Where next for Labour on hacking? Follow the money Ed

by Atul Hatwal

The wreckage of Rupert Murdoch’s empire floats in the political waters. MPs and journalists view a landscape transformed. But as the initial storm surge from hacking slows, Labour faces some tough new political choices.

Where next in the campaign?

By common consent Ed Miliband has had a good war. Should he now step back and let the Levenson Inquiry go about its business? Or should he keep on keeping on?

Around Miliband, two camps have rapidly emerged.

On one side are those advocating a Glee strategy – don’t stop believing.

If News International can be brought to its knees, what about the Daily Mail?

The Daily Mail is unique in eliciting the same reaction from Tony Blair and Alastair Campbell as the left of the Labour party. For this group, it is a once in a generation opportunity to fix one of Labour’s most implacable enemies and help create genuinely more open political debate.

The voices on this side of the divide include Ed Miliband’s base – his early and most enthusiastic supporters, new politics think-tankers and those yearning to move on from the technocratic managerialism of New Labour.

Belief is intoxicating. They want the moral crusade to keep rolling. This is the Ed they voted for.

On the other side are the old media hands.  They have been out of their comfort zone for the past two weeks. Their world view involves dealing with the media to get Labour’s message across. War on News International was unthinkable ten days ago. War on the Daily Mail makes them feel ill.

Come what may, at some point, Labour is going to have to deal with the media.

The fall of News International might have taken them by surprise, but that doesn’t change the fundamentals of media management where some type of working relationship is essential, even with the enemy.

This group includes rafts of former advisers, members of the shadow cabinet and Labour-leaning journalists.  It’s no coincidence that this nexus was also the source of Miliband’s recent leadership crisis.

But in the debate on resolving this dilemna, something’s been missing.

Neither camp has provided a cogent analysis as to why News International’s position collapsed so quickly.

The scale of the public’s revulsion is one thing, but that doesn’t explain why Murdoch didn’t do what he has always done in the past: – baton down the hatches and tough it out.

The Sun’s reporting of Hillsborough involved smearing hundreds of innocent football fans who were either crushed to death or injured in a horrific disaster. The disgust was national and sales in Liverpool never recovered. But at no point was any action on the scale seen in the past week even contemplated.

Part of the reason for this missing analysis is a structural issue with politics. People in politics are from politics. The outside world provides the audience but the players are all on the political stage.

Except that this time the real drama is being conducted in the business arena.  Politicians are supporting actors not the main players.

In the 1980s, Rupert Murdoch ran a British newspaper business, unencumbered by the niceties of corporate governance.

In 2011, he is chairman of an American movie and TV business where British newspapers are an indulgent hangover from the old man’s earlier days and there is some semblance of corporate accountability.

Although News Corp’s governance arrangements are amazingly lax by modern standards, with the Murdoch family’s 12% of shares translating into 40% voting rights, Rupert Murdoch remains in the minority on his board.

Last year the British newspaper operation contributed just 5% of total News Corp revenue while the American Fox TV and movie business contributed 57% of News Corp’s $32.7bn revenue

It’s difficult for most politicians and residents of the Westminster village to comprehend just how irrelevant British titans as mighty as the Sun and News of the World are to American institutional shareholders and the majority of the News Corp board.

In the shock of the withdrawal from the BSkyB bid, the most under-reported element of the story has been that it was Chase Carey, President of News Corp and deputy-chairman who announced the withdrawal from the BSkyB bid.

Not Rupert or James Murdoch.

This would be the Chase Carey who drove Jason Subotky, vice-president of Yacktman Funds, which owns 3.2% of News Corp, to recently declare

“We would be thrilled if Chase Carrey became successor”.

The same Chase Carrey whose path to the top job is currently blocked by one James Murdoch.

Carrey was sent out as a signal to American institutional shareholders that the adults were back in charge. The old digger might be hanging on as chairman and harbour dreams of going back for BSkyB, but the U.S. tectonic plates are moving. The days of the News International papers as part of News Corp are numbered.

This is why Labour’s campaign was so effective. It coincided with nascent News Corp shareholder discontent, Board restiveness and the decision point for the biggest deal in the company’s history where British government approval was needed.

A perfect storm.

On this basis, if Ed Miliband wants to keep on believing and broaden the fight to include the Daily Mail then he might face a rather different result.

Unlike News Corp, the Daily Mail General Trust (DGMT) is still fundamentally a British business with its national newspapers – the Daily Mail and Mail on Sunday –very much at its heart.

The board are largely British, the chairman of DGMT, Viscount Rothermere, personally owns over 20% of the shares and 44% of DGMT total revenue came from Associated Newspapers, the subsidiary that owns the two Mail titles.

There isn’t any big decision requiring government support which is critical to the DGMT business model, nor is there any sign of institutional shareholder unhappiness.

All of which would suggest that charging over the top at the guns of the Mail would likely be a one way ticket to martyrdom rather than another victory.

With one caveat.

The Levenson Inquiry will be delving into the murky backwaters of how the Daily Mail, amongst others, conducted its business.

The 2006 Information Commissioner’s report, “What Price Privacy Now“, highlighted the vast extent to which the Daily Mail used information obtained illegally.

It identified 952 instances across 58 Mail journalists where information was bought from a private investigator who had illegally accessed the police national computer.

That’s over five times higher than the 182 instances clocked up by the News of the World in the same report.

If Levenson finds skeletons and horror stories in the Mail closet, the business dynamics could change.

DGMT’s growth last year was driven by its business to business services. Revenue was up 14% compared to a fall of 2% for Associated Newspapers. Associated’s figures would have been much worse if not for the soaring revenues from the Mail’s website.

If there is public revulsion at the Daily Mail‘s antics, then Associated’s digital revenues could be an early casualty. Online is a fickle world. Just ask Rupert Murdoch about Myspace.

If the backlash really sets in, it might infect the Daily Mail General Trust’s broader operations, repelling corporate customers from its business services and driving DGMT to act decisively.

This would surely involve an overdue pension for current editor-in-chief, sixty-two year old Paul Dacre, who has been running the show for nearly twenty years.

It was the business rather than Westminster politics that dispelled the shadow of Lord Volmurdoch. The darkness of Dacre is still there, but Levenson could yet lift the veil on countless crimes.

Going forward, Ed Miliband needs to bide his time when it comes to the Mail. Let Levenson lead and keep reading the city pages.

How is the Mail’s website doing? What are the analysts saying? Answers to questions like these will tell when to strike, if at all.

Time to watch and wait.

Atul Hatwal is associate editor of Labour Uncut.

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6 Responses to “Where next for Labour on hacking? Follow the money Ed”

  1. Edward Carlsson Browne says:

    I’d see little benefit in going after the Mail even if it were feasible. It’s a successful and profitable group. If the current owners are forced to sell up, somebody else will likely buy it, and its readership are happy with its politics so they’ll likely maintain the same stance.

    And if it got shut down, it’d just strengthen the Express, which is considerably less sane.

    Plus going on a crusade against the right-wing press one proprietor at a time is just going to unite all the rest of them against us, and probably much of the liberal press too. Picking on Murdoch worked because he’s trodden on enough toes. Trying to shut down all media critical of you just makes you look dictatorial.

  2. Guido Fawkes says:

    You realise that Mirror Group Newspapers were worse offenders than the Mail. I think all of them are going to get it.

  3. Millsy says:

    Oh and while you’re at it, why not dream up a plan to take down the Telegraph and Express as well. And then Labour’s right to world domination will be fulfilled!

  4. James Thompson says:

    This has to be handled carefully.

    Rumours are that Trinity Mirror is the next worse offending paper as regards potential phone hacking. Remember Piers Morgan had to resign over questionable dealings when he was editor and it was also recently revealed that Tony Blair had over 60 meetings with him while he was PM.

    Also, after the Times the next paper that sheds vast amounts of money is The Guardian. In many resects it is lucky to still be in business as it has no wealthy benefactor behind it. Many in the industry believe that if The Independent becomes a free paper (as seems very likely) The Guardian will close within a year.

    I guess the point I am making is that if we are not careful we could end up taking down The Mirror and The Guardian as well if we go after other titles. We could then end up with no left leaning papers to support us in the future.

  5. AmberStar says:

    I wonder when we’ll hear from Ken Livingston about the links between the Met & the NoW. He appears to be allowing Boris to make all the running on this issue… mind you, Boris has made quite a prat of himself. “Why did the Met employ Neil Wallis?” asked Boris. “Why did Cameron employ Coulson?” was the Met’s swift & crushing response.

    Still, it will be interesting to see what, if anything, Ken can make of the hacking issue.

  6. snowflake5 says:

    The Daily Mail is a whole different kettle of fish from the NOTW, and it’s going to be very hard to take the DM down.

    It’s actually a celebrity paper, which tacks on news on the side.

    What happens is that they do stories about say Cheryl Cole, or Katie Price – crucially with a lot of pictures, something the Mirror lacks in it’s celeb stories – and this attracts all the Cheryl and Katie fans looking for info on their idol (and the info they are looking for is about what they are wearing, rather than info on their private lives, hence the importance of the pictures). While they are there, they click around and read the other news the DM provides.

    If another newspaper, such as the Mirror, could provide all those pictures, then this group of readers would flock there, and while they were at it, read news from the Mirror’s point of view.

    The problem is that other papers arn’t providing this – and as long as the DM remains the premier celeb paper, it will control a large audience who will read regardless of how nasty the hard news part of the paper is.

    BTW, this group of readers don’t do boycotts, they are not really interested in the phone hacking scandal, except tangentially.

    Therefore, the only way to attack the DM is to attack their advertisers. You’d need a massive hook to pull it off. The only way to get M&S to pull their advertising is to prove the DM hacked Dannii Minogue’s phone and hurt her, for example. But the DM knows which side it’s bread is buttered and tends to provide very sugary coverage to anyone connected to their advertisers, – as soon as Dannii became a spokesperson for M&S, her coverage in the DM miraculously improved! – so you’d struggle there.

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