The UK phone-hacking affair may endanger the immediate job prospects of Andy Coulson, former Murdoch protégé and now media adviser to British PM David Cameron, but the rapidly unravelling saga lays bare the bitter struggle between government, Murdoch and the BBC.

Well-placed sources within the BBC have confirmed that the corporation has actively toned down its online coverage of the scandal, despite the fact that Teresa May, the UK home secretary, has been forced to defend the police’s investigation of the matter in parliament.

The scandal first erupted in 2006 when Clive Goodman, a reporter at the News of the World, was arrested and then jailed for listening to phone messages belonging to members of the royal household. Goodman employed private investigator Glenn Mulcaire to arrange the phone taps.

Coulson, who was editor of the News of the World between 2003 and 2007, has consistently denied knowledge of the hacking, with News keen to paint Goodman as a rogue reporter. However, a parliamentary committee condemned News’ “collective amnesia” on the matter in a report last year and  former journalists at the tabloid have come forward to claim that phone hacking was rife .

Despite these events, BBC coverage has been sparse. Indeed, of the few stories by the BBC on the affair leads with a claim by Michael Gove, the UK education secretary, that the allegations centre on “recycled evidence”.

Gove is a former leader writer for The Times, a News International newspaper. Andy Hayman, the former Metropolitan Police chief who effectively cleared News of any wrong-doing last year, is now a Times columnist. Bloggers see Murdoch’s puppet strings everywhere, aided and abetted by a near-universal code of silence on the matter within the media.

This may be a little overblown, but it’s accurate to say that The Guardian and The Independent are the only UK newspapers to give the story any kind of oxygen. Indeed, it took an investigation by the New York Times to resurrect the issue and place scrutiny on the conduct of Coulson and to question why police didn’t inform every victim of the phone hacking that they were targeted.

Former deputy prime minister John Prescott, one of public figures targeted by the phone hacking, has demanded a judicial inquiry into the police’s investigation. The NYT article alleges that a Metropolitan police press officer urged investigators not to look into the case due to the force’s close relationship with the News of the World.

The reluctance of the Murdoch-owned press to cover the story is understandable. But the downplaying of events by the BBC is troubling for UK observers.

The BBC is facing huge cuts to its budget by a coalition administration in austerity mode. The future of the licence fee itself is in doubt, with the BBC faced with an ideologically antagonistic government and an openly hostile press.

The Times, for instance, has run stories on BBC “fat cat” pay, waste and anti-competitiveness over the past 10 days. James Murdoch labelled the BBC’s size and future ambitions as “chilling” in a speech to the Edinburgh TV festival last year.

Mark Thompson, the BBC’s director general, staunchly defended the BBC’s right to exist in a speech at the same festival last month, but he was subsequently caught visiting Downing Street to discuss BBC coverage of government spending cuts, provoking howls of protest about independence from editorial staff.

With the BBC battling to convince government that it is cost-effective while being mauled by the Murdoch press, an attack on Coulson, a man who has been at the heart of both organisations, isn’t in the corporation’s immediate interest.

This approach may make strategic sense and it may help preserve what many feel is the finest public service broadcaster in the world. But, to twist the meaning of James Murdoch’s words, the implications for society are certainly chilling.

Oliver Milman was previously a contributor to the UK’s Media Week.

Peter Fray

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