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Elisabeth of the Murdochs

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Murdoch siblings Elisabeth and James at the Cheltenham horse-racing festival, March 2010.  

Liz’s personal life was also blowing up. Her marriage to Elkin had been strained. Elkin was an intellectual and didn’t strike his friends as a media executive. “He was the philosopher guy,” a friend recalls. Around the time she was thinking of leaving BSkyB, Liz had started working with Freud on her PR image, and the two began an affair. Rupert was dismayed when the news appeared in the London tabloids.

In a 2001 Vanity Fair story about Liz and Freud’s courtship, Freud was quoted openly mocking Rupert. The article infuriated Rupert. A story later circulated through Freud’s London office that one night, Freud got home and couldn’t get a signal on his TV. When he called the BSkyB customer-service line to ask about the problem, the representative responded coldly, “We’ve been instructed not to turn on this account.”

Liz’s friends point to her divorce as a turning point. She’d been frustrated by her father’s imperiousness and favoritism, but she’d controlled these emotions. Freud, so much like her father, seemed to give her license to feel them.

Liz and Freud formed a powerful alliance. He persuaded her to strike out on her own, and in 2000, she quit BSkyB and then formed Shine—again with her father’s backing. She started by producing shows for British TV and eventually acquired production companies across Europe and rolled them into the Shine umbrella. “The thing that was most impressive was how she combined a strong commercial sense with what worked creatively,” a former senior Shine executive tells me. “She never made any mistakes.”

Liz, demonstrating her programming instincts, was instrumental in persuading Rupert to import the British show Pop Idol to America.* In 2008, Liz made the biggest deal of her career when she acquired Ben Silverman’s production company. The deal gave her control of lucrative franchises like The Office, Ugly Betty, and The Biggest Loser.

As much as she craved independence, Liz surely understood that her success was fueled in part by her famous last name. In London, Liz and Freud became a major power center. As Liz built her business, Freud’s reach grew. His London PR firm represented global companies, and he was close to Tony Blair and much of the New Labour political Establishment. Freud’s Christmas parties were regularly attended by the biggest figures in media, politics, and business.

And Freud saw that he could play a chess game steering the Murdoch empire in ways that would benefit his business. When the journalist Michael Wolff was writing his Murdoch biography, Freud helped push the notion that Fox News was a pariah in the News Corp. empire. As Liz’s company grew, Freud wanted to build his own firm into a global powerhouse. In 2005, he opened offices in New York. But Freud’s American venture failed, partly because the power of the Murdoch empire is more diffuse outside London, and the Freud name doesn’t have the same pull on this side of the Atlantic.

The phone-hacking scandal is not only a near-existential threat to News Corp.—Freud’s business is also in the firing line. With the failure of his foray into the American market, Freud recognized that his London power base would be harmed if Liz’s business was brought down by her connection to News Corp.

Ironically, to maintain their position, Liz and Freud had to jettison a key player in their earlier success. Before the hacking crisis, Liz had developed a close friendship with Brooks, who was a regular on the social circuit with Liz and her husband.

With their friendship with Brooks, anyone who feared crossing Rupert’s tabloids feared crossing them. There was a wide perception in London that Freud could get any story he wanted planted in the Murdoch papers—or, more important, keep unwanted stories out. “He would get stuff to Rebekah Brooks, he would just go to her and get it in,” one person close to Freud tells me (another source close to Freud disputes this). But this closeness to Brooks and James now proved to be a liability for Liz and Freud. And so Freud, according to sources close to the family, has advised Liz to break from James and Brooks. When James testified before the parliamentary committee in July, Freud and Liz skipped town, spending two weeks on a yacht.

In the weeks since the crisis exploded, Liz, with Freud as her private adviser, has worked to put as much distance as possible between herself and News Corp. Less than a week before James and Rupert testified before the committee, news of Liz’s rift with James and Brooks spilled into the press. On the morning of July 15, John Bingham, a reporter for the Telegraph, got a tip from a high-ranking editor at the paper that Liz was overheard at a party saying, “Rebekah fucked the company.” The editor told Bingham to write up the account but refused to tell Bingham the identity of the source, leaving Bingham to wonder if Freud was spreading the gossip.


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