Damn The News of the World, Full Speed Ahead: Protect the BSkyB Deal At All Costs - UPDATED 1700 CET

Philip M. Stone July 8, 2011 Follow on Twitter

Above all else Rupert Murdoch wants 100% of the BSkyB cash cow. He’s willing to pay around US$14 billion to get the 61% of the company he doesn’t already own. His empire was originally built on the tabloid cash cows News of the World (NoW) and The Sun, but the NoW has torpedoed itself with telephone hacking revelations that disgusted almost everyone, major advertisers pulled out and seemingly overnight the brand was hamburger. So this Sunday’s NoW will be its last and News International (NI) hopes desperately that will be that. But it won’t be.

The public wants blood. Murdoch has killed a “thing”; it doesn’t bleed. What most people seem to want is for Rebekah Brooks, the News International UK boss, to be sacrificed, too. She was editor of the NoW when much of the hacking occurred although she has told Parliamentary committees she didn’t know about it. Now she is in charge of NI in the UK. If anyone has to go she is the logical one. But Murdoch is exceedingly loyal to his top executives and he is standing by her and thus far she has not been allowed to fall on her sword although she apparently did offer to step aside. British Prime Minister David Cameron is on close social terms with her – they are near enough neighbors in his Oxford constituency – and Cameron for some time was noticeably silent on demanding her head but on Friday he finally came out and said NI should have accepted her resignation.

NI seems to be hoping that if there does need to be a sacrificial lamb then let it be Andy Caulson, a former NoW editor who had resigned over the original telephone hacking of members of the Royal family. And yet it was he who Cameron appointed as his Downing Street spokesman, against a lot of advice from politicians in all parties. But when new hacking revelations back in January made him the main subject of media stories – he has denied all knowledge of hacking -- instead of his spinning stories to the media he knew it was time to go. He was arrested Friday and the Murdochs are no doubt hoping that will satisfy those wanting blood. (Ed. Note: Former NOWT editor Clive Goodman was also arrested Friday and police searched offices at his current employer, the Daily Star. Goodman had been arrested previously for complicity in phone hacking.)

The politics of all this is causing huge headaches in Downing Street. Cameron probably wouldn’t have become Prime Minister if it wasn’t for the support of the four Murdoch UK national newspapers. For years when he was Conservative Party leader and out of government he courted Murdoch for that support. How do you pay back that media support? Murdoch found a way. He owned 31% of BSkyB – the British satellite broadcaster that nearly bankrupted him in its very early days – but today it is a cash cow and he now wants it all. Do the math – the average price paid by its 10.1 million customers is now £544 a year which means annual cash flow of near $9 billion. What’s a junked tabloid worth in comparison? The government was ready to give him that prize on condition he spun-off Sky News but public opinion is now firmly against. How does Cameron walk that tightrope? He owes Murdoch big-time.

But while there may be headaches in London they’re probably clinking the champagne glasses 3,000 miles away at the shiny New York Times headquarters on 8th Avenue. For when Murdoch’s Wall Street Journal decided it wanted to be a player in the New York market – and that meant competing for NYT advertisers -- one of the NYT’s artillery shells was a long expose journalistic piece last September about NoW hacking, not just covering what had already been in the public domain but there were interviews with former employees and police officers that indicated there was a lot more to the story.

It was mostly old stuff, but it did reveal that while Scotland Yard nailed those responsible for hacking into Royal telephones – that’s just not acceptable – there seemed to be a whole lot of other people whose phones were also hacked, although the tabloid continually denied it, and Scotland Yard allegedly, according to the NYT, did not follow up because it was afraid of the Murdoch press influence.  The NYT found a former employee who said “even the cat knew” there was wholesale hacking going on. Scotland Yard eventually reopened the case based on this “new evidence” and a Parliamentary committee questioned the lead Scotland Yard investigator as to why the original investigation did not go further and new police investigations began. Nine months later and the NoW is down and out.

When the NYT story broke its hacking story it had mostly gone away in the UK, but the UK media picked up on the new revelations, especially indications that the police feared going up against the Murdoch empire.  But the public still didn’t seem too bothered until this week when all hell broke out. The Daily Telegraph wrote that the mobile phone of a missing girl had been hacked back in 2002 and some messages had been erased – at the time the family thought erased messages meant the girl was still alive, never thinking for one moment a newspaper was behind it, but she was already dead. That hacking hit home. And if that wasn’t enough more revelations came out about hacking the phones of family members of the 7/7 London bombings, and then there was the hacking of phones of family members of soldiers killed in Afghanistan…

It was all too much. The British Legion that helps British servicemen and their families withdrew from the NoW relationship; major advertisers lined up to announce their withdrawals; politicians from all political parties demanded public inquiries headed by a judge with subpoena powers, and it seemed everyone wanted Rebekah Brooks’ head. (Ed. Note: Renault announced it is pulling all advertising from News International titles. Charities including Action Aid and the Salvation Army have declined to place ads in Sunday's final NOTW.)

So the Murdochs  -- Rupert who was in Sun Valley attending the 2011 Allen and Co. Sun Valley Conference of top business leaders, and in London son James, chairman of European operations, made the overnight calculations that the BSkyB deal  had to be saved at all costs; Rebekah Brooks was to remain in post; and the sacrifice that was to catch everyone’s eye would be the closing of the NoW that was losing many of its major advertisers anyway.

But the cynics were soon out there. A former BBC chairman wrote the Financial Times demanding that James Murdoch resign. Pundits were asking how long would it be before the NoW would be replaced by The Sun on Sunday? And while it was noted the NoW staff were losing their jobs (they were welcomed to apply for positions at other NI publications) there was Rebekah Brooks keeping hers. (Ed. Note: The National Union of Journalists (NUJ) reports it has been "innundated" with inquiries from NI employees about union membership.)

The government announced it was delaying for a month making a final decision on BSkyB. The public consultation period is to end today (Friday) but there have been reports there were more than 100,000 submissions from the public made this week once the latest hacking revelations came out. The government probably hopes that everyone goes on their summer holidays and will forget all of this and in September approval will be easy. It won’t be.

But the government is also keeping to its line that it can only give a yea or nay to the deal based on media plurality and the working practices of a News International newspaper plays no part in the decision. But Lord David Putnam told the House of Lords Thursday that the government could block the bid on the grounds News Corp would not be a "fit-and-proper" owner of BSkyB. Putnam had a part in writing the relative legislation so he should know, but the government insists it does not apply in this case. (Ed. Note: UK Culture Minister Jeremy Hunt has asked regulator OFCOM to determine if News Corp is "fit and proper" to take complete control of BSkyB. OFCOM responded that it could take the police investigations into its consideration once those investigations are completed.)

The News of the World has been The Sunday UK newspaper read for as long as anyone can remember. Its circulation of around 2.6 million is about half of what it was in during the good old days, but it brought to the Sunday breakfast table all the gossip, much of it not fit to print. Many households would buy at least one quality paper and one Sunday tabloid – one for the news and the other for the nod and a wink.

The NoW will be missed but perhaps there is some justice that a newspaper that lived by breaking scandals should be killed by a scandal of its own making.

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