David Cameron, Ed Miliband and Co flock to pay homage at Rupert Murdoch's summer party | Media | The Guardian

David Cameron, Ed Miliband and Co flock to pay homage at Rupert Murdoch's summer party

Staff at the News International bash fear the fall-out of the phone-hacking scandal

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• • James Robinson
  • The Guardian, Monday 20 June 2011
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David and Samantha Cameron arrive at the News International summer party Photograph: Alan Davidson

At News International's summer party in London on Thursday night, guests including David and Samantha Cameron drank Moet & Chandon champagne and ate oysters. Labour leader Ed Miliband and shadow chancellor Ed Balls sheltered from the inclement weather in a giant canopy at the Orangery in Kensington, along with other attendees, but by the time a dramatic storm broke after 9pm, and rain lashed down on the guests, the party was already thinning out.

The thunder and lightning were an appropriate backdrop for the party given the tumult afflicting the UK arm of Murdoch's newspaper empire, which has ramifications for the rest of the media mogul's businesses. Despite the company's attempts to bring the phone-hacking crisis to a close by setting up a compensation fund to pay off victims, the saga shows no sign of ending.

The way it is handled will determine the future progress of a phalanx of Murdoch's key executives, most notably NI chief executive Rebekah Brooks. Brooks has long been regarded as untouchable because of her warm relationship with Murdoch and her successful stints as editor of first the News of the World and then the Sun. The crisis may be taking its toll on Brooks, according to some sources close to the company, who claim she is not sleeping well (others who have seen her recently, including the former Sun editor David Yelland, insist she is on good form). But Murdoch was at her side again on Thursday, as she led him by the arm around the venue in the grounds of Kensington Palace, and the signs are that he will continue to stand by her.

She was also present after the reception at a private dinner hosted by Murdoch at a Mexican restaurant, along with the Times editor James Harding and his counterpart at the News of the World, Colin Myler. Outsiders, including Cameron's press adviser Gabby Bertin, were also there. The phone-hacking scandal is taking up a huge amount of management time in the London division of Murdoch's global collection of media businesses and causing a degree of corporate paralysis.

Victoria Newton, the former showbiz columnist who is now a senior executive at the Sun, might have been prompted by Brooks to take charge of the News of the World, if the brouhaha had blown over, but parachuting in an inexperienced editor at a time of crisis would be a reckless act. Sun editor Dominic Mohan, who spent much of the evening in intense conversation with Newton, is another former showbiz journalist who is highly rated by Brooks and safely ensconced. Sky Living director Jane Johnson, a former executive at the Sunday Mirror and launch editor of gossip weekly Closer, was also at the party. All three are said to have bright futures.

Myler, who, according to one source, "has broken more scoops over the last two years than any other editor, with the possible exception of Tony Gallagher [of the Daily Telegraph]", is perceived internally as an editor under pressure, despite the fact he has steadied a paper that was in crisis after the resignation of Andy Coulson as editor in 2007, when the title's former royal editor Clive Goodman was jailed for illegally intercepting voicemail messages.

When two high-flying lawyers from the US arrived at NI's east London offices earlier this month to ask questions about how the hacking affair was being handled, stories started to appear in the press suggesting Myler had been deliberately excluded from the company's investigation into it. There was intense speculation last week that powerful figures in London were moving against Myler, but his position seems secure.

Such are the vagaries of life at Murdoch's London court that key editors and executives must learn to live with constant speculation about what he thinks of them. Brooks has been linked with a possible move to Manhattan but friends privately insist she will not leave London, hinting at personal reasons. A networker without rival, she is close to the Camerons, dining with them regularly in Oxfordshire, where a close group of friends gather at weekends. They include Top Gear presenter Jeremy Clarkson, PR man Matthew Freud, who is married to Rupert's daughter Elisabeth, and, more recently, the millionaire property developer Tony Gallagher (no relation to the Telegraph editor), who bought a 17th century estate near Chipping Norton five years ago from former Labour minister Sean Woodward.

She also enjoys a good working relationship with Murdoch's son James, but he is New York-bound after being promoted to deputy chief operating officer at News Corp and is setting up an office in the US. He may not be able to protect Brooks from the ire of shareholders there, who have watched the phone-hacking scandal unfold with growing alarm.

Board members, who include former British Airways chief executive Rod Eddington and former Spanish prime minister Jose Maria Aznar, are believed to be uneasy about what they perceive as the mess made by a group of unaccountable London executives, and to have expressed surprise that Murdoch didn't act to end it earlier. The decision to send News Corp lawyers to London was taken, in part, because of pressure from non-executives who fear they could face legal action from investors that wrongdoing on a huge scale has been admitted. "After Enron and Sarbannes-Oxley the Americans are much more obsessed with corporate governance than we are," points out a senior News International insider.

The hacking affair is being handled by director of corporate affairs Simon Greenberg, a former sports journalist, and Will Lewis, the former Daily Telegraph editor who is now NI's group general manager. Both report directly to Brooks.

A firewall has been erected around Brooks in an attempt to ensure she survives the hacking affair, and it is a source of intense irritation at NI that two Labour backbenchers, Chris Bryant and Tom Watson, are amongst the public figures keeping it in the headlines.

Despite the Sun's high-profile decision to back David Cameron in 2009, the Labour leadership know that alienating Murdoch would be foolish. There were more Labour figures at the party than Conservative ministers, a reflection, perhaps, of Labour's continuing obsession with winning over Murdoch when they can, and trying to neutralise his title's most venomous attacks when they fail. As well as Miliband and two of his closest advisers, Tom Baldwin and Stewart Wood, shadow home secretary Yvette Cooper and shadow foreign secretary Douglas Alexander also partied.

Tory backbenchers were represented by David Davis and Nick Boles. Labour peer Lord Sugar, who had attacked NI over phone hacking earlier that day, was also there, briefly, leaving after a frank exchange of views with two senior executives.

Few of them will have discussed it at the party, but many observers are wondering how News Corp might look in a post-Rupert era. There are those who think he is not as sharp as he was. Others, including one insider who lunched with him last week, say his extraordinary energy and mental alacrity show no signs of waning. As long as he is there, Brooks will benefit from his protection, but if the phone-hacking affair proved anything it is that no one at News Corp is indispensable.

Lewis, a former Sunday Times business editor, is a ready-made replacement for her if she were to become the second high-profile victim of the hacking affair after Coulson, her successor at the News of the World. Coulson's career was rejuvenated by Cameron when he made him communications director months after his resignation from the paper - only for him to resign again in January over "continued coverage of events connected to my old job".

His replacement at No 10, Craig Oliver, was with his boss at the Orangery, but it was Coulson's absence, rather than Oliver's presence which felt more significant. The fact that he wasn't there served as a reminder of what can happen to even the longest-serving and most loyal of Murdoch executives when things go badly wrong.

via guardian.co.uk