Rupert Murdoch may have finally gone too far. For decades the billionaire media baron has relentlessly amassed power on three continents. But it is worth recalling that his first move out of his native Australia—and out from under the shadow of his father, newspaper magnate Sir Keith Murdoch—came in 1969, when he snatched a very downmarket British Sunday title, the News of the World, away from Robert Maxwell. (Maxwell’s fraudulent dealings were still unsuspected, but his Czech Jewish origins were held against him by the paper’s editor, who remarked that the News of the World “was—and should remain—as British as roast beef and Yorkshire pudding.”) In considerable decline from its heyday in the 1950s, when it sold over 8 million copies, the paper Murdoch acquired relied on a mix of kiss and tell stories—the News of the World bought Christine Keeler’s account of her involvement in the Profumo Scandal—and “investigations” of London vice dens, with the exposé typically ending with the line “I made my excuses and left.” 

But it was still the biggest-selling English language paper in the world, and though Murdoch steered it even deeper into sleaze—earning him the nickname “the Dirty Digger”—the News of the World and its weekday stablemate, the Sun, which he acquired a year later, supplied the steady profits that enabled Murdoch to build his British empire. (In 2010, a terrible year in the newspaper business, the two titles reported a profit of £86 million.) So there was something not just shocking but brutal about James Murdoch’s announcement that “this Sunday will be the last issue” of the 168-year-old paper.

The immediate cause of the paper’s demise was public revulsion in Britain to the news that News of the World reporters had hacked into the mobile phone messages of Milly Dowler, a 13-year-old girl who was abducted on her way home from school in March 2002, but whose body wasn’t discovered for another six months. Guardian reporter Nick Davies’s disclosure that the News of the World had not only listened to messages left by Milly’s frantic friends and family but had deleted messages from her voice mailbox to keep the supply coming—creating false hope for the girl’s family and possibly destroying evidence—sparked a boycott of the paper’s advertisers and widespread denunciation. Prime Minister David Cameron condemned the hacking as “dreadful,” Labour Party leader Ed Miliband called for Rebekah Brooks, a Murdoch executive who was editor of the News of the World when the murdered teenager’s phone was hacked, to resign. The Royal British Legion, the country’s largest veterans’ organization, announced it was cutting its ties with the paper after reports emerged suggesting that the phones of soldiers killed in Iraq and Afghanistan had also been hacked. Even Rupert Murdoch described the mounting scandal as “deplorable and unacceptable.”

Behind the wave of sentiment, though, lie some significant figures: the profits of all of Murdoch’s papers put together are a tiny fraction of the £6 billion in revenues from Sky, his British satellite broadcaster. Ever since News of the World reporter Clive Goodman and private investigator Glenn Mulcaire first pleaded guilty in 2007 to hacking into the mobile phone accounts of members of the royal family, Murdoch’s actions have had a single aim: to contain the damage so that he can proceed with his plan buy the 60 percent share of British Sky Broadcasting he doesn’t already own. For a while it even looked like he might succeed. Despite dogged reporting by the Guardian and the New York Times, the rest of the media showed little interest. But the slow drip of celebrity hacking victims eventually brought a wave of lawsuits; each lawsuit prompted the disclosure of new documents; each set of documents revealed a culture of lawlessness and invasion of privacy targeting not just the usual boldface names but the kind of people who read the Sun, watch Sky and vote Conservative.

When Labour MP Tom Watson, himself a hacking victim, called for Murdoch’s takeover of BSkyB to be blocked, nobody cared. But when Zac Goldsmith, a Tory MP whose father was a bare-knuckled corporate operator and whose grandfathers were both Tory MPs, rose in the House of Commons and said that Murdoch’s organization “has grown too powerful…. It has systematically corrupted the police and has gelded this parliament, to our shame,” it was a sign that the political weather was changing. By Thursday David Cameron announced two new investigations, and by Friday it emerged that government approval of the BSkyB takeover, once seen as inevitable, has now been deferred until at least September.

Cameron’s moves may have been an attempt to deflect attention from the arrest on Friday morning of Andy Coulson, the Prime Minister’s former director of communications, who’d resigned as editor of the News of the World when Goodman and Mulcaire were convicted, but who always claimed to have no knowledge of what they’d been up to. Coulson is accused of approving hundreds of thousands of pounds in payments to police officers in exchange for confidential information.

There is no doubt that Murdoch has been seriously damaged by all of these disclosures. It has often been said of Murdoch that the only thing he cares about is his share price. Events over the past week wiped some $2.5 billion off the value of News Corporation, his US-based holding company. But there is still every likelihood he will recoup his losses. Even closing the News of the World may turn out to be a boon, allowing him to jettison not only a toxic title but also the expense of a separate weekly paper if widely rumored plans for the Sun on Sunday turn out to be true.

For Americans, the real question is whether Murdoch’s political influence is on the wane. Certainly it would be pretty to think so. A world without Fox News would be a fairer (if not more balanced) world in every sense. But as the widening revelations of the phone hacking scandal show, News Corporation is not an ordinary commercial enterprise. Through his journalists and gossip columnists and the network of former and current police officers and law enforcement officials on his payroll, Rupert Murdoch has been operating what amounts to a private intelligence service. And the threat of personal exposure—on the front page of the Sun or Page Six in the Post—gives News Corporation a kind of leverage over inquisitive regulators or troublesome politicians wielded by no other company on earth.

English already has the expression “para-state” to describe the kind of shadowy forces that operate beneath and behind legitimate authority. Is it really unreasonable to suggest that in News Corp, Fox, News International, Sky and the rest of Murdoch’s empire we are witnessing the emergence of the para-corporation?

Like this blog post? Read it on The Nation’s free iPhone App, NationNow.