How the Phone Hacking Scandal Threatens News Corp.

Here's what we know so far about the ballooning scandal around News of the World

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The phone hacking scandal that imperiled Rupert Murdoch's tabloid News of the World is spiraling out of control. Ensnaring not only the editors involved but also the British police, members of Parliament and News Corp. itself in the web of culpability, the controversy looks increasingly like it will bring to bear Rupert Murdoch's stranglehold on the national dialogue and Machiavellian business practices. After news emerged that News of the World had hacked into the cellphone of murdered teenager Milly Dowler, the latest reports claim that they may have done the same with families of fallen soldiers, and News Corp.'s coverup spanned far and deep into British political machine. The tabloid's sister paper The Times finally broke their silence on the story Thursday and said that regardless of the scandal's outcome "this is a watershed moment for British journalism."

Of course, this isn't the first time News of the World has drawn global scrutiny for phone hacking. The practice has been going on for years--a reporter and private investigator were sentenced to jail time for a 2005 scandal involving the Royal family. The New York Times offers a perusable timeline of the years-long scandal including the history of reported News Corp. payouts and the latest developments. Along these lines, The Guardian reports Thursday that News of the World paid five police officers at least £100,000 each for a cover up. But the latest revelations has reignited outrage sending advertisers running and launching an internal investigation that Murdoch might not be able to buy his way out of.

News Corp.'s private investigator may have targeted dead soldiers' families. Scotland Yard is once again investigating Glenn Mulcaire--the investigator hired by News of the World and later jailed for hacking into royal aides' phones. Claims emerged recently that Mulcaire hacked into the phones of soldiers killed in Iraq and Afghanistan, a charge that The Guardian says will "further shock the public, who have already reacted with horror to news that the paper intercepted voicemails left on a phone belonging to murdered schoolgirl Milly Dowler and targeted the phones of families of victims of the 7/7 attacks." The Royal British Legion, the leading charity supporting British veterans, is severing ties with News of the World as a result.

Everybody wants News Intl. CEO Rebekah Brooks to resign. A quick survey of leading British papers' editorial sections on Thursday morning reveals widespread calls for Brooks, who was the editor of the News of the World when the tabloid hacked into Dowler's phone and now is the top executive of News Corp.'s British newspaper division, to step down. The Financial Times claims that Brooks's "position is untenable" and that regardless of her knowledge of the hacking, "the final responsibility was hers." The Independent, similarly, says that it's "hard to see how Ms Brooks can remain in her present position, even if it is true that she was unaware of the hacking of the Dowler phones."

Scandal offers Parliament a unique opportunity to investigate Murdoch. The House of Commons is aggressively pursuing claims that police may have known about this week's revelations all along. In debating the issue Wednesday, legislators seized the opportunity "to denounce reporting tactics by newspapers once seen as too politically influential to challenge," says The New York Times. "Prime Minister David Cameron, whose Conservative Party benefits from Mr. Murdoch’s support, stopped short of calling for an immediate investigation" into News Corp. until after police conclude their criminal investigation into the matters.

Advertisers are fleeing in droves, but that probably won't hurt News Corp. We learned Wednesday that Ford, Lloyd's Bank, Renault and Coca Cola pulled their ads from News of the World in response to the public outrage over the Dowler hack. Halifax, the Cooperative Group, Virgin Holidays and Mitsubishi join those who have fled and T-Mobile, Orange and Npower are reviewing their contracts, reports CNN. So far, the financial consequences of the boycott seems manageable for News Corp., who "does not yet face heavy financial losses, according to The New York Times.

The hacking scandal now threatens News Corp.'s massive takeover of BSkyB. The real worry for News Corp., the Times report suggests, is that scrutiny from the on-going investigation into News of the World's hacking practices and, consequentially, News Corp.'s business practices could threaten a planned acquisition of the BSkyB satellite television company. The $12 billion takeover has already drawn criticism from lawmakers and regulators for giving News Corp. too large a market share. “We have let one man have far too great a sway over our national life,” Chris Bryant, a Labour member of Parliament, told The New York Times. Conservative Zac Goldsmith called Murdoch guilty of "systematic abuse of almost unprecedented power."

Former New York City schools chancellor Joel Klein will aid an internal investigation. After leaving his post at the helm of New York's school system, Klein joined News Corp. and has now been recruited by Murdoch to "provide important oversight and guidance" into News Corp.'s independent investigation into the phone hacking incidents. Klein says he's "not in charge" of the investigation but rather "providing counsel and advice to the company."

"The omertà of Britain’s press and politicians on phone-hacking amounts to complicity in crime." Peter Oborne at The Spectator says that a lack of better News Corp. coverage makes the rest of the British newspapers just as guilty of malfeasance. "Murdoch could not have got away with it for so long but for the silence in the British press" says Oborne "By minimising these stories, media groups are coming dangerously close to making a very significant statement: they are essentially part of the same bent system as News International and complicit in its criminality. At heart this is a story about the failure of the British system, which relies on a series of checks and balances to prevent high-level corruption. Each one of them has failed…"

This article is from the archive of our partner The Wire.