Murdoch and a Tiger-mother masterclass

It was even more of a family affair than anyone anticipated. Rupert and James Murdoch were on the schedule for Tuesday’s House of Commons Culture, Media and Sport Committee. Not so, Wendi Murdoch’s right fist. After sitting demurely behind her husband for two hours, Rupert’s Chinese-born wife gave new meaning to the phrase Tiger mother, by pummelling the intruder who had burst into the room to lather her husband with a foam pie.

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For connoisseurs of management, and moguls in particular, though, the proceedings offered a master class in crisis management. James Murdoch was good, if a little reedy, wordy and over-drilled by his lawyers. He did all the necessary blocking and tackling to get through a tricky afternoon. His father, though, was magnificent, initially as terse as an outback farmer, but slowly unveiling the lethal charm even his rivals describe as mesmeric. He may have been spinning, but it didn’t sound that way. He made clear that he understood the gravity of the situation and the need to rectify it. But at times he showed all the interest of Caesar being grilled about some long-forgotten incident in the Londinium aqueduct authority. He responded to the MPs’ rambling questions with theatrical pauses, often followed by a simple “yes” or “no”. But when he needed to make a point, he banged the table, rattling his microphone, as if berating an insubordinate prime minister.

By taking over management of the scandal, Mr Murdoch is finally heeding the lessons of the most widely taught crisis management case in business: Johnson & Johnson’s response after seven people died from cyanide-laced Tylenol capsules in 1982. While police sought the psychopath responsible, the company pulled all 31 million bottles of Tylenol from shelves across the United States, at a cost of $100 million. James Burke, its CEO, appeared endlessly to apologise and reassure the public. Tylenol sales quickly rebounded.

Until Tuesday, Mr Murdoch had left it to Rebekah Brooks, the former chief executive of News International, and his son James, to be the faces of the scandal. Given the sheer scale of News Corp, it doubtless seemed a local difficulty, pumped up by a hysterical British press. The revelation that News of the World reporters had hacked the phone of the murdered schoolgirl Milly Dowler turned the scandal toxic and demanded his intervention.

The MPs did their best to challenge him, but they were up against a man who has built his company over 57 years, who employs 52,000 people around the world, who broke the British print unions, barged into US network television, and gave us Titanic and Avatar. Pressed on details of the hacking scandal, he said that the News of the World represented a tiny fraction of News Corp, less than 1 per cent of its $33bn revenues last year. At times the Murdochs addressed the MPs as if they were a slightly dim MBA class. In large businesses, they explained, it was customary to delegate authority to managers, and that these managers had a certain amount of discretion to make decisions and manage budgets. Such systems rely on measures of trust.

Defending his son’s handling of the scandal, Mr Murdoch said that in any given week James had to spend “a day in Munich, a day at Sky Italia where he had a particularly difficult situation, and a particularly tricky competitor, if I might say so”, a sly dig at Silvio Berlusconi. While the MPs pettifogged, he implied, the Murdochs ran the world.

Entering hour two, Murdoch Snr softened. He sympathised with the MPs for their dismal pay, and suggested a Singaporean model, where legislators are paid so well they have no need to fiddle their expenses. Intimidate first, then charm, advise the management texts on crisis and change management. Murdoch did just that.

By the end of the session, Mr Murdoch seemed avuncular, a chief executive in full, deeply sorry for the worst of the phone hacking, feeling betrayed by his managers and promising to make it right. He talked of his pride in his father, a journalist and small newspaper owner who had exposed the scandal of Gallipoli, and his belief in the role of newspapers in ensuring transparency in public life. The politicians, you sensed, were in his palm, awed by the plain fact of his being there, and embarrassed by the pie-thrower.

When asked at the end of the hearing why he hadn’t resigned, he answered: “Frankly, I’m the best person to clear this up.” It comes late, but given all that he has seen and done in his life, it is hard to disagree with him.

The writer is author of ‘What They Teach You at Harvard Business School: My Two Years in the Cauldron of Capitalism’