THE decision of the News of the World to support Tony Blair is the latest example of a growing number of links between Labour and Rupert Murdoch, owner of one of the world's most powerful media empires. The News of the World's sister paper, the Sun has already come out in favour of Labour - and there is speculation that The Times may do so later this week. The links are more extensive than Labour and Mr Murdoch like to broadcast - particularly as during much of the Eighties they were bitter enemies. Ten days ago, when Labour launched its business manifesto, it produced Gerry Robinson as the latest leading businessman to endorse Mr Blair. The accompanying Labour press release described Mr Robinson as chairman of Granada, the hotels and entertainment group. It did not mention that he is also chairman of BSkyB, the satellite TV channel in which Mr Murdoch has a controlling interest. Mr Robinson is also a director of British Digital Broadcasting - a joint venture with both Granada and BSkyB - that is applying for licences for digital television. BDB's services would incorporate Sky's regular programming and pay-per-view services. Dennis Stevenson, another prominent businessman and a trustee of the Tate who was recently appointed by Mr Blair to head an independent review on bringing information technology into schools, is also a director of BSkyB. At the heart of the changed relationship is the expansion of digital and cable television, which resulted in what appears to be a series of links between Labour, the privatised British Telecom and Mr Murdoch's empire. Labour's move towards Mr Murdoch has transformed in the space of three years. In January 1994, Peter Mandelson, one of Mr Blair's most trusted lieutenants, said: "If Murdoch cannot be beaten - and there are many who believe that his media holdings need to be cut down to size - we should encourage more British media companies to grow, compete and give Mr Murdoch a harder run for his megabucks." The rapprochement began in July 1995 when Mr Blair flew to Australia at Mr Murdoch's invitation to address the News Corporation's triennial management conference on Hayman Island, Queensland. A report in the Murdoch-owned Times said the Labour leader struck a conciliatory note in the light of the past conflicts between Labour and the News International Group of newspapers at Wapping. "There have been changes on both sides. The past should be behind us." The Times also reported that Mr Blair "appeared to offer an olive branch to Mr Murdoch by not specifying any precise limits on cross-media ownership". One of Mr Blair's key objectives since becoming Labour leader has been to neutralise the impact of the Murdoch press. The Sun famously claimed after the 1992 election it was the "Sun wot won it" for the Tories. Until 1995, Labour favoured an investigation by the Monopolies and Mergers Commission into the domination of Sky and Mr Murdoch's News International on the Britishmedia. But this policy has been shelved. Subsequently, Labour opposed the Government's proposals for tighter rules on media ownership - which would have placed restrictions on both Murdoch and the pro-Labour Mirror Group. It has hinted that it favours moving towards more de-regulation and having no ceiling on market shares. BSkyB is planning an expansion in digital television. This depends on regulation of the digital set-top box - and the access conditions allowed to competitors. The Government has set tough conditions for access, while Labour has made sympathetic noises to Mr Murdoch, who wants to control the set-top box. BSkyB is also involved in a joint venture with BT to develop interactive services, and BT would like to use its cable to carry entertainment services, including Sky channels. But BT is currently prohibited from carrying entertainment on its services until 2002, when the situation will be reviewed. This was to allow cable companies to get off the ground.Virginia Bottomley, the Heritage Secretary, recently confirmed the Government would keep this restriction in place. Ten days ago, Labour said it would lift the ban in 1998. In October 1995, Mr Blair announced a deal with BT to provide cabling to all schools as part of his effort to show that his party could do deals with business. A previous joint venture between Sky and BT has been vetoed by the Office of Telecommunications, Oftel, headed by Don Cruickshank. Sky executives are unhappy with him as their regulator. Mr Cruickshank is also unpopular with Labour because he criticised the party's proposed "windfall tax". Labour indicated in January that it was considering replacing Oftel and the Independent Television Commission with a single regulatory body, the Office of Communications. There have also been mixed signals on whether BT would be subject to the windfall tax. Mr Blair's advisers have indicated it would not - though aides of Gordon Brown, the shadow chancellor, have said it would be included because he wants to raise £5 billion plus. Links between Mr Murdoch and BT could become stronger if the merger with MCI, the second biggest American long-distance telecommunications firm, to form a joint company called Concert, goes ahead. MCI is a major shareholder in News Corporation. There is nothing to suggest any form of deal - it could be no more than a series of coincidences. But industry watchers believe the policies to which Mr Blair is signed up provide significant business opportunities for Mr Murdoch. A report in the Sydney Morning Herald after the Hayman Island get-together noted there were close links between BT and Murdoch through MCI. "So Murdoch is likely to be the key provider of product on BT's cables - and tap into a huge new source of income." John Major said yesterday he was not surprised by the News of the World decision. "It's not my job to woo newspaper proprietors," he said. "It is my job is to pass the legislation that I think's right. I dare say things like the broadcasting act did upset some people. But we believe in competition."
