It's Not Phone Hacking That Will Kill News Corp in the US

By Emily Bell, Guardian UK

20 August 11

Barring a Milly Dowler-type revelation Stateside, Murdoch will weather the recent scandals - but he has other reasons to worry.

he news that the News of the World's former Hollywood reporter James Desborough is the latest person to be arrest in the hacking case, raises the possibility that transgressions happened in the US too. But however much every liberal, competitor and Murdoch-sceptic is willing the wildfire of the phone-hacking case to ignite public outcry in America, the dampening influence of geography, distraction and incomprehension has eased the pressure on New Corp HQ.

Those with an interest in the outcome want to know the same thing: what will cause the centre to give? What can bring down Murdoch in his most important territory? Without the final implosion, it seems, there is no closure, no adequate finale to a gripping tale. "Hackgate" is a media studies thesis waiting to be written, on space, time and impact in news reporting. The physics of the case are straightforward; the further from the centre of the event, the weaker and more diffuse the shockwaves. The US market has moved swiftly on from the jumbled narrative involving the image of a murdered girl, a terrible invasion of privacy and a closed newspaper followed by the impromptu fringe show of parliamentary pie throwing. For a moment it refocused on the connections between the disgraced News International editorial management team and a Brit chat show host called Piers Morgan. But he and his employer, CNN, sat tight too.

For those who are doggedly sticking to the story, such as the New York Times's David Carr, who continues to examine ugly News Corp behaviour, particularly around a subsidiary called "News America," it is for now a lonely furrow to plough. And for Carr and others who know the US news scene well, it will take a human story or dynamite revelation of the magnitude of a US Milly Dowler to elevate the scandal to the same levels it reached in the UK, and so far, there is no sign that this will happen.

But despite Murdoch appearing Stateside to be as impervious to the stories as a rhino is to a bird pecking at bugs on its back, there is little doubt in the centre of the news business that however slowly it happens, News Corp here is also, as one chief executive put it, "effectively done."

A few weeks ago an impending "major restructuring" flickered onto the radar to those who cover Wall Street market activity. A big restructuring? A multibillion dollar company splitting its businesses? Many reached the logical but erroneous conclusion that it must be Rupert Murdoch's News Corporation. The hypothesis was sensible. Here was News Corporation, owner of Fox , Dow Jones, the Wall Street Journal and paymasters of potential Republican presidents, having its eyebrows singed by the raging fire of the phone-hacking scandal in the UK.

Maybe, ran the gossip, the only firebreak potentially big enough would be to announce a New News Corp, the creation of a separate company in the UK, dumping the newspaper assets within it under a whole new management, issue shares in that company and run away as fast as possible. Rather anti climactically the company turned out not to be News Corp but Kraft Foods - an institution free of misdemeanour unless you count taste crimes against cheese. But the unthinkable in terms of a News Corp restructuring is already being thought.

The market chatter is illustrative of how Wall St and the industry now view News Corp; as a company potentially fighting on too many fronts with an octogenarian leader and no succession plan. Interestingly, too, the legal threats that would make a difference to the company in the US - in particular any future indictments of James Murdoch which flow from police inquiries in the UK - are in many ways matched by Murdoch losing his political grip here.

Fox News is still the US's number one cable network but in July it was the only network which actually lost viewers over 2010. It's triumvirate of rightists, Bill O'Reilly, Sean Hannity and Greta Van Susteren, all saw declines and the furthest right commentator, Glenn Beck, has gone from the schedules.

This is symptomatic of another reason why Murdoch is in trouble. Fox News practically invented the Tea Party, and therefore to some extent is to blame for the political eccentricities list of GOP candidates now scrapping to take on Obama and the fracturing at the heart of the Republican party. Fox's own tone has been back-pedaling from its more extreme positions, but the CEOs and the GOP grandees who would naturally be Murdoch's constituency are no longer in thrall to his power in quite the same way.

News narratives are strange things; the expectation that News Corp will crash to the ground in the US, with the right story at the right time, is not going to be fulfilled. The multitude of pressures in the UK and growing problems unrelated to the hacking scandal in the US might well yet combine to see a much slower but nevertheless devastating effect on the heart of the empire.