Media in turmoil as BSkyB bid falters

Allister Heath
THESE are bad times for David Cameron, who has been engulfed by the hacking scandal and is faltering in the opinion polls – but they are even worse for the media industry, which is now undergoing what will eventually be recognised as its very own Lehman Brothers moment, courtesy of a small but despicable minority of out-of-control journalists.

One newspaper has already been shut and forces have been unleashed which could yet destroy other titles and change the shape of the industry. If, as looks increasingly likely, Rupert Murdoch’s attempt at buying the 61 per cent of BSkyB he doesn’t already own is derailed, perhaps after a Parliamentary vote on Wednesday, the idea that traditional newspapers may be saved by bundling digital subscriptions for them with pay-TV will be dead in the water before it even has the chance of being tested. If Murdoch is forced to quit the UK newspaper market altogether, the future of his loss-making Times (currently paid for by the Sun’s profits) will look equally bleak. His News Corp is also pioneering charging for online and iPad subscriptions even for general news. That experiment would also be ended were Murdoch forced out – hurting those who profess to hate him and everything he stands for, yet (not for the first time) secretly hope his strategy pays off so that they can copy him and finally make real money online. Last but not least, the News of the World wasn’t the only paper that misbehaved – others from other stables did too, and at some point some may also be dragged into the scandal.

So who will emerge ahead? Free newspapers – especially high quality, profitable and independent players such as City A.M. – will be among the winners: while paid-for print is in accelerating decline, we are gaining extra readers and bolstering market share. The BBC, which derives its income from the taxpayer, will also be a winner: contrary to what is usually claimed, it is a more powerful media organisation than Murdoch in the UK, with much larger numbers of TV and radio listeners than Murdoch has readers (even more so today) and a huge, free website – though its revenues are smaller. The likely collapse of the BSKyB-NewsCorp merger will help it preserve its dominance. ITV, Google, Facebook and commercial radio will also gain if print loses out.

Politically, the situation is complex. It is the economy and bread and butter issues such as law and order that will determine the coalition’s future, in the same way that it was the recession and not its own scandals that finally did for the Labour government. For the time being, Ed Miliband is enjoying a small bounce as a result of the revelations, especially the arrest (and subsequent release) of Andy Coulson, the ex News of the World editor and ex Cameron communications chief. Heeding the opinion polls, and hoping that Murdoch’s empire is now too weak to fight back, Miliband is calling for a Commons vote to delay the BSkyB takeover; the government, which would clearly love for the takeover to be delayed until the politics die down, is tied up in legal knots about the bid, which it cannot arbitrarily block without exposing itself to judicial review. The problem for Miliband is that many of his Labour colleagues also have close ties to News International and other media firms – and as this whole scandal develops and widens, Labour is likely to get pretty contaminated too.
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