Move Over, Rupert

by Bernard McCormick Tuesday, July 26, 2011 No Comment(s)

The Decline and Possible Fall of the Rupert Murdoch British Empire may seem unbelievable to some. How could a leading newspaper commit the acts it did, hacking people’s messages, bribing law enforcement at the highest level, at the same time becoming so influential that the most powerful people in the country treated its owner as uncrowned royalty? People knew this was going on. Why no complaints for so long? Did the newspaper staffers who did these things believe they had the sanction of their employer?

Well, by way of understanding, if not explanation, it isn’t the first time. You may chalk it up to corporate culture, for want of a better term. We were reminded of this last month, when going through old files at Philadelphia Magazine, where we started out in the magazine business and in the process played a bit role in the invention of city/regional magazines. Such magazines are everywhere today, but this was not the case in the 1960s when Philadelphia showed the rest of the country what a fringe media could do for a city. A book is under way on the subject, and Philadelphia Magazine is a big part of the story.

That magazine goes way back, almost 100 years now, as a chamber of commerce publication that nobody read. That changed, however, in the 1960s, when the editor and publisher realized that a publication directed to a small business audience had the potential to grow into a new media form that in some ways was more influential than the local newspapers. It was so influential that today some people give the magazine credit for driving out of the city a man who at the time was one of the most powerful figures in the newspaper world. He was Walter Annenberg, whose name today is recognized as a major figure in education philanthropy. That is a worthy distinction, but quite different from Annenberg's reputation as a newspaper publisher.

In that time he owned two of Philadelphia’s three daily papers, along with magazines including Seventeen and TV Guide. Like Rupert Murdoch, he was an intense competitor. Like Rupert Murdoch, he was feared and befriended by the most powerful people in his city. He could also be petty and vicious. He was known to have people he did not like airbrushed out of photos, even when they posed with the president of the United States. He all but boycotted the Philadelphia 76ers basketball team in its early years. His Philadelphia Inquirer ran a story with a headline reading that a candidate for governor had denied being in a mental institution – even though no one had said he was.

In that culture an enterprising and long-term Inquirer reporter named Harry Karafin saw opportunity. Karafin was known as Walter Annenberg’s hatchet man. When Annenberg wanted to get somebody, Harry Karafin was his hit man. Karafin figured out a way to live well on a newspaper reporter’s salary. And that was to write stories in The Inquirer suggesting that an investigation of some business was under way, then send a crony into the business and suggest public relations might be in order. Over several years Karafin got himself on the payroll of a number of businesses. Among his victims was the largest bank in that part of Pennsylvania, which paid his PR company more than $60,000 over five years. Serious money in those days. People paid off because they assumed that if Harry Karafin were on a story, Walter Annenberg was behind it. In fairness, nobody in Philadelphia thought Annenberg knew what Karafin was up to. But anyone close to the newspaper business knew that Karafin could never operate as he did if a sense of ethics came down from the top.

A lot of people in Philadelphia thought Karafin was a bad actor, but nobody did anything about it. The leading rival newspaper, the stodgy (and long defunct) Evening Bulletin, did not want a feud with Walter Annenberg. Then along came Philadelphia Magazine. Gaeton Fonzi, later a founding partner in Gold Coast magazine, and the author of an iconic book on the Kennedy assassination, quietly tracked Karafin for several years. Fonzi noticed that stories about corruption that he worked on were also rumored to be investigated by Karafin, but nothing appeared in the Inquirer. Fonzi sensed that Karafin was on the take, using the threat of investigations to blackmail businesses.

As Philadelphia Magazine grew in stature, so did the nerve of its management, which permitted Fonz and another Philadelphia Magazine writer, Greg Walter, to work full time on the Karafin story for months. When the story broke, it created a sensation. The whole town was buzzing, but The Philadelphia Inquirer remained silent. Silent, until the story began appearing in the national media, including Time Magazine. Then The Inquirer ran a big story, not mentioning Philadelphia Magazine, suggesting it had uncovered the corruption within its own organization. Karafin was fired, convicted of blackmail and extortion, and died in jail. After that, Philadelphia Magazine grew rapidly. It became a must read for anyone who gave a damn about their city.

Fonzi then went on to write a two-part magazine series, which became a book, on Walter Annenberg and the way he ran his publishing business, explaining how the Karafin scandal was only possible in the culture Annenberg created. It was devastating stuff and within months Annenberg sold his papers to Knight Ridder. Today people who hear the incredible Karafin story wonder how it could have happened at The Philadelphia Inquirer, which won numerous Pulitizer Prizes in the years after Knight Ridder took over. They need to be reminded that it was before that fine organization came to Philadelphia, when Walter Annenberg ruled in fear.

Not too different from the Rupert Murdoch story.

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