The U.K. phone-hacking scandal returned to the front of the stage today after the police announced charges against editors and journalists who worked at the now-defunct News of the World.
Eight editors are charged with conspiracy to hack the phones of more than 600 people. And there are additional individual charges, including some against former top editors Andy Coulson (also former director of communications for the Prime Minister) and Rebekah Brooks. Coulson and Brooks are both charged with conspiracy to hack the phone of murdered schoolgirl Milly Dowler. Both have publicly denied the charges.
While clearly another stain on the U.K. Murdoch empire, the biggest concern for News Corp. (NWS) will likely be the evidence the prosecution offers at trial and anything that comes out in witness testimony. It wants this to go away fast.
The smart and likely move for Murdoch would be to jettison his U.K. publications. After deciding to split NWS between entertainment and print, he stepped down from the board of News International, which controls The Sun, The Times and The Sunday Times. It seems odd for him to cling on to a business that is such a small part of NWS overall revenue.
What makes this even more likely is such a move would receive enormous, if quiet, support from the coalition government. As noted in this analysis from politics.co.uk, for PM David Cameron the trials make "any sort of rapprochement with Murdoch and News International before the next election virtually impossible."
This is crucial as the publications still have great sway over the U.K. electorate, especially The Sun (which is kind of like Romney having to court TMZ, but that's another story).
With new ownership for the papers, the coalition would be able to make amends with them, disparaging the old regime and hailing a new dawn of journalism. (I'd suggest Larry Flynt bid for The Sun. It's essentially in his wheelhouse anyway and he seems to have more ethics that the previous editors.)
As for the stock, any weakness form the charges could be a good entry point in anticipation of a sale of U.K. assets.