Murdoch's biggest setback?

Robert Peston
Economics editor

In a business career of more than half a century, has 80 year-old Rupert Murdoch ever experienced such setbacks to his business ambitions?

The quintessential media mogul sees himself - rightly some would say - as the founder of British Sky Broadcasting, the UK's biggest broadcaster by revenues.

So to be told by politicians, who till recently were seen by some as his creatures, that he shouldn't press ahead with his attempt to own all of BSkyB, and then to have to do what they urged, well it is a humiliation of a kind that is somewhat unusual for him.

And, to state the obvious, that humiliation comes only a few days after another act that caused him acute pain, the closure of the News of the World, once his favourite newspaper.

Of course it would be wrong to overstate the damage to his News Corporation empire, owner of vast chunks of the US and global media industry.

It still remains immensely profitable. And News Corp still owns 39% of BSkyB, a business that bucked the recent recession to continue increasing its profits - to something like £1bn in the past year.

But no one - including Mr Murdoch - can be certain what will emerge from either the police investigation or the judge-led public enquiry into alleged wrongdoing at the News of the World.

With the police as yet having contacted only the tiniest fraction of the thousands of people whose phones may have been hacked by a private detective in the employ of the News of the World, it is probable that there will be week after week of new shocking disclosures about the privacy of individuals being invade improperly.

And overnight there have been signs of contagion to other countries where News Corp has important assets: Senator Jay Rockefeller, the chairman of the Senate's commerce committee, urged US government agencies to probe whether the News of the World instigated attempts to hack the phones 9/11 victims and other American citizens.

So there could be further damage to the reputation of News Corporation, damage which could alienate advertisers and buyers of its newspapers and entertainment.

If that translated into losses of revenue, it would be easier for Mr Murdoch to shrug that off, if his recent investments had gone spectacularly well.

But he has written down the value of Dow Jones, owner of the Wall Street Journal - and he lost a fortune on the sale of MySpace, one of the original social networks.

Mr Murdoch would probably concede that in recent years he has not been infallible.