ON JULY 15th “Fox & Friends”, a show on Fox News, condescended to cover the scandal that is mesmerising the world. Steve Doocy, the host, and Bob Dilenschneider, his guest, conceded that there is a serious problem with hacking: recent victims have included the Pentagon, American Express, Citigroup and Bank of America. But why are the mainstream media focusing on hacking at the News of the World? And why are they obsessing about something that happened a decade ago in London, when America is teetering on the brink of default? Having implied that the News of the World was the hacked rather than the hacker and blasted other media for neglecting the great issues of the moment, “Fox & Friends” moved swiftly on to discussing Casey Anthony, a mother freshly acquitted of murdering her child.

That is probably the dumbest comment yet on the crisis at News International. The smartest may be a piece that Conrad Black, a former press baron who is between spells in jail, wrote in the Financial Times. He described Rupert Murdoch as a “great bad man”. (True to form, Lord Black added that this phrase was first used by Lord Clarendon to describe Oliver Cromwell but was later applied to Napoleon.) Mr Murdoch, he says, has broken his word and debased journalistic standards. But he has also revolutionised an industry.

With the world debating, in the wake of Mr Murdoch's appearance in the House of Commons, whether he is an evil genius who is showing his years or an evil genius who is pulling the wool over everybody's eyes, it is important to remember his greatness as a businessman: his ability to create value out of nothing and a media empire out of an obscure rag in Adelaide. He saved the British newspaper industry from being destroyed by thuggish print unions, endured years of losses to make satellite television a success, cracked the American television triopoly with the creation of Fox and gave the world Homer Simpson. Mr Murdoch has shown both a restless hunger for the next deal and the patience to invest for the long term—a rare combination. A study of annual returns to investors in blue-chip stocks between 1977 and 2001 put News Corporation third (30.7%) after Berkshire Hathaway (30.8%) and Walmart (38.8%) and comfortably above Exxon (18.3%), McDonald's (15.6%) and IBM (12.1%).

Balzac supposedly wrote that “behind every great fortune lies a great crime”. It would be truer to say that behind every great fortune there is a psychological aberration. Henry Ford hated Jews. George Eastman sanctioned industrial espionage. Thomas Watson turned IBM into a personality cult, complete with company songs about “our friend and guiding hand”, a man whose “courage none can stem”. Michael Milken, the inventor of junk bonds, was jailed. Richard Tedlow of Harvard Business School argues that many “giants of enterprise” suffer from what Norwegians call stormannsgalskap, the madness of great men.

Stormannsgalskap is particularly common among media barons, not least because they frequently blur the line between reporting reality and shaping it. William Randolph Hearst is widely suspected of stirring up the Spanish-American war to give his papers something to report. Lord Beaverbrook regarded himself as a kingmaker, literally so in the case of George VI. These men's megalomania was captured in two masterworks: Orson Welles's film “Citizen Kane” and Evelyn Waugh's novel “Scoop”.

The ugly side of these entrepreneurs is often just as important to their success as their admirable side. You cannot reshape an industry without extraordinary confidence in your own rightness. And it is hard to build a great company from scratch without what Mr Tedlow dubs “the imperialism of the soul”. But these negative qualities often end up undermining the empires that they helped to create. Ford's stubbornness led him to mass-produce cars before there were many roads for people to drive them on. But it later blinded him to the fact that General Motors was beating him by giving consumers more choice. Mr Milken's scorn for the way things had always been done allowed him to revolutionise financial markets. Yet it also blinded him to the fact that he was breaking the law. The bad side of great bad businessmen usually gets worse with age. They surround themselves with yes-men and family members (Mr Murdoch currently has two children working for his company). They become fixated on their earlier successes. Many start to believe that they are invulnerable even as their mortal powers begin to fade.

The Ozymandias of Oz

Mr Murdoch's woes follow a familiar pattern. He has built his empire by outsmarting complacent establishments all over the world and by taking extraordinary risks (in 1990 he came within a whisker of losing everything). Along the way he has collected a loyal band of lieutenants who share not only his conservative beliefs but also, more importantly, his attitude of “us against the world”. All this has returned to bite him. His entire empire is threatened by the rot in a small part of it. (Before he closed it, the News of the World contributed less than 1% of News Corp's business. A clear-sighted baron would have listened to advice and sold it long ago, but Mr Murdoch has a deep emotional attachment to newsprint.)

Mr Murdoch's confidence in his ability to solve any crisis has proved misplaced. Since flying into Britain to clean up the mess in Wapping he has made some odd mistakes, notably making such a fuss over Rebekah Brooks. And his contempt for the British establishment has been transformed from an asset into a liability. As well as giving his pet tabloids too long a leash, Mr Murdoch has underestimated his enemies. The Guardian, a left-wing paper that Murdochites have long viewed with utter contempt, has turned out to be as deadly as any of Rupert's rottweilers.





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