The resignation of Andy Coulson, the spokesman for the UK prime minister and a former newspaper editor, over a continuing phone-hacking scandal drew sharp attention to News Corp’s efforts to balance two huge controversies, lawyers and people close to Rupert Murdoch’s media group said.
News Corp, ultimate parent of the News of the World and owner of 39.1 per cent of British Sky Broadcasting, has been trying simultaneously to balance two difficult public relations exercises.
The first is to counter opposition to its efforts to buy the remaining 60.9 per cent of BSkyB in a deal that would value the satellite broadcaster at least at £12.3bn.
Rival media owners have urged Jeremy Hunt, the UK culture secretary, to accept the recommendation of Ofcom, the UK broadcasting regulator, that a full review of the proposed bid should be undertaken by the Competition Commission.
The second task is to limit the damage done by a continuing drip-feed of allegations, mostly through court documents lodged by angry celebrities, that more News of the World journalists, working under Mr Coulson at the time, were involved in phone hacking than it had originally admitted.
The most threatening development was in December when lawyers for Sienna Miller named Ian Edmondson, the number three editor on the paper today and when Mr Coulson was editor five years ago, as the man who had commissioned a private investigator, Glenn Mulcaire, to hack into the actress’s phone.
That prompted a letter from the London Metropolitan Police asking News International, the immediate parent of the paper, to send it any new information it had. In turn, the company suspended Mr Edmondson.
“Legally, the resignation of Andy Coulson has nothing to do with regulatory questions over the Sky bid, because it is about plurality,” a leading competition lawyer said, referring to the question of whether common ownership of BSkyB and News International threaten to reduce the diversity of UK media.
“But everyone knows that the decision Hunt is taking is 100 per cent political because of the noise around phone hacking and the idea that Rupert Murdoch has an influence on Number 10.”
If Mr Hunt were to reject Ofcom’s advice and accept an offer from News Corp to divest itself of Sky News, for instance, Mr Coulson’s resignation would only heighten the likelihood of an ensuing political furore, he argued.
But a person close to News Corp disagreed: “Actually, Coulson leaving No 10 puts a bit of distance between the government, which is having to make the BSkyB decision, and the Murdoch family, which will be a good thing in the long run.”
The difficulty for News Corp, according to a third person who has worked as an adviser on the BSkyB bid, is that it has lost the ability to prevent evidence reaching open court.
The letter from the police, according to a person inside Wapping, prompted lawyers to advise News Corp that any excessive settlement could be misinterpreted as an attempt to obstruct justice. It could also be misconstrued as a breach of their fiduciary duty to shareholders over the use of company funds.
Meanwhile News International’s main defence – that only one reporter, Clive Goodman was involved with Mulcaire in a 2006 case that saw both men jailed – appears to be unravelling, lawyers say.
Senior executives at News International upheld that line, including Les Hinton, then the senior executive, and Rebekah Brooks, who holds the job now. They may find themselves answering questions about why they did so.
News Corp declined to comment on Friday.
The company is anxious to avoid any possible suggestion of impropriety in the way it has defended itself against allegations of phone hacking. But its room for manoeuvre in the face of growing opposition appears to be dwindling.
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