Murdoch got himself into such a financial pickle with his Milken junk bonds that he had to move his British newspapers to Wapping to pay for them. The move was a huge success. Despite a year of worker unrest, Murdoch's stock price went up 300 percent. Unfortunately what no one realized was that as a result of the rise in stock value, the cost of paying out the Milken junk bonds eventually would also go up 300 percent. If he couldn't pay them out in time, it threatened to be a $3 billion blunder. So having turned US television on its head and then revolutionized British industrial relations to pay for his US adventure, Murdoch decided to take over the Australian press. It wasn't to make money, or to buy his father's old company, Herald and Weekly Times. Murdoch took over a country's newspaper industry as a debt-restructuring exercise.

Unfortunately it went horribly wrong. Murdoch had planned that most of the News Corp stock that he was issuing to pay for the Herald and Weekly Times takeover would end up in the hands of associate companies of the Herald and Weekly Times group, which he would control. It was an ingenious scheme which meant that after the takeover, rather than seeing his control of News Corp diluted by the huge parcel of new stock issued to pay for it, Murdoch would actually control more News Corp. stock than he had started with.

But when other bidders emerged, Murdoch found himself in a furious takeover battle not only for the Herald and Weekly Times group, but also for its biggest shareholder, an associated company called Queensland Press. With his plan about to collapse, Murdoch saved the day by using the Murdoch private family company, Cruden, to buy Queensland Press—a company that was once part of Sir Keith Murdoch's estate. The deal worked out, and Murdoch was able to repay the Milken junk debt. So by October 1987, all was well again in the Murdoch universe. The only danger Murdoch faced was if stock prices suddenly dived.

Chapter Four: The Party Line

The tale skips ahead here to Murdoch's great 1990 debt crisis, the defining moment in his life. More specifically, Chapter Four begins with that famous evening in the middle of the crisis when Murdoch was trying to convince Pittsburgh National Bank to roll over a $10 million loan. Murdoch survived the debt crisis, and everyone talked about the Pittsburgh moment, but nobody would give any details about where the Pittsburgh loan came from. The trail leads to a $A1 billion loan involving Queensland Press, which was now a private Murdoch company. The great Pittsburgh crisis wasn't about News Corp., it was really about saving the Murdoch family's private fortune.

Within weeks of the end of the debt crisis, the Australian Securities Commission launched an inquiry into the Pittsburgh loan. To understand this peculiar tale, you have to go back to New York in the week of October 18, 1987. Murdoch should have been in Australia for the News Corp. annual meeting. But Forbes magazine had just named Murdoch a billionaire, and Malcolm Forbes had invited Murdoch to a party in New York. Going to the party meant that Murdoch probably couldn't get to Adelaide in Australia in time for the annual meeting. So he skipped the annual meeting and was in New York when Wall Street crashed.

The crash was a big problem for Murdoch because earlier that year, the family company, Cruden, had taken out a big loan to buy Queensland Press. The Cruden loan was secured against Cruden's News Corp. shares, but when the News Corp. share price collapsed, the Commonwealth Bank of Australia and Citibank began to worry about their loan. They wanted more security. Rupert and Ann signed over a mortgage on their New York penthouse two days after the Crash. Then 24 hours later in Australia, Queensland Press bought a parcel of News Corp. shares from Cruden at $16 when the share price was at $13.80, sliding to hit $8.50 the following Tuesday. Buying shares for almost twice the market price didn't hurt Cruden or the Murdochs, but it was a different story for News Corp. shareholders. News Corp. owned 44 per cent stake of Queensland Press as well. Doing the deal so far below market price arguably cost News Corp shareholders up to $100 million. However, Murdoch's lawyers have a very different account of the transaction, and say that Qld Press directors made a farsighted and courageous decision to ignore short-term market turbulence to take advantage of a unique opportunity, and point out that today Qld Press is $A3 billion ahead on the deal. (nb this precis is too brief to give a full picture of the circumstances. Readers are urged to consult the book).

The $1 billion loan that Queensland Press raised for this deal was syndicated, and Pittsburgh National, which had just opened an office in Queensland, ended up with a piece of it. The loan fell due three years later, right in the middle of the 1990 debt crisis. This is the real origin of the moment that William Shawcross has made famous.

Chapter Five: The Fugitive

There are times when Rupert Murdoch's empire begins to choke on its own secrets. This chapter is about one of those times. When Murdoch announced in 1988 that he was going to launch a British satellite operation called Sky, he quickly found that he needed some way to encode the programs he broadcast. The latest Napster court decision has underlined how important trade secrets are to the entertainment industry—the ability to ensure that only paying customers can watch your programming. Murdoch got in on the ground floor by starting his own encryption company in Israel, News Datacom, using 'smartcards'. Unfortunately the American-Israeli who ran News Datacom, Michael Clinger, was also running a major fraud.