Hacking’s back

It’s over eight years since the revelation that the News of the World had been involved in hacking the phone of murdered schoolgirl Milly Dowler. That news set off a chain reaction that saw the newspaper close, numerous journalists arrested, Rupert and James Murdoch summoned to face a grilling in parliament, News Corp’s bid for BSkyB pulled (and the opportunity ultimately lost forever), senior police offers resign and the Leveson Inquiry launched (if not completed).
As the fallout spread, not only News Corp started racking up multi-million costs, but other media groups including Trinity Mirror (now Reach PLC) caught up. The scandal revealed that some of the ‘dark arts’ used by tabloid journalists were far from unique to the Murdoch empire.
It all seems like a long time ago. The government’s decision not to continue with the Leveson Inquiry has taken the heat off the industry. Meanwhile the issues raised by the hacking scandal seem to have fallen off the ESG radar of most investors.
But while memories have dimmed, some significant issues remain unresolved. It is still not completely clear how much the clean-up bill will ultimately come to since there remain many claims from hacking victims yet to be resolved. To date Murdoch’s group is believed to have paid out around £400m, whereas the total provision made by Reach Plc to settle claims is £75m, although not all of this has been used so far. Media standards campaign group Hacked Off argues that total hacking payouts across the industry could eventually reach £1bn.
In addition new claims are continuing to come through. There have been two significant developments in recent weeks. First, Prince Harry has launched legal cases against the owners of the Sun and the Daily Mirror over alleged phone hacking, whilst his wife Meghan has initiated a legal action against the Mail on Sunday for alleged breach of privacy and copyright infringement. The involvement of high-profile and popular members of the Royal family in these legal actions must raise the reputational risks to the media companies involved.
Secondly, the website Byline Investigates has reported that actress Sienna Miller and former Lib Dem MP Simon Hughes have initiated claims of phone hacking that focus on The Sun. Previously claims have focused on the former News of the World.
Looking back at the hacking scandal what is most surprising is how few executives of the media companies involved were held accountable. There was certainly a sense amongst editorial staff at the time that they were sacrificed whilst the ‘higher ups’, for all the public criticism they suffered, were allowed to remain in post. In retrospect, perhaps shareholders should have pushed harder. If these issues come back into focus investors may have a second opportunity to do so.

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