In what has been a fascinating week for watchers of politics and the media, some other issues spring to mind in terms of what has happened with the closure of the 168 year-old News of the World (NOTW) worth a look for politics and economics students.
1) The Principal- Agent problem - in very large organisations there is a divorce between ownership and control. Sometimes this can lead to managers and employees of a company not to act as the owners might have wished. This is certainly the angle that Rupert Murdoch is taking during this crisis. Starting off by blaming the phone hacking on bad eggs within the company, the owners of News International have had to change their tone and verbiage as the realisation has grown that they aren't going to be able to bluff and obstruct their way out of this one. As I said in January (click here), I believe that the culture created by Andy Coulson encouraged journalists to do anything for a story. I would argue the same thing again for the culture created by Rebekah Brooks (then Wade), who was editor at the time when Milly Dowler's mobile phone message box was being hacked (and messages deleted to make room for more, making the police and her parents think she might be alive) by private investigators hired by NOTW journalists. She insists she didn't know about it and was on holiday at the time - but she didn't need to know about it - she was in charge, which is why we have the witch hunt that we do now. Worse for Rupert Murdoch is the involvement of his son, James - who has had nothing to do with the NOTW but may possibly be accused of obstructing justice during the investigation. At the moment, Brooks is taking the heat, as a human lightning rod for the Murdoch family (I wonder how much money persuaded her to do that). But I have heard quite a few times this weekend that there is a possibility James Murdoch could end up dragged into this to the extent he is fighting to stay out of jail. Rupert Murdoch will sacrifice ANYBODY to stop that happening, as we saw last week.
Going back to the Principal - agent problem - some News Corp shareholders have filed a suit in the USA arguing that News Corp management's failure six years ago to take sufficient action when the phone-hacking candal first broke demonstrated an "unwillingness by management to provide adult supervision". This large scale failure of governance was a failure of management and went against the owners' interests. Fact is that management seemed not to have been incentivised to investigate properly.
2) The power of the unions (and lack of power here) - Wither the NUJ? Whilst 200 journalists, many of whom had nothing to do with phonehacking, were stripped of their livelihoods in order to save the person who was editor when the worst of it happened - the NUJ were nowhere to be seen. Unions were set up for this reason, to protect the jobs and working conditions of their members, and this hasn't happened. At first, I was despairing - instead of going on strike against demographics, they should have been fighting against the exact example of capitalist destruction (particularly given it was done to protect a member of management). But then I did a bit of research and found that Donnacha Delong in the Guardian could explain it:
"Unfortunately, the NUJ remains locked out of News International due to a ridiculous loophole in the law on union recognition. While claims for applications for recognition can only be made by independent trade unions, they are blocked from doing so if there is pre-existing recognition of a non-independent "trade union". In the case of News International, that so-called trade union is the News International Staff Association (Nisa), which the Certification Office denied recognition as an independent trade union in 2001. Nisa remains what then NUJ general secretary, John Foster, then called "a company union, set up largely to keep independent unions out". Yet in the three-hour debate in the Commons on Wednesday, or on Thursday night's BBC Question Time, not one political figure mentioned this ridiculous situation."
Unions are absolutely vital for situations like this. I find it annoying when they dress up self-interest and avarice as being in the public interest and when they protect inadequate workers (particularly teachers) but in the case of journalism the unions would not only have caused a justifiable fuss about what happened to NOTW staff last week but in journalism the unions have a record of upholding standards and ethics - such as the time when members of the print unions refused to print a picture of Arthur Scargill making what looked like a nazi salute during the miners' strike and when journalists of the Express stopped working until the paper pulled a regular page called the "Daily Fatwa".
3) The chicken and egg question of just how powerful are newspaper proprietors - On Question Time last week Baroness Shirley Williams pointed out the need for two public inquiries: One to look into phone hacking and the other to look at the relationship between politicians and the media. Politicians have been lining up to admit that they have been too close to newspaper proprietors in the past and want to change now. Ed Miliband had a very good week in being one step ahead of David Cameron by disassociating himself with News International.
Cameron eventually spoke about it on Friday but the fact is that he is a personal friend of Rebekah Brooks, who lives in his consistuency. The other fact is that the major political parties have become terrified of Rupert Murdoch since he claimed to have won the election for the Tories in 1992 then his switches to Labour in 1997 and back to the Tories in 2010 were also influential. Not only have politicians felt this but journalists have done so too. Tom Watson, the Labour politician who has been at the forefront of the backlash against News International, has told of a stream of personal abuse being hurled at him by their journalists and a message being given to him that The Sun were holding back stuff they could print about him but would print it unless he backed off. If journalists feel they have that much power then we are not in a good position.
But actually there is possibly a chicken and egg situation here. People who have worked in communications in Downing Street have been telling on the radio and TV of how policies get sent back to departments unless they are tabloid friendly, and this is seen as a sign of how powerful the tabloids are. Murdoch has argued that he is merely reflecting public opinion. But does he? Or does he impose his opinions - or the opinions and preferred policies of his major advertisers (who are so important that they caused the closure of the papers) on the public, pretending that it reflects everyone's views?
4) Competition policy - this is a great example of the difficulty when dealing with mergers and acquisitions in this country. Politics gets involved. It got involved with Kraft's acquisition of Cadburys last year (when the withdrawal by Labour of a condition that tested whether a merger was "in the national interest" left them powerless to intervene when a crown jewel of British manufacturing was bought). It is getting involved now with News International's attempt to buy the remainder of BSkyB (they own 39.1% already). Labour and Lib Dem politicians are arguing that the government should pull the plug on that now. I have written before (click here and go about half-way down for this) about why News International wants to do this. Let's just say it would give them access to a massive amount of money. Given the link between money and power and the belief that Rupert Murdoch has quite enough for now you can see why politicians (and rival newspaper proprietors, who must be absolutely delighted with this latest turn of events) are so interested in derailing it.
However, the laws on this are pretty clear, and in a statement today News International pointed it out - "News Corporation continues to believe that, taking into account the only relevant legal test, its proposed acquisition will not lead to there being insufficient plurality in news provision in the UK." Given that Sky News only has about 7% of the TV news viewers, they might be right, although when added to the amount of newspapers owned by News Corp (a far greater proportion than in any other country), one can see what the problem might be.
But opponents of the deal are bringing in the "fit and proper test", which OfCom can apply under the 1990 Broadcasting Act to make sure that owners of broadcasting companies meet ethical requirements. The problem there is that the Act does not make clear what "fit and proper" means, nor gives any guidance on the matter. News Corporation have not had any compliance issues before and should OfCom decide that what has happened is reason to reboke their licence to broadcast they will open up a pandora's box of legal problems for themselves as News Corp will argue that the decision has been politically influenced, in particular because until the law is tightened up and a proper definition of "fit and proper" is created then News Corp's lawyers will have a field day.
Today, News Corp announced they had dropped their commitment to make Sky News independent, which automatically triggered the Competition Commission investigation. This could have been done for a few reasons. One was to give the government breathing space to refer the bid instead of stopping it. The other could be as a pre-cursor to News Corp simply dropping their ownership of UK newspapers. Given they have been subsidising the Times for the past few years we may need to be careful what we wish for.
5) Media laws - The Press Complaints Commission defines public interest as including but not confined to: detecting or exposing crime or serious impropriety; protecting public health and safety; preventing the public from being misled by an action or statement of an individual or organisation. It points out that there is a public interest in freedom of expression itself. If journalists rely on a public interest defence, editors must be able to demonstrate that they reasonably believed that publication, or journalistic activity undertaken with a view to publication, would be in the public interest. The problem with what the NOTW did was that there is certainly no public interest in deleting Milly Dowler's voicemail messages and, given Gordon Brown's determination never to use his children publicly, no public interest in an exclusive that his son had cystic fibrosis. Rio Ferdinand is at the moment arguing that his sexual pecadillos are also not in the public interest, even if they are interesting to the public.
The point is that undercover methods will always be needed if wrongdoers are to be held to account. You CAN pretend to be soemone else to gain access to private information. You CAN pay someone to download sensistive company data onto a disk. You CAN secretly record conversations. But ONLY if you can prove that the material is obtained in order to publish a story in the public interest. The Watergate scandal, the information on the sinking of the Belgrano during the Falklands war, MPs' expenses, the publication of diplomatic cables provided by Wikileaks - all were obtained illegally but led to stories that were in the public interest. My concern is that new media laws are created that stops this happening.
The history of politics is littered with examples of hurriedly drafted bad laws to respond to public and political clamour. The laws may need to be clarified, but more importantly, they need to be implemented. There was not a proper police investigation here - partly because the case was passed to the anti-terrorism squad on the very day that the plot to blow up airplanes was discovered, but also allegedly due to the police being compromised by their relationship with the NOTW and possibly being intimidated by the way they operate.
That, I hope, is the change that ensues. What is certain is that much more is to come on this story.
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