Bloomberg Businessweek
Go To Businessweek.com
During the past 20 years, the author has watch China move from being a developing country into an industrial superpower
Money Moves, 5/24: Chocomize Co-Founder Fabian Kaempfer talks with Bloomberg’s Deirdre Bolton about the business of customizing chocolate
The president's campaign has a new rule—no cell phones allowed
In honor of remote control inventor Eugene Polley, we recognize other influential but neglected inventors who have felt the sting of stolen glory
Forget Adderall. Traders now pop chia seeds to stay focused and energized
The Italian automaker and others are adding hybrid technology to elite cars
The storied bridge that links San Francisco and Marin County changed the face of California
Schools cultivate ties with startups before they're big successes
Dave McClure's traveling venture capital show scours the world for promising startups
Few are more at home in a corporate crisis than Freud Dave M. Benett/Getty Images
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. 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.”
