As $80 billion Time Warner takeover bid fails, what next for the Murdoch empire?

On thin ice. EPA/Andrew Gombert

Rupert Murdoch’s 21st Century Fox has reportedly had an $80 billion takeover bid rebuffed by Time Warner. The deal would have created a company with a combined revenue of $65 billion, and would have been a serious coup at a decidedly shaky time for the Murdoch galaxy.

As the multi-year phone hacking saga goes on, with trials and retrials in the pipeline, things are looking as tricky as ever for the Murdochs – even if the British press (and not just the Murdoch press) has painted quite a different picture.

Utterly predictably, the verdicts in the hacking trial were taken by most British papers as confirmation that the entire three-year process – from the Leveson Inquiry to Scotland Yard’s Operation Weeting to the trial itself – was both a colossal waste of public funds and a draconian threat to press freedom.

The Telegraph’s front-page story led the pack in emphasising Rebekah Brooks’ innocence (failing to mention Andy Coulson’s conviction until its fifth paragraph). The Sunday Times joined in, braying that: “The phone hacking trial cost more than £100m, much of it taxpayers’ money, and resulted in just one conviction.” An editorial in the Daily Mail suggested that the not guilty verdicts had exposed “the baselessness of [Cameron’s] decision to call the Leveson inquiry – which has cast such a chill over press freedom.”

The Murdoch-owned Times headlined its front page story “Brooks Not Guilty”, and pulled no punches:

Taking another approach, Brooks and Coulson’s alma mater The Sun warned that “We face unprecedented danger from Islamic terror”, pointing out that the money spent on the trial could have been used by a Foreign Office counter-terror unit facing £15m in cuts.

That, of course, was hidden behind a monster of a front page:

The grotesque misreporting of the outcome of the trial has left us in urgent need of a reality check.

Trouble ahead

On 8 July 2011, when Rebekah Brooks told NoW staff that their paper was to be closed down, she said she had “visibility” of revelations of more criminal activity yet to come and added: “I think in a year’s time every single one of you in this room might come up and say ‘Okay, well I see what you saw now’.”

Sure enough, in 2013, Greg Miskiw and James Weatherup, both former news editors of the News of the World, and chief reporter Neville Thurlbeck all pleaded guilty to plotting to hack phones, followed in January 2014 by reporter Dan Evans.

Private investigator Glenn Mulcaire, who had already been imprisoned for consipiracy to hack phones in 2007, admitted to three more counts of conspiring to hack phones, plus a fourth count of hacking Milly Dowler’s voicemail.

And at the conclusion of the trial, Coulson was found guilty of conspiracy to hack phones during his time as editor of NoW; at the time of writing, he and the paper’s former royal editor Clive Goodman are both to face a retrial over allegations they conspired to commit misconduct in public office by paying police officers at Buckingham Palace for two royal phone directories.

Brooks, her husband Charlie, her former PA Cheryl Carter, NoW head of security Mark Hanna, and the paper’s former managing editor Stuart Kuttner were found not guilty of phone hacking and walked free.

A criminal enterprise

So, contrary to the impression given by most of the press, Coulson was hardly the only person found guilty. Ahead of sentencing, prosecutor Andrew Edis QC stated that

Anyone who has ever suggested or believed or been told that phone-hacking that was revealed in 2006/7 was the work of a single rogue reporter needs to look carefully at this dock, in which there are four employees of the NoW – and only one of them can be described as a reporter, Thurlbeck who was chief reporter.

He continued:

Between them, these defendants utterly corrupted this newspaper, which became at the highest level a criminal enterprise. This was systemic misconduct, approved and participated in by the editor himself.

A similar line was taken by Weatherup’s QC Charles Bott, who, at his client’s pre-sentencing hearing, stated that Weatherup had instructed Mulcaire to hack phones only because it was the “standing policy” of the NoW at the time; senior staff at the newspaper encouraged and actively condoned the practice as an “expedient and cost-effective” way of gathering stories, he said.

He concluded:

At the time of Mr Weatherup’s offending we say phone-hacking was endemic. Secondly we say the ultimate responsibility for that lay at senior editorial levels. Thirdly the suggestion that phone-hacking was the responsibility of a small clique of news editors is falsely misleading. We have gone from rogue reporter to rogue reporter-plus, but neither of those reflect the truth.

Thurlbeck’s pre-sentencing hearing contained rather more specific revelations, since he had refused to testify against “former friends and colleagues”, including managing editor Stuart Kuttner, at the trial itself. However, at the pre-sentencing hearing, his QC, Hugh Davies, told the court that phone hacking at the NoW was sanctioned by managing editor Stuart Kuttner and three other top executives.

Davies also said it was Kuttner and Coulson who took the decision not to inform the police of the suspected whereabouts of Milly Dowler for 24 hours while the paper tried to find her themselves and get an exclusive story.

As noted above, the jury found Kuttner not guilty of phone hacking.

The next chapter

So, for anyone willing to listen, the phone hacking trial has at least raised the curtain on the sheer extent of criminal activity at the former NoW. But this is absolutely by no means the end of the story.

Since Operation Weeting was launched in January 2011, it has morphed into 12 separate operations; 210 people have been arrested or interviewed under caution in relation to a wide variety of alleged offences.

Arising from Operations Elveden (investigating alleged payments to public officials by the News of the World, Sun, Mirror Group and Star on Sunday) and Tuleta (investigating alleged computer hacking and other illegal access to confidential data by News UK titles), 11 more trials are due to take place at the Old Bailey, including 20 current or former Sun and the NoW journalists.

The most significant and potentially damaging case arising from Elveden concerns former Ministry of Defence official Bettina Jordan-Barber, alleged to have been paid nearly £100,000 by the Sun for stories.

In Scotland, Coulson and two other NoW journalists face trials variously on charges of perjury, phone hacking and breaching data protection laws. These arise from the Tommy Sheridan case, and are being investigated by Operation Rubicon.

Operations underway

Meanwhile, in the high court, Rupert Murdoch himself is mired in civil litigation. News UK has already paid damages of £250m to 718 of Mulcaire’s victims, but the settlements involve less than 15% of the suspected 5,500 victims. Now, News UK faces a new round of litigation from victims of Dan Evans, the former Sunday Mirror showbusiness writer allegedly recruited by the NoW specifically by virtue of his hacking skills. These charges are the subject of Operation Pinetree.

As noted above, Evans pleaded guilty in 2013 and co-operated with police in hopes of receiving a lighter sentence. According to one source, detectives have been warning up to 90 people a week that they were targeted by Evans; the final total of victims may amount to 1,600.

His former employer, Trinity Mirror, is currently facing phone-hacking claims of its own from at least 20 public figures, including Alan Yentob, Peter Andre, Sven-Goran Eriksson, Gary Flitcroft, Cilla Black, Christopher Eccleston, Davina McCall, Sheryl Gascoigne and Shane Richie. These are being investigated by Operation Golding.

Meanwhile, Operation Weeting detectives are understood to have found evidence that Mulcaire allegedly hacked the voicemail messages of officers from Scotland Yard’s highly secret witness protection programme. These officers have access to the new identities and current whereabouts of witnesses, victims of crime and offenders whose safety could be in jeopardy – information that is often the subject of a high court order prohibiting its disclosure, a breach of which could be ruled to be a contempt of court.

Any action would be brought by the attorney-general’s office, which was informed of the possible breach by the Metropolitan Police in April 2012. Perhaps inevitably, among those allegedly targeted by Mulcaire were the tabloid hate objects Robert Thomson, Jon Venables and Mary Bell.

And there’s more.

Active investigation

In August 2013, the Independent revealed that lawyers for the Metropolitan Police had identified News International as a “corporate suspect” in October 2011. In May 2012, Scotland Yard apparently warned the parent company, News Corp, that News International was under “active investigation”. In September 2012, Les Hinton, the former chairman of News International and Mr Murdoch’s right-hand man for decades, was interviewed under caution.

Then, during the hacking trial, but barely reported in British papers, it emerged that Brooks and Coulson too had been interviewed under caution in May 2012 for corporate charges concerning hacking and bribery.

And while this was also barely reported in the UK press, Murdoch too has been officially informed by Scotland Yard that detectives want to interview him under caution as a suspect in their inquiry into allegations of criminal behaviour at his British newspapers.

Controlling minds

The guilty verdict on Coulson substantially increased the possibility that News UK could be charged as a corporation. That could potentially lead to the prosecution of members of the UK company’s former board of directors (which included Rupert and James Murdoch) under section 79 of the Regulation of Investigatory Powers Act.

This section makes directors liable for prosecution if their company breaches the Act as a result of their consent, connivance or neglect. Such a prosecution can occur only if the “controlling minds” of the company are found to be guilty of a crime.

Following the guilty verdict on Coulson, Operation Weeting is expected to submit a new file of evidence to the Crown Prosecution Service.

Meanwhile, in the US, News Corp is being investigated at the corporate level by the Department of Justice, and Jay Rockefeller, chairman of the Senate Committee on Commerce, Science and Transportation, is known to be waiting to launch a formal congressional investigation into the company.

Nor should one forget that the cases being investigated by Operation Elveden could bring the Murdoch empire under the scrutiny of the Foreign and Corrupt Practices Act, US legislation that prohibits American companies from bribing foreign officials.

Ongoing nightmare

Successful corporate charges would be an absolute nightmare for the Murdoch empire. They could lead to a revolt among non-Murdoch shareholders; at worst, they might mean Rupert and James Murdoch could be debarred by law from holding any position within the organisation they created.

This threat is being taken extremely seriously. That much was demonstrated by the way in which Murdoch split his global business in July 2013, when the highly profitable television and film assets were hived off (as 21st Century Fox) from News Corp, the newspaper group. That appears to have been at least partly an attempt to isolate and contain any possible contagion from the phone-hacking scandal.

The failed Time Warner bid is only the latest stumble in a long saga of trouble for the Murdoch empire. It will surely not be the last.