Why Murdoch could sell all his London newspapers

Eighty-year-old Rupert Murdoch may have looked gaga in yesterday's photograph, wearing running shorts, a jaunty baseball cap and a broad grin on his face when he has nothing to smile about. But don't be fooled. Think instead wounded lion. Not with a mere thorn in his paw, but a spear in his side.

There is now rising speculation that Murdoch could sell off his remaining London newspapers – the profitable Sun and the loss-making Times and Sunday Times - in order to protect both his BSkyB takeover and his American media empire.

It will be painful for him – he loves newspapers – but for the sake of his legacy, it might be the only option.

His love of print is not shared by the younger generation at News Corp. His son, James Murdoch, who currently runs the London operation, lost little sleep closing the News of the World, while his senior lieutenant in New York, Chase Carey, is not a newspaper man.

If it means protecting News Corp's media interests from the phone hacking fallout, the papers could go. Russian oligarchs are no doubt watching closely.

THE CONTAGION SPREADSThe latest Guardian investigation suggests the malpractice contagion has spread to the Sun and the Sunday Times.

According to the paper, Gordon Brown was targeted by News International newspapers for over a decade, both as chancellor and later prime minister. Among the revelations are that:

• The Sun managed to get hold of private medical records of Brown's son Fraser and reveal to its readers that he was suffering from cystic fibrosis.

• A private investigator persuaded a police officer to search the police national computer for information about Brown.

• A 'blagger', posing as Brown, managed to get details of his Abbey National bank account, on behalf of the Sunday Times.

• A conman working for the Sunday Times tricked London lawyers Allen & Overy into handing over details from Brown's file.

I am told the mood at the News International offices in Wapping is ominous following these revelations. Brown himself has made a ferocious attack on News International in an interview with the BBC, accusing it of "disgusting" newsgathering tactics and alleging the organisation has links to the "criminal underworld".

THE BSKYB DEAL IS DELAYEDThe proposed takeover of BSkyB is now delayed at least until next year after culture secretary Jeremy Hunt's decision yesterday to refer the bid to the Competition Commission.

This followed Murdoch's unilateral withdrawal of his offer to sell off Sky News. BBC business editor Robert Peston has explained that News Corp was in effect asking for its bid to be referred to the Competition Commission.

A statement from Murdoch's team said: "News Corporation today announces that it is withdrawing its proposed undertakings in lieu of reference to the Competition Commission with respect to its proposed acquisition of BSkyB."

The statement said News Corp was "ready to engage" with the Competition Commission and that the company "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".

However, the plurality issue has hardly been helped by the closure of the News of the World. Britain simply has one less newspaper title – one that, on a good day, was the most popular in the country. The paper was not being sold to a rival press baron.

A sell-off of the other titles would bring plurality to Britain's media landscape – if buyers can be persuaded to take on the loss-making Times and Sunday Times.

THE NEW YORK CONNECTIONMurdoch will now be desperate to stop the rot from London spreading to America where his media empire is on a quite different scale – 20th Century Fox studios, Fox News and the still respected Wall Street Journal, among other properties.

The Daily Mirror reports that Murdoch could be ready to fire Les Hinton who currently runs the Wall Street Journal business but was in charge of the London newspapers from 1995 to 2007.

Questions have been asked as to how Hinton could go before a committee of MPs and claim that the News of the World royal correspondent Clive Goodman was a "rogue reporter" when internal memos at News International unearthed by the Guardian now suggest a far more widespread use of phone hacking was evident. It seems bizarre that Hinton would not have have been privy to them.

The Mirror quotes a News Corp insider saying: "Les will be sacrificed to save James and Rebekah. It happened on Les's watch."

Murdoch also has to contend with a complaint brought on behalf of some of News Corp's institutional shareholders, including Amalgamated Bank and the Central Laborers' Pension Fund. They say the board has failed to take sufficient action since revelations of phone hacking first emerged five years ago.

According to the Daily Telegraph, their complaint alleges "rampant nepotism and failed corporate governance" at News Corp. They want a block on Murdoch's daughter, Elisabeth Murdoch, joining the board and "an end to Rupert Murdoch's use of company assets to serve personal and family agendas, without regard for public shareholders".

Hence the rising speculation in New York, too, about a News International sell-off to protect News Corp.

Murdoch's biographer Michael Wolff is quoted by the Independent as saying: "There has long been a faction within News Corp which says 'Why do we have these newspapers?'...

"It's quite possible that at some point one of the fall-back positions is to blame it all on the newspapers: 'It's newspaper culture and newspapers which are the problem here, not the company, which is a modern media company.' The newspapers were once the motor of this company but they have not been certainly in half a generation. In New York no one has heard of the News of the World."

Nicholas Grant, chief executive of Mediatrack Research, disagrees. "That's the last thing they will do," the Mirror quotes him as saying. "Big newspapers give credibility, give access, give influence, give position, open doors, in a way that other titles don't."

Hmmmm... Up to a point, Lord Copper. ·