article

07.21.11

Rudy's Cozy Murdoch Ties

The unholy alliance of press and politics happens here, too. Giuliani did enormous favors for Fox TV in New York City, and his wife’s earnings from Fox tripled while he was mayor.

On the eve of Rupert Murdoch’s appearance before Parliament this week, Rudy Giuliani, fresh from his latest pre-presidential forays to New Hampshire, went on CNN to defend his old friend and patron. Knighted by the British for his much-monetized heroism on the day of the 9/11 attacks, former crime buster Giuliani, who once paraded Wall Street brokers out of their offices in handcuffs only to later drop the charges against them, delivered a wide-eyed lecture on “the presumption of innocence.” He called Murdoch a “very honorable, honest man,” noting that all the hacking and bribing offenses that occurred on News Corp. payrolls “can’t be something that he would have had anything to do with,” a statement that went beyond presuming innocence to declaring it.

The Rudy-Rupert relationship is in fact as close as we come in America to understanding the hubbub now consuming the U.K. It is a tale of transactional journalism that goes to the heart of everything long wrong in the Murdoch empire, where politicians are acquired as frequently as businesses, and mergers occur at personal as well as corporate levels.

A judge chided Giuliani for giving “preferential treatment” to Fox, apparently to “reward a friend and to further a particular viewpoint.”

The story goes far past the standard quid pro quo fare of political endorsements for lucrative tax abatements, though there were several of those. Never before or since, really, has a mayor of New York gone as far for a media friend as Rudy did for Rupert, and never before has a media czar gone as far as Murdoch lieutenant Roger Ailes did to repay the debt, even flirting with a crime, according to one lawsuit, quickly settled for millions, just like the ones that drew so much attention in Parliament.

Let’s start in 1996, three years after Murdoch’s New York Post helped make Giuliani mayor with the narrowest win in modern city history. That year, Rupert and Ailes, who’d actually managed Rudy’s unsuccessful mayoral run in 1989, were launching Fox Cable News and they had one rather daunting problem: Time Warner controlled the prime NYC cable franchise, with 1.2 million viewers, including virtually all of Manhattan, where every advertiser who might buy a spot lived or worked. And Time Warner refused to give Fox a channel for its new venture. In those days, Time Warner only had space for 77 channels on the dial, and 30 applicants had lined up before Fox. Richard Aurelio, who ran the NYC cable system for Time Warner, recalls now that he assured Ailes that in a year or so, they would “get more capacity and put you on.” But, says Aurelio, now long retired at age 83, “Murdoch was furious.” A former deputy mayor under John Lindsay, Aurelio says he’d “never seen such a display of raw political power,” branding it “ferocious.”

Records revealed that after Murdoch and Giuliani talked directly about the matter on Oct. 1, their aides had 25 conversations and two meetings in the space of a few weeks. A deputy mayor instantly warned Time Warner about the possibility that their franchise, granted by the city every 15 years, might not be renewed and volunteered to fly anywhere in the country to meet with a Time Warner executive above Aurelio. When Time Warner wouldn’t budge, Giuliani came up with an extraordinary remedy. The city controlled five public-access channels, written into law as alternatives to commercial television, and the mayor decided to give one of them to Fox. In fact, presumably to make it look like this wasn’t something he would just do for Murdoch, he offered another to Mike Bloomberg’s then-fledgling TV network. The Bloomberg News channel actually had its debut one night before a federal judge could stop the deal, but soon the courts blocked this transparently extralegal adventure.

The judge who ruled against Giuliani, Denise Cote, used to work for him in the U.S. Attorney’s Office. Her eloquent decision condemned the city’s “improper motives in giving Fox News preferential treatment,” describing it as “special advocacy” to “reward a friend and to further a particular viewpoint.” Cote accused the city of “linking Time Warner’s decision” about carrying Fox to the city’s pending approval of its merger with Turner Broadcasting, which required a city signoff, and “to Time Warner’s franchise renewal in 1998.” Saying this was “content-based favoritism,” Cote said Giuliani had violated “longstanding First Amendment principles.” Without adopting all of Cote’s findings, a three-judge appeals panel unanimously affirmed her decision in 1997.

But none of this slowed the Rudy-Rupert alliance for one second.

Aurelio retired in 1997 as the head of the city cable system, and Dick Parsons, a former law partner of Giuliani’s who’d actually co-chaired his campaign-finance committee, assumed control of the New York cable franchise. Murdoch began an ad campaign against the extension of the franchise, and Giuliani aides began harassing Time Warner with renewal issues. “Parsons realized the relationship with Giuliani had soured,” Aurelio recalls, “and decided that, in lieu of putting the franchise in jeopardy, he would reconcile with the mayor.”

“I know he talked to Giuliani, and I know they made a deal to bring Fox in on another channel,” Aurelio says. “I hold Parsons responsible for caving in to Giuliani. I thought it was pretty awful. Giuliani was doing Murdoch’s work.” (Parsons did not respond to messages seeking comment.)

In 1995, the year before Rudy went to bat for Rupert, his wife, Donna Hanover, then 45, was hired by Fox’s New York channel as a street reporter, 13 years after she’d last done the job. The next year, while Rudy crusaded for Fox, her Fox New York salary tripled, which, added to her income elsewhere, meant she was earning twice as much as her husband.

By the time Rudy left City Hall at the end of 2001, he was regarded as a member of the extended Murdoch family, and a property primed by 9/11 for a presidential run. Murdoch came to Giuliani’s 2003 wedding to his next wife (he’d actually performed Ailes’ wedding while mayor). When the NYPD’s Bernie Kerik, the chauffeur Giuliani had elevated to commissioner, was nominated by George W. Bush to become homeland security secretary in 2004, none other than Roger Ailes rushed to Kerik and Giuliani’s aid. The married Kerik, a partner in Giuliani’s new security-consulting company, had been swept up in an affair with Judith Regan, a star in the Murdoch book company that published Kerik’s memoir. Kerik and Regan had split by then, and Ailes apparently feared Regan might become an obstacle to all of Kerik and Giuliani’s grand plans, both profitable and political.

According to court papers Regan filed in 2006 and 2007, after she was fired by News Corp., Ailes told Regan in the midst of the 2004 nomination process that “he believed she had information about Kerik that, if disclosed, could harm Giuliani’s presidential campaign.” Ailes “advised Regan to lie to, or withhold information from, investigators concerning Kerik,” said the complaint. News Corp. quickly paid $10.7 million to settle the case, pushed in part by reports that Regan had taped the conversation. Regan’s allegations suggested that Ailes was actively preparing for Giuliani’s 2008 campaign within weeks of Bush’s reelection in 2004. Kerik is now in a federal prison on charges of lying to the White House and tax violations in part related to his book. But if Regan’s allegations were true, Ailes’ call to her amounted to obstruction of justice, a News Corp. felony committed on this side of the pond.

When Giuliani did chase the presidency, reports in the summer of 2007 indicated that Fox had devoted twice as much airtime to him as to the eventual nominee, John McCain. In a field flush with candidates ideologically compatible with News Corp., Giuliani was still Fox’s favorite son, having merged his interests with Murdoch’s a decade earlier.

Jacob Albert, Bill Kline, Lenina Mortimer and John Surico contributed reporting to this article.