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Rupert Murdoch being undone by old-fashioned journalism

Opinion: If the phone-hacking scandal proves anything, it's that serious, investigative journalism is the best way.

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Rupert Murdoch, Chief Executive Officer of News Corp., smiles at photographers as he is driven from News International's headquarters on July 13, 2011 in London, England. (Peter Macdiarmid/Getty Images)

LONDON, United Kingdom — In the last few days, terrorists have attacked Mumbai. Ahmed Wali Karzai, the second most powerful man in Afghanistan, and the political linchpin of anti-Taliban strategy in Kandhar — was assassinated. The worst case scenario for global economic recovery — the utter collapse of the Euro — began to unfold as Italy, the third largest economy in the euro zone, came under pressure from bond-markets over the size of its deficit. And if the Euro doesn't kill recovery, the fight over the debt ceiling in Washington might.

But, despite all of that, only one thing has mattered in Britain: the sudden reversal in fortune of Rupert Murdoch's empire.

Not only has a potential source of more than $2.75 billion in profit annually just disappeared from News Corporation's balance sheet, Murdoch's influence over the political process here has completely evaporated. 

The story is far from over as criminal investigations are under way — a former executive editor of the News of the World was arrested today — and a special judicial inquiry is being set up. But since you can't fast forward reality, now is a good time to reflect on what the phone-hacking scandal says about Murdoch, the British public and, most importantly, about why, despite the changes in the practice of journalism brought about by the internet, the old-fashioned way is still the best way.

1. Murdoch is to our times what Andrew Carnegie or John D. Rockefeller were to theirs. This is the information age and News Corporation — the company he built after inheriting a single newspaper in Adelaide, Australia almost 60 years ago — is the largest media company in the world. Murdoch's company provides content, owns the pipelines that deliver it and uses its monopolistic muscle to gain greater market share along the way. It does not hire goons to assert its authority as those earlier industrialists did. The company's original business — journalism — allows it to use something less bloody but equally effective. In Britain, its newspapers, in America, Fox News, absolutely bludgeon political opponents. It doesn't matter who wins an election, the Murdoch press will crush those politicians that seek to regulate it or more generally create limits on what the company sees as its right: to make as much money as it can and pay as little tax on its profits as possible.

We still study Rockefeller's Standard Oil trust and its break up. It is quite possible that what happens to News Corp. will provide a similar subject a century from now for study of a business empire brought down by its own arrogance.

2. In 1992, when Britain was unceremoniously ejected from the European Exchange Rate mechanism and forced to raise interest rates to double digits, then Prime Minister John Major called Kelvin MacKenzie, the editor of Murdoch's tabloid The Sun, to ask how he planned to play the story. Mackenzie famously told Major: "Well John, let me put it this way. I've got a large bucket of shit lying on my desk and tomorrow morning I'm going to pour it all over your head."

A large number of shit buckets have been emptied in recent days. They've been dumped on the heads of senior police officers and politicians from all parties. Not even Prime MInister David Cameron has been spared. His decision to hire the former editor of the News of the World, Andy Coulson, despite being warned about his connection to phone hacking, is something he simply can't get away from.

The one participant in the story who has avoided the excrement dump has been the British public. Indeed, Labour Party leader Ed Miliband praised the public yesterday and said their moral outrage is what really forced Murdoch to abandon his bid for BSkyB. 

But the great British public shouldn't be allowed to go away from this scandal clean. It is their insatiable desire for tittle-tattle, salacious gossip and red-meat nativist political commentary that allowed Murdoch's papers to grow.

If they didn't buy Murdoch's product, he wouldn't have accumulated the power. Before News of the World was shut down last weekend, it sold 2.66 million copies every Sunday. The Sun sells nearly 2.8 million copies every day. Rupert Murdoch is a businessman who gives