News-of-the-World-gate: the empire strikes back

This just keeps getting better and better. Alexander Cockburn is right—this is just like Watergate. The steady drip, drip, drip of bad news. The iconic hate figure, a man who pretty much singlehandedly created a global media empire against very significant odds, which in any other context might be seen as plucky and admirable in some way, but who wrecked that accomplishment through political blowback once some transparency revealed the depths to which members of his organization would go. (There’s that whole Fox News thing too, for good measure.) The scuttling of politicians for cover, or at least better defensive positions. And a few heroes popping up, occasionally from unexpected quarters.

So what’s happened since our last update? Well, what hasn’t happened? Except for Rebeka Brooks’s resignation, which Rupert has said is not gonna happen. We’ll see—some folks are giving it until Wednesday. In other expected and unexpected developments, Andrew Coulson, former News of the World editor and former press advisor to Prime Minister David Cameron, has been arrested, question, and released. More arrests are apparently forthcoming. One would hope so, given the other stuff that’s come out. Like the fact that News International apparently has been sitting on a bunch of emails since 2007 that pretty unequivocally show the company’s involvement in more extensive phone hacking and police payoffs. Cameron himself took responsibility for hiring Coulson against the advice of a number of people, reiterating his give-everyone-a-second chance spiel, authorized the creation of two new investigations, and is still in some hot water. Deputy PM Nick Clegg, presumably on his own, called for Murdoch to withdraw News International’s bid for BSkyB. Ed Miliband, whose stint as leader of the Labour Party thus far has been mostly characterized by flailing around, suddenly looks sharp and determined—like a leader, perhaps, although he still sounds a bit like a doofus. Culture Secretary Jeremy Hunt, who just last week was all set to sign off on Murdoch’s dream of buying up the 61% of BSkyB that he doesn’t already own, has reconsidered and sent the bid off to the UK Competition Commission, which looks set to extend this whole process. Oh, and the News of the World published its final edition yesterday.

This last point is what this whole affair has been about, from Murdoch’s point of view. He was willing to close a profitable newspaper, one of the two in his stable—the other being The Sun. Both The Times and The Sunday Times continue to lose money, but have been supported by the profits from the redtops (as the tabloids are referred to). He was willing to do this because the profitability of broadcast media is in the billions, of newspapers in the millions—when there are even profits to be had. So saving that deal was paramount. But it doesn’t look as if he’s going to pull it off. Miliband is set to introduce a resolution in Parliament on Wednesday that will force a deferment of any News International/BskyB deal until all investigations are complete—and this could take a while, perhaps even years. According to The Daily Mail, News International executives were threatening Miliband just a couple of days ago, but it looks as if Miliband has decided the game is too far gone. And it looks as if he’s even going to get some LibDem and Tory support. Murdoch didn’t help his position, presumably, by insisting that his top priority was saving Rebekah Brooks’s job. If I were a News Corporation shareholder, watching the share price drop regularly, I think I’d be getting a little concerned about what Murdoch’s actual priorities are. It’s not a good time to be an owner of BSkyB shares either.

Nor will Murdoch be helped by the more recent revelations. As I said, it’s drip, drip, drip at this point. So yesterday we had the news, as mentioned above, that News International has been sitting on damaging emails since 2007. 2007, by the way, was the year the Les Hinton, Murdoch’s right-hand man for 52 years, testified to Parliament that the phone-hacking was the work of one rogue reporter, he was positive of that—and that’s the line that NI and News Corp resolutely took up to last week. So we’re already seeing stories that he’s being set up to take the fall, along with Coulson.

Coulson apparently is not a happy camper these days, nor should he be, since it looks as if he’s in a bit of trouble as well. Then there were the gems from today—first, that News International apparently paid someone in the royal security detail for information on Royal Family movements. Cool. But even that paled with this afternoon’s allegation that The Sunday Times and The Sun (not NOTW, for a change) apparently did some furious digging on the personal details of former Prime Minister Gordon Brown and his family—including his children’s medical records. Now, Brown is not the most popular political figure in the UK, obviously—he lost pretty handily last year. But medical records of his kids? That will generate the same revulsion that phone-hacking a murdered girl’s cellphone generated—and that’s what started Murdoch on the slippery downward slope he’s currently on, remember. It was the Sun that broke the story that one of the Browns’ children had cystic fibrosis—a fact known only to the Browns and their doctor at the time. We now know how they got that story, then. Gee, who was editor of The Sun at the time? Rekekah Brooks. Oh, and let’s not forget the allegations raised in the Daily Mirror today that 9/11 victims in the US had their phones hacked as well And the shareholders’ lawsuit alleging lousy governance. See? Tomorrow, we’ll read about how News International was behind Princess Diana’s death as well. Well, maybe not. But every time I think we can’t go lower, we do.

If Murdoch wants to save his BSkyB deal, and even his UK businesses in general, he needs to be doing a whole lot of apologizing and digging for what actually happened. He does not appear to be taking that route—there are still press reports of News International executives threatening various political figures even as recently as this weekend, and Murdoch and Brooks putting up their beamy smiles across the media landscape today is probably not helpful to his cause either. Which suggests a very deep disconnect with the mood of the country, and Parliament, right about now. Murdoch is not stupid. But is he too old? Is he losing it? It’s hard to say. I gather, though, that there’s a legal reason for shutting down NOTW—and it has to do with limiting potential litigation in the US.

Here’s what Murdoch’s lawyers are probably worried about. Up until today, the government’s line was that there was little it could do to stop the NI/BSkyB transaction. That’s because up until now, the only issue that might have gotten in the way was the issue of media plurality, and whether Murdoch had too much dominance in the UK media landscape. Since the original proposal was approved by the EU Competition Commission, it was believed by the government that it could not then refer the deal to the UK Competition Commission. And the big mystery was why OFCOM, the media regulator, was not attempting to block the transaction on the grounds that Murdoch and his crew were obviously up to some pretty scandalous stuff—they would not pass the “fit and proper” test laid out in the Broadcasting Act of 1990.

Well, there’s a reason for that. And it’s this, if I have this right—the only way OFCOM could have attempted to block the transaction once it was passed on by the Competition Commission was if there was a likelihood of bringing charges against a director or executive of the company, or if a director or executive of a company was convicted of a crime—News International, in this case. That’s the test—but the law and precedent are murky here, as you might expect. And up until this week, that looked very unlikely.

But as a result of the revelations of last week—including James Murdoch’s admission that he paid off settlements to hacking victims years ago to keep other hacking details from coming to light—based on incomplete information, and all those pesky emails that keep turning up—it appears that OFCOM may have reconsidered its position. Which is why it wrote to Hunt a couple of days ago taking an interest in the case—and why Hunt today referred this all to the UK Competition Commission, to buy more time. Because if it turns out that any News International executive broke the law, that may pretty much doom the NI/BSkyB transaction. And not only that—if NI isn’t “fit” to own 100% of BSkyB, they would obviously not be fit to own the 39% that they currently own. Wait, there’s more. This has ramifications in the US as well.

So I’m looking forward to whatever comes out tomorrow. The next big milestone is Miliband’s threat to introduce legislation that would delay any NI/BSkyB transaction until after all investigations is probably going to come on Wednesday. That probably seems like a long way away to some of the people involved in all this.

Andy Coulson portrait by Paul Szep.

3 replies »

  1. My pleasure. Can’t wait to see what comes next, but it will be hard to top yesterday.