Ian Burrell: Cost to News International's reputation is biggest worry

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If Rupert Murdoch's News Corp is really serious about bringing the phone hacking scandal at the News of the World (NOTW) to a close, it must act quickly and decisively. Before Christmas the group shifted its strategy by suspending and later sacking NOTW executive Ian Edmondson. This apparently signalled a new approach at News International, Mr Murdoch's British newspaper division. At the start of the year, the media mogul himself was in town to try to put things in order at Wapping.

But Mr Murdoch is back in the US and events yesterday in the High Court in London showed that the phone hacking scandal is anything but over. Mr Justice Vos voiced his concern at the sheer volume of civil cases being brought and urged the various lawyers to work together to streamline the legal equivalent of a giant rolling snowball that continues to grow.

The difficulty for News International is that, strategically, it is a matter of the utmost complexity.

Though it is a legal issue, the long-term cost in terms of corporate reputation could be far higher than that paid out in settlements, damages and lawyers' fees.

The range of options is wide, from settling with all claimants for upwards of £750,000 to fighting every case through the courts. The former is virtually a non-starter. News Corp is determined not to offer huge settlements like those given to publicist Max Clifford and Gordon Taylor of the Professional Footballers' Association. Furthermore, claimants such as former MP George Galloway have said they want their day in court. The latter scenario would be unthinkable in terms of bad publicity.

In the meantime, senior News International executives such as general manager Will Lewis and director of corporate affairs Simon Greenberg are immersed in a subject that is rarely out of the news.

The News of the World itself is also being continually distracted from its central task of breaking stories.

All of this is costing money. News Corp must do something – but what?

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