Blog Post

Update 2: Hacked Off Public May Derail News Corp Over Dowler Scandal

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

The newest voicemail hacking scandal that has engulfed the UK tabloid News of the World was described by one commentator today as a “slow motion train wreck.” Now that train wreck is threatening to derail the newspaper’s owner, News International.

Just as people were getting inured to the whole phone hacking scandal, with its revelations about the minutiae of celebrities and other VIPs, the media world was hit with a zinger, when yesterday the Guardian broke the news that the News Corp.-owned Sunday tabloid is now alleged to have used the same techniques to hack into the mobile phone of Milly Dowler, a young girl who had been abducted and murdered back in March 2002. The revelations have come out of an independent investigation into mobile phone hacking, called Operation Weeting.

The news has sparked off a huge consumer backlash, with people encouraging feedback to the Press Complaints Commission (one example below); a campaign to boycott buying NOTW, currently the country’s most popular newspaper; and others setting up groups advocating brands to remove their advertising from the newspaper (although some are standing by the paper, noting that these are as yet just allegations).

Update: The Telegraph is reporting that Ford has withdrawn its advertising in the Sunday paper pending the outcome of further investigations into the hacking. Other advertisers, including Currys, PC World, T-Mobile, Npower and Halifax, are all reviewing their advertising contracts, which would represent a big financial blow to the publication. Meanwhile, the blogging site Mumset has cancelled a contract with Sky for the broadcaster to advertise on its site after an unprecedented response from readers over the scandal. That deal was estimated to be worth about £30,000 to Mumsnet.

With the prospect of lost income from pulled advertising, now the problems are spreading to the wider company:

There are growing calls for the resignation of Rebekah Brooks, the CEO of News International who had been the editor of NOTW when the hacking took place. Brooks has said in a memo to staff that she is determined to lead them through this scandal and that she herself is “sickened” by the newest hacking allegations. She denies knowledge of anything — although The Independent is expected to run a front-page story tomorrow morning that Rebekah Brooks was in contact with the private investigator herself. Whether she did know or not, both positions are damning for her.

BSkyB: Some, including senior politicians, are now also raising the issue of whether this NOTW scandal should affect News Corp.’s proposed acquisition of the shares of broadcaster BSkyB (NYSE: BSY) that it does not already own. While it may be still arguable whether the Dowler incident is the best example of News Corp (NSDQ: NWS). having too much power, BSkyB is not taking any chances, and has now started to take part in covering the affair just as much as other news media outlets.

Legal issues: And there is the very real threat of criminal charges, although as yet it is unclear who would get hit. The voice mail hacks did not only gather information for stories, but they also went so far as to delete messages in the voice mail system so that more could get delivered. That meant not only untold anguish for Milly’s family (who would have thought she might have been deleting the messages herself) but also meant that NOTW was tampering with criminal evidence. All this in the name of news.

News International released the following statement to paidContent on the matter:

“We have been co-operating fully with Operation Weeting since our voluntary disclosure in January restarted the investigation into illegal voicemail interception. This particular case is clearly a development of great concern and we will be conducting our own inquiries as a result. We will obviously co-operate fully with any police request on this should we be asked.”

Can this get any worse? Unfortunately, it looks like it might. News International executives have admitted to the BBC’s Robert Peston that “they fear there may have been worse examples of NOTW hacking than that of Milly Dowler’s phone. The mind reels.” Indeed.

Disclosure: Our publisher ContentNext is a wholly owned subsidiary of Guardian News & Media.