokering access to celebrities’ peccadilloes. “We’ve been able to draw upon celebrity and the media’s obsession with it,” Freud told Management Today magazine in 2009.

Freud has always been close to his sister Emma, who is two years older. In the late ’80s, Emma’s career as a TV personality took off as she hosted a series of shows, including Pillow Talk, in which she interviewed celebrities in bed. At the same time, Freud built a roster of famous clients culled from the same milieu, such as TV presenter Chris Evans and pop singer Geri Halliwell, aka Ginger Spice. At his offices, Freud hung flattering newspaper articles about his clients near paintings by the likes of Andy Warhol.

By 1994 the business was thriving, and Freud made his first small fortune, selling a majority stake of Freud Communications to Abbott Mead Vickers, a U.K.-based advertising agency for a reported £10 million ($14.4 million). Peter Mead, a founder of the agency, says they saw great potential in the PR firm’s energetic founder. “Genetic intellect is one of the things he brings to the table,” says Mead. Entertainment accounts typically don’t generate much revenue. The real money in PR comes from consumer brands and their hefty, monthly retainer fees. Celebrity clients can be used to lure in brands, however. While teaming with Abbott Mead Vickers, Freud developed a knack for mashing up celebrity and brands in bold gestures that generated publicity for both. “He’s never been one who believes that sending out press releases is what PR is all about,” says Mead.

In 1996, PepsiCo (PEP) was rolling out newly blue soda cans. To publicize the event, Freud enlisted Air France to paint the Concorde blue and the Daily Mirror to publish on blue newspaper for a day. Freud then arranged for a bevy of celebrities, including supermodel Claudia Schiffer, to pose with the blue products. The successful campaign had all the key ingredients of Freudian PR: celebrity endorsement, brand dollars, and newspaper collusion.

While working on an account for British Sky Broadcasting, Freud met Elisabeth Murdoch in 1997. The elder of three siblings from Rupert’s second marriage, Elisabeth had grown up in New York, gone to college at Vassar, and moved to the U.K. to work for her father. She was married to Elkin Pianim, a Ghanaian financier. After meeting Freud, Elisabeth left her husband. Freud left his wife.

During the courtship, puffy profiles of Elisabeth soon bubbled up. A new, chic Murdoch had arrived on the scene. Her father disapproved. “Rupert couldn’t stand Matthew,” says Wolff. “They are not at all similar. Rupert is the least smooth guy in the world. With Rupert, what you see is what you get. With Matthew, it’s the opposite.”

In a 2001 Vanity Fair article about the “Scions in Love,” Freud attributed Rupert’s disapproval, in part, to the media mogul’s old-fashioned notions about gender. Freud downplayed a newspaper article that suggested he and Elisabeth were one of the hardest-partying couples in London. “Here’s the weird thing about the Murdoch family,” said Freud. “They believe what they read in the papers.”

Despite a temporary breakup, Freud and Murdoch eventually married in August 2001. That same summer, Freud bought back full ownership of Freud Communications. In the years after marrying into the Murdochs, Freud’s business grew quickly. According to public records, in 1999, Freud Communications brought in £7.8 million in revenue. By 2009 that figure had more than quadrupled, to £33 million. According to the Sunday Times’s Rich List 2011, the couple are now worth £251 million.

These days, Freud Communications is a premium PR service whose clients—among them Mars, Nike (NKE), Pizza Hut (YUM), and Diageo (DEO) —pay above-market rates, says Rogers of PRWeek. (Michael Lynton, CEO of Sony Pictures Entertainment, was one of several clients who declined to comment.) Where a typical consumer PR firm in London might charge £100,000 a year, Freud commands £250,000 to £500,000, according to Rogers. “If you’re a company with a problem, he can call on his informal network of advisers and friends, CEOs, and politicians,” says Rogers. “If you’re a big oil company with a spill, you could do worse than call Matthew Freud.”

In the U.K., most of the nation’s top politicians, celebrities, and business leaders live in London. By sitting in the middle of the network, Freud is privy to a rich trove of backroom communication. People don’t even have to like Freud to seek his company, because in the end, everybody wants access to his lowdown. “He’s an incredible source of gossip,” says Wolff. “You can always go to Matthew and get a cogent and persuasive interpretation of what’s going on.”

In 2005, Freud sold a majority stake of Freud Communications to the global marketing company Publicis Groupe for a reported £35 million. Freud touted the move as a way to move overseas, and opened offices in New York and Los Angeles. It didn’t go well. Freud has been unable to recreate his success in the U.S.—where the political, business, and entertainment elites are spread out. In the U.S. he lacks a comprehensive, overlapping network of powerful connections and, as a result, is not known as a trove of inside intelligence.

One example of his Hollywood naïveté came last year. According to a person who has seen the communication, Freud sent an e-mail to Ari Emanuel, the superagent, trying to resolve an issue with Shine, his wife’s TV company. Freud had never met Emanuel, but in the e-mail, Freud was openly confrontational. (A spokesperson for Emanuel declined to comment. According to a second source, Emanuel was as baffled by the e-mail as he was annoyed.)

In 2009, Freud folded his New York operations into a firm called H.L. Group. Earlier this year, Publicis Groupe sold him back their portion of Freud Communications for a sum that was not made public, and the L.A. office was absorbed by Publicis. “It may be that the unique Freud blueprint doesn’t work outside of London,” says Rogers. In the U.K., “his summer and Christmas parties are legendary. Clients get a bit of Matthew, a bit of the glamour, and they get invited to the parties.”

They also get an ally inside the Murdoch clan. How much of Freud Communication’s growth has been driven by Freud’s perceived influence with Murdoch papers in London can be difficult to judge. “He comes from a well-networked family anyway,” says Rogers. “He didn’t lack connections before the Murdoch marriage.”

“Matthew had great relationships with lots of media way before he met Elisabeth,” says Mead. “He is highly principled. I have never heard any rumors that he, at any stage, used his relationship with the Murdochs for professional services or gain. It’s not the way Matthew works.”

One former Freud Communications employee disagrees with that assessment and believes that part of what the firm implicitly sells is Freud’s relationship with the Murdoch papers. But to what degree that relationship is real vs. illusory, the former staffer could not convincingly explain. Results in public relations are hard to measure. The value of a PR firm is largely determined by the perception of its influence—that is, it’s presumed ability to get prominent space for positive stories and get negative stories buried or killed. In that sense, Freud’s relationship with the Murdoch family is an advantage even if he never acts on it.

In July, the Daily Mail (a competitor of Murdoch’s papers) published an anonymous story by a former insider at News Corp. in London. Relationships between Murdoch-owned papers and PR firms such as Freud Communications “were so close that if [Freud’s office] called the newsdesk with a story, you had to run it,” wrote the unnamed informant. “If you told them it wasn’t a story but just a piece of PR fluff, they would phone Rebekah [Brooks’s] office, the reporter would be told off, and the story would go in as Freud wanted it.” (A News Corp. spokesperson declined to comment.)

Ian Reeves, who teaches journalism at University of Kent—and previously worked for Freud during the publicist’s brief dalliance with publishing—says Freud has the power to significantly boost the careers of the journalists he favors. “He is very successful at elevating people he likes and people who are useful to him,” says Reeves.

Freud’s favorites over the years, says Reeves, include many powerful media players who got their start as showbiz reporters at the tabloids, including former News of the World editor Andy Coulson, who was recently arrested as part of the phone-hacking probe; Piers Morgan, a former entertainment reporter who went on to edit News of the World and the Daily Mirror and is now a host on CNN (TWX) ; and Brooks, who worked as a features writer at News of the World, became editor of the tabloid, and went on to the top job, managing Murdoch’s London papers. (Attempts to reach Brooks were not successful. Morgan declined an interview request.)

Though he spends much of his professional life doing hand-to-hand business with reporters, Freud is infrequently quoted on-the-record in newspapers. “He’s not particularly comfortable himself in the limelight,” says Reeves. “He does a lot of behind-the-scenes greasing.” In the past, when Freud has gone on the record, he sometimes does what he would never let a client do.

In January 2010, for instance, Freud attacked Roger Ailes, the head of Fox News Network, one of News Corp.’s most lucrative media properties. “I am by no means alone within the family or the company in being ashamed and sickened by Roger Ailes’s horrendous and sustained disregard of the journalistic standards that News Corporation, its founder, and every other global media business aspires to,” Freud told the New York Times.

Afterwards a News Corp. spokesperson insisted that Freud was not speaking on behalf of the company, but Freud Communications was then on the News Corp. payroll. Between 2006 and 2011, according to company filings, News Corp. paid Freud Communications $2.7 million. Freud was, in essence, blasting his own client.

Months later, according to multiple press accounts, Freud was involved in another embarrassing public scrap. In March 2010, while at a party at a chic London club, Freud grabbed a piece of chocolate cake and—in a move Sigmund Freud would no doubt have had a field day with—smeared the brown dessert down the front of the actor Hugh Grant’s white dress shirt. The star of countless romantic comedies socked Freud in the face.

 

In August, riots swept through London. The world watched as the city burned. Politicians and sponsors fretting over the world’s perception of London in the months ahead will likely turn to Freud to help them repackage their civilization and its discontents. After all, not long ago, Freud Communications won the competition to represent the organizers of the London 2012 Olympics.

One restoration job Freud is not working on—at least, not officially—is the task of publicly defending News Corp.’s reputation. Earlier this summer the company hired Edelman, not Freud Communications, to manage its PR during the crisis. Nonetheless, says Wolff, Freud remains engaged. “He is still in the thick of what’s going on. He is still managing everybody’s position in this.”

Recently, the Daily Mail reported that the gambling company Ladbrokes had canceled a contract with Freud Communications. “Could this be the first sign that the scandal is affecting Mr. Freud’s business?” the paper wrote. (Ladbrokes did not respond to a request for comment.) In recent years, Freud has thrown an annual charity event at Cipriani 42nd St. in New York during United Nations Week, hosted by PepsiCo CEO Indra Nooyi (a Freud Communications client), Queen Rania of Jordan, Rupert Murdoch’s wife, Wendi Deng, and former PR executive Sarah Brown. In July, in the heat of the phone-hacking outrage, Brown’s husband, former U.K. Prime Minister Gordon Brown, publicly lambasted the Murdoch papers in London and accused their reporters of breaking into the medical records of his sick son. According to a source in London, Freud’s glitzy New York dinner has been canceled. Additional signs of fallout have yet to materialize.

“I don’t think this hurts Freud very much at all,” says Reeves. “He’s removed from it. James’s handling of the affair has certainly not been a triumph. There are those who would say that, as a result, Matthew and Elisabeth might end up benefiting.”

On July 19, Rupert Murdoch and his son James appeared in front of Parliament to answer questions about the phone-hacking skullduggery. Key News Corp. lieutenants sat behind them, including Wendi Deng and the company’s new cleanup specialist, Joel Klein. Rupert’s elder son Lachlan flew into London from Australia in a show of family solidarity. Freud and Elisabeth Murdoch were nowhere to be seen. The London Evening Standard reported that at the peak of the Murdoch crisis they had left London on holiday.

It was a telling move, says Wolff, reflecting Freud’s current strategy of distancing himself and Elisabeth from the mess—particularly from Brooks and James Murdoch, who are at the center of the turmoil.

Recently, the Telegraph published an article reporting that Elisabeth was furious at Brooks and had told friends privately that it was she who had “f—– the company.” The source went unnamed.

“Matthew is an outsider who has made himself a power within that company,” says Wolff. “Now that he’s gotten in, he won’t let go.”

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Gillette is a staff writer for Bloomberg Businessweek in New York.

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