Has the old boy finally lost the plot?

At last, he says sorry, and loses his key lieutenants. But is it all too late for an ageing Rupert Murdoch

(epa)

It was the oddest of comments. In his first significant remarks since the News of the World scandal broke, Rupert Murdoch had this to say: "The damage to the company is nothing that will not be recovered. We have a reputation of great good works in this country. I think he [James] acted as fast as he could, the moment he could. When I hear something going wrong, I insist on it being put right." He added that News Corporation, the giant US media group which owns News International in the UK, had handled the crisis "extremely well in every possible way", making only "minor mistakes".

Then, when asked by the interviewer on his own newspaper The Wall Street Journal, whether he had been upset by all the negative publicity, Murdoch replied: "Just getting annoyed. I'll get over it. I'm tired."

Tired? How could the greatest media tycoon of all time, the Australian newspaper man who came to Britain in the 1960s to buy the News of the World, going on to snap up some of the country's most treasured newspapers, and build a $40bn (£25bn) TV and cable network in the United States, give in to such a prosaic condition at such a crucial time? Or is it true, as the Telegraph's former owner Lord Black said last week, that while Murdoch is quite an agreeable chap, he has no loyalty to anyone, has betrayed all his friends and political leaders and cares only about his company? It certainly seemed so as the 80-year-old then made no attempt to apologise for hacking the phones of vulnerable families, making payments to police officers or closing the UK's biggest selling newspaper. If it was an attempt to fight back, it was pathetic. One thing is sure – he didn't have any spin-doctors telling him what to say then.

His remarks compounded the questions being asked about Murdoch's usually sharp mental faculties, whether the man who up until last week was considered one of the most powerful on earth is finally showing his age, and losing his grip. As Michael Wolff, biographer of the Murdochs who spent hours interviewing him, commented: "These guys are on the run. Now the real issue is how to avoid further humiliation."

Not easy. Being photographed out with his personal trainer, with his jowly jaws, and spindly knees sticking out of his running shorts, the mighty mogul had very clearly aged. Then, those pictures of him alongside someone who could have been a matronly nurse in mufti in his silver-grey Range Rover showed him looking not just old but fragile, too. You could almost see the power seeping from him.

Questions have been asked ever since Rupert flew in from the US last Sunday, ostensibly to take charge of the crisis. When reporters wanted to know what his priority was to be in fixing the scandal and handling the BSkyB bid, he put his arm around his right-hand woman, Rebekah Brooks, still chief executive of News International; saying "this one". It brought gasps from even the most cynical.

Well, "this one" was finally sacrificed on Friday after two weeks of intense pressure from politicians, an outraged public, the parents of Milly Dowler, the murdered schoolgirl whose phone had been hacked, and the press. It's hard to know whether it was Rupert Murdoch's daughter Elisabeth who drove the stake through Brooks after allegedly telling friends that Rebekah had "fucked the company"; or perhaps it was the late-night intervention of Saudi Prince Al-Waleed bin Talal, who said on Newsnight that Mrs Brooks would have to go if "her connection [to phone hacking] is explicit" but repeated his backing for James.

But it's clear that the support of Bin Talal, the second biggest single investor in News Corp with 7 per cent of the shares, is critical to the Murdochs' control and stewardship of the company; the Murdoch family itself owns about 40 per cent of the voting shares through various trusts.

Bin Talal will have been watching News Corp's share price, which has plunged more than $3 to $15 a share, wiping billions off the value of the company, now worth around $42bn. The selling has been triggered by big US investors who fear that the Murdochs will be investigated in the US, that they face lawsuits running into hundreds of millions of dollars and that they may even be forced to give up running the company. Already, the FBI and the Department of Justice have said allegations that US citizens involved in 9/11 were the victims of phone hacking will be investigated, while News Corp is also facing inquiries by America's corporate watchdog, the Securities and Exchange Commission, over potential violations of a law that forbids US companies from bribing foreign officials – the Foreign Corrupt Practices Act.

It was only a few weeks ago that Rupert, his son James, daughter Elisabeth and Rebekah Brooks were the talk of the town; hailed as the king-makers to the political classes. At the Murdochs' summer party, there was the usual mish-mash of politicos from David and Samantha Cameron to Ed Balls and Yvette Cooper, alongside celebrities such as Mariella Frostrup, all paying homage at Kensington's elegant restaurant, the Orangery. The talk was merry, both Rupert and James confident that their longed-for £7bn bid for a full takeover of BSkyB was about to be cleared by the Culture Secretary, Jeremy Hunt. This was to be the jewel in the News Corp crown – generating about £1bn a year in revenue. The Murdochs had hoped to use the TV station and broadcaster to cross-subsidise the loss-making part of the empire, the newspapers – only The Sun and the News of the World made money. Now the value of BSkyB has collapsed as hedge fund investors, who were hopeful of a takeover, have sold out. The position of James as chairman is under pressure from investors who question his handling of the phone-hacking allegations. As one said: "It seems to be that James, like his father, is a cynic – but a cynic without his father's charm."

It's not the first time investors have queried Murdoch's commercial strategy over the past few years: investments in ITV, the pricey $580m purchase of Myspace, which he later sold for $35m, a fortune for the Dow Jones group and for Shine, the TV production company owned by Elisabeth Murdoch, have all been fiercely criticised. Shareholders have claimed that Murdoch either over-paid out of vanity, or misjudged the value of the assets he was buying. Either way, it's led to many disgruntled investors in the US arguing that Murdoch was becoming too much of a risk factor; this is one of the reasons the News Corp shares are depressed relative to its media peers. It was concerns that Rupert Murdoch had paid £415m for his daughter's company, Shine, that prompted the Amalgamated Bank to lodge a court action against News Corp in Delaware – where the company is registered – alleging it paid too much for her production house and trying to block her appointment to the News Corp board. Independent analysts disagreed, claiming Murdoch paid the going rate and that Elisabeth's business was sound.

That's perhaps academic now as Amalgamated, along with the Central Laborers' Pension Fund and the New Orleans Employees Retirement Scheme, has triggered fresh legal action against Rupert and James Murdoch in the phone-hacking case, alleging the two men have a fiduciary duty to shareholders and should take responsibility for what happened.

While Rupert Murdoch may appear to have lost some of his grip, there are signs that his supporters are fighting back, and many of them are emerging on the airwaves to defend him. After two weeks of being behind the curve, the Murdochs have appointed the high-profile PR firm Edelman, which, with offices in London and New York, will be working flat out to restore reputations. It didn't take Edelman long: within hours of Murdoch's bizarre ramblings appearing in the WSJ on Friday came his mea culpa in the afternoon, followed by the full-page ads in most of Britain's newspapers on Saturday. He apologised profusely for all that had happened at the News of the World, personally apologised to the Dowler parents, and, according to reports, with head in hands told them that the standards that had been followed at his newspapers would not have pleased his mother, who is still alive, or his newspaperman father. It was a strangely revealing remark, showing how deep the ties of this family run.

As one insider said: "Don't underestimate this family; it's as close as any Mafia family and will battle to the end. Watch out for Elisabeth – she has come through this clean and could even emerge in a more powerful position. Rupert certainly rates her the highest of all." But in the meantime the one to watch is Chase Carey, the man with the walrus moustache and an unsentimental attitude to newspapers, who is president and chief operating officer of News Corp. He's in London helping to sort out the mess – and is said to have persuaded Murdoch to drop the BSkyB bid.

Carey, an American who rose through the movie channel and satellite business, is being tipped as the new broom, and is perfect to succeed Murdoch as chief executive, leaving him to be chairman, thus taking the damaged James out of the succession. It's certainly what the US investors would like to happen, arguing that Carey has proved he can make money and doesn't run the business as a personal candy jar. But, more importantly, Rupert actually listens to his chief operating officer, who acts as a brake on his more extreme actions.

It's for the historians to judge just how pervasive the influence of Rupert Murdoch's reign has been on the British body politic. For now, the judgement of the amateur historian Lord Black seems rather apt. As the former media mogul also said, quoting Clarendon on Cromwell, Murdoch is a "great bad man. It is as wrong to dispute his greatness as his badness."

Five uses for an ex-CEO

1. Southern Cross, leaders in elderly care, hire Rebekah to spearhead their new initiative to improve quality of life for their male residents. A spokesman said: "She has a proven track record at boosting the self-esteem of old men. Rebekah will lead a team that will accompany the old guys everywhere, agreeing with everything they say."

2. Fox TV introduces Rebekah as a new character in The Simpsons. A spokesman for the Murdoch-owned channel said: "This is a natural move, given her hairstyle. She will play Marje's long-lost sister."

3. She joins the Top Gear team as their first female presenter. A BBC spokesperson said: "In a way, this is a job Rebekah has been preparing for – charging arrogantly around the place, doing irresponsible and indefensible things." He added that the producers will ask James May to dye his hair blonde so there is no confusion between him and Rebekah.

4. The Mail on Sunday unveils Rebekah as its new female columnist with the blurb: "Are you missing what she's missing? She forgets! She's on holiday when important things happen! She's the columnist all Britain is talking about!"

5. Trustee on E block at Holloway women's prison.