The Murdochs' Annus Horribilis

22/12/2011 22:42 GMT | Updated 21/02/2012 10:12 GMT

How different the world looked for the Murdochs last Christmas. The BSkyB decision had just been withdrawn from Vince Cable. It now looked as though their bid would go through on the nod. Once approved this would allow the Murdoch dynasty to straddle Britain's media like a gloating colossus, dwarfing the BBC and all other commercial competitors. Politically they would be untouchable.

James Murdoch headed up to the Cotswolds in what must have been high spirits, on his way to a private pre-Christmas lunch with Rebekah Brooks and David Cameron. Exactly what they talked about we do not know; the lunch was one of many social occasions enjoyed by government ministers and senior News International employees. Perhaps they toasted the Sun's continuing support of the Coalition government - or its Conservative members at least.

It is unlikely anyone was impolitic enough at lunch to mention Ian Edmondson, assistant editor (news) at News of the World. Though they should have done, since Edmondson's suspension and subsequent arrest would soon turn their worlds upside down. Edmondson had worked very closely with Andy Coulson when Coulson was editor of the paper. If there was evidence to show Edmondson had been phone hacking then it was difficult to conceive that Coulson would not have known about it.

Four weeks later Coulson, then director of communications at No.10 Downing Street, resigned from government.

But even the departure of Coulson could - it appeared - be finessed. Phone hacking, all the political parties agreed, should not be taken into account when considering the BSkyB bid. The two should be kept separate. This was extremely convenient for the Murdochs and meant their bid could continue to trundle towards completion, and with it the opportunity to secure 100% of the BSkyB money-making machine.

Indeed, by June 2011 there was every sign News International had figured out how to shut the hacking story down entirely. It was settling the remaining civil claims, and might have expected Edmondson and others to follow the lead of Goodman and Mulcaire and plead guilty, and thereby prevent disclosure.

Yet within a month, the bid had collapsed and the Murdochs were fighting fires on three continents.

The explosion came, appropriately, on Independence Day. On 4 July 2011 The Guardian published the story that murder victim Milly Dowler's phone had been hacked. On the Wednesday we learnt that the families of 7/7 victims had been hacked. A day later the Telegraph revealed that the same had befallen the bereaved families of soldiers who had fought in Afghanistan and Iraq.

Suddenly the BSkyB bid started to unravel. The Murdoch brand became toxic. Within a week the House of Commons came together in a remarkable show of unity to block the News Corporation bid for BSkyB and prevent them becoming the most powerful media magnates in Britain.

But the damage to the Murdochs could not be contained within Britain. In Australia, Rupert Murdoch's birthplace where News Corp controls about 70% of newspaper circulation, the Green Party managed to marshall support for an inquiry into the press. An inquiry, in other words, into the Murdochs.

In the US the FBI began looking into allegations that families of 9/11 victims had been hacked (they found no evidence that they had). Other US news outlets began investigating News Corp practices in America. The New York Times discovered that News Corp's advertising arm in the US - News America Marketing - had admitted to hacking into its competitor's computers in order to use the financial information it gained to steal business from them.

By August it seemed that we might be witnessing the collapse of the most powerful dynasty in global media. Rupert's daughter Liz was reported to have said that 'James and Rebekah fucked the company'. Was this the end of the Murdochs?

Yet, towards the end of 2011 there were signs the Murdochs may have survived. Few think the Australian inquiry into the press will do much to attack the family's dominance of the print media. In the US Rupert and James weathered an uncomfortable shareholders meeting.

In the UK James Murdoch distanced himself from the print papers. He stepped down from the boards of the Times and the Sun. In front of the Culture Media, and Sport Sport Select Committee he did not squash rumours News Corp may sell either newspaper. They have a willing buyer for theSun in Richard Desmond.

So as Christmas approached the Murdochs might well have felt they had found themselves a short breathing space. Enough time at least to re-group. That is, until further evidence began to emerge about James Murdoch's knowledge of a phone hacking pay-off to Gordon Taylor in 2008.

This Murdoch family Christmas will certainly be different from the last. At the very least, it is distinctly unlikely James Murdoch will enjoy a festive lunch with Brooks and Cameron again.