A secret meeting between Rupert Murdoch and Margaret Thatcher cleared the way for News International to buy the Times and Sunday Times in 1981, Thatcher's private files reveal.
A long note – marked by her press secretary, Bernard Ingham, as "commercial in confidence" – of the Sunday lunch at Chequers on 4 January, three weeks before the first cabinet committee discussion of the Murdoch takeover, shows the meeting was held at his request.
Thatcher gave the meeting no publicity and instructed that the note should not leave No 10 Downing Street; the media tycoon later gave the impression in the newspaper's own history that he had no contact with the prime minister ahead of Conservative approval of the purchase.
The Ingham note makes clear that Murdoch first tried to establish some political empathy with Thatcher by praising Ronald Reagan's new administration before explicitly briefing her on his bid and future plans for Times Newspapers, including taking on the unions, introducing new technology and reducing the workforce by 25%.
Murdoch followed up the lunch with a handwritten "thank you" note two weeks later – "My dear Prime Minister" – telling her that "the field has contracted down to only two or three of us" and that the Times owners, the Thomson family, would "make up their minds in the next day or so".
This direct personal lobbying was critical, as the government had the power to block his acquisition by referring the bid to the Monopolies and Mergers Commission because Murdoch already owned the Sun and the News of the World. The government's subsequent refusal to do so paved the way for the creation of what is easily the largest newspaper group in Britain. Its market share was about 28% at the time, but its financial strength has helped it grow to the point where it accounts for about 37% of all newspaper copies sold.
The decision was one to be taken personally by the trade secretary, then John Biffen. However, when the matter was first discussed at the crucial cabinet economic strategy committee on 26 January, the recently released minutes show that Thatcher opened the discussion by highlighting the exemption under the Fair Trading Act 1973 that would allow Murdoch's bid to avoid a referral.
Thirty years later, the circumstances surrounding Murdoch's purchase of the Times titles came back into focus as his News Corporation bid for full control of BSkyB. Negotiations between News Corp and the culture secretary, Jeremy Hunt, led to a similar outcome – with the minister proposing to approve the merger in lieu of a full referral to the Competition Commission, in return for an agreement to spin out Sky News.
But the deal collapsed in furore that followed the revelation that Milly Dowler's phone had been targeted by the News of the World.
David Cameron's first meeting with a media owner after he became prime minister in May 2010 was with Rupert Murdoch, who entered No 10 by the back door. Two months later Murdoch's News Corp launched its bid for Sky, and the proprietor met Cameron in July 2010. This meeting was not initially disclosed when Cameron first published a list of meetings with media owners and newspaper editors in July last year.
The disclosure of the secret Chequers lunch in the 1981 Thatcher papers held at the Churchill archives centre, Cambridge and now released after 30 years, flatly contradicts the account in the official history of the Times that says the two scarcely knew each other and "had no communication whatsoever during the period in which the Times bid and referral was up for discussion".
The author, Graham Stewart, sources this to an interview with Murdoch. The official history suggests that the newspaper tycoon relied instead on the columnist Woodrow Wyatt to plead his case.
The Ingham note says that Murdoch spent much of the Chequers lunch voicing his "favourable impressions" of the embryonic Reagan administration and offering to arrange a meeting for her with a group of "New Right" politicians during her impending visit to New York.
Ingham says that before the meeting he had tried to check with the trade department on the reported 10 bids but was told there was no further information beyond what had been in the papers because Times Newspapers were being very secretive.
Murdoch said he had made a "nominal bid" for all the Times titles, all of which would be retained, in return for which he would meet all staff redundancy costs on the condition there was a 25% cut in "overall manning levels". He added that he couldn't move to "optimum manning and use of new technology in one fell swoop" but foreshadowing the later move to Wapping stressed the "inevitability of progressing gradually".
He then listed his rival bidders. He dismissed Lonrho and Robert Maxwell as unlikely to impress either Thomson, unions or journalists. He said Sir James Goldsmith was only likely to bid for the Sunday Times, which had been profitable, but that he was in a stronger position as he was willing to buy the Times as well. The Times journalists' own bid was also dismissed as "unlikely to carry much conviction". He left out, however, the most significant rival, Lord Rothermere, owner of the Daily Mail.
Murdoch said that he was risking £50m of News Group's resources in the deal and that such an amount "could finish us".
Ingham claims that Thatcher did nothing more than "wish him well in his bid" and noted the need to improve Fleet Street staffing levels and to introduce new technology.
The later cabinet committee minutes confirm Thatcher's role in the discussion but also that the trade department's accountants had advised that only in the case of the Times was it "clear-cut" that it was not economic as a going concern.
Many people who wanted the MMC to block Murdoch's takeover believed that the Sunday Times would return to financial health, and the papers appear to confirm that view. Until recently the Sunday title was highly profitable.