Hacking storm lingers over British media

With evidence that journalists tapped into private phone calls in search of exclusive stories, Rupert Murdoch has cancelled a trip to Davos to fly to London.

There is an almighty storm raging in the British media. Even by the none-too-genteel standards of the "street of shame", Fleet Street - that address is still the generic term for the UK's newspaper industry, despite the fact there are no titles in the central London area any more - it is a tempest of extraordinary proportions.

It has claimed the careers and, in a couple of cases the liberty, of senior journalists and one government adviser. Several other news executives are also in the firing line.

Most media observers there believe the affair will not die down quietly, even after the resignation of Andy Coulson, the press adviser to the prime minister, David Cameron, and former newspaper editor.

It also threatens the reputation and business ambitions of Rupert Murdoch, the UK's pre-eminent media mogul, at a particularly sensitive time for his UK empire, based on the newspaper titles of his News International holding company and his TV satellite business BSkyB.

He is taking the matter so seriously that he has cancelled his trip to Davos this year and the chance to participate in the World Economic Forum.

His rivals in the UK and international media industry, led by the Guardian and Telegraph groups in Britain and The New York Times in the US, are rubbing their hands with glee at Mr Murdoch's troubles, and taking every opportunity to further embarrass him with fresh revelations almost daily.

It has also kicked off a debate about the ethical standards of the British press, regarded as perhaps the toughest and most ruthless in the world.

The view among those who know him well is that the timing of the scandal is very bad, coming as it does just as Mr Murdoch is seeking to buy the 60 per cent of BSkyB that he does not already own. He is said to be increasingly pessimistic that he will be given government permission to complete the deal.

The scandal goes back to 2005, when it emerged that journalists from the News of the World, Mr Murdoch's big-selling Sunday tabloid, had hacked into mobile phone messages belonging to Prince William, the grandson of Queen Elizabeth II. Two were subsequently jailed, but the controversy did not end there.

The issue became: how high up the chain of command at the newspaper did knowledge of the journalists' illegal behaviour go? Although Mr Coulson resigned as editor, he denied any knowledge of the crimes, and was later hired as press adviser to Mr Cameron, who last year became prime minister.

Other news executives at the paper came under suspicion, adding to calls that Mr Coulson should bear responsibility for the illegalities and should quit his government job. Last weekend, he resigned from Number 10 Downing Street, but continued to deny any knowledge of the events.

Meanwhile, the circle of people who were the victims of the illegal phone intercepts grew: footballers, actors, musicians and other celebrities claimed they had also suffered intrusions. Even Gordon Brown, Mr Cameron's predecessor, said he suspected his mobile phone had been intercepted, and asked police to investigate.

At the last count there were as many as 2,000 potential victims. The newspaper has concluded legal settlements with some, but with compensation going as high as £1 million (Dh5.8m) in one case, the scandal is also beginning to hit Mr Murdoch where it hurts most: in his pocket. So far, the allegations have been largely confined to the News of the World, but there is speculation that other newspapers also engaged in the illegal practices. In my day on Fleet Street it was an open secret that the phones of celebrities were routinely broken into, with or without the knowledge of editors or proprietors.

The hacking scandal that is unfolding daily in the British press is beginning to affect Mr Murdoch's wider business ambitions. Mainly to get control of its valuable cash flows, he would like to take over completely the rest of BSkyB, the satellite network of which he already owns 39.1 per cent.

The UK media authorities, which must approve the merger, are already looking at the proposal, and any controversy could affect their decision. Jeremy Hunt, the government culture minister, is philosophically well disposed towards the Murdoch camp, but he must be seen to be acting impartially. The hacking allegations might just be a good excuse for him to block the bid or order an investigation that could also affect the outcome.

Mr Murdoch's international plans are also at a critical stage. The populist tone and content of his Fox News channel is under fire in the US following the attempted murder of a US politician.

In the Middle East, he is planning ambitious expansion strategies with Prince Alwaleed bin Talal bin Abdulaziz Al Saud of Saudi Arabia, and also with partners in Abu Dhabi.

But for the moment, his attention is likely to be focused on the UK, and the dubious ethics of some of his journalists there. Nobody expects the five-year-old storm to blow itself out quickly.