Is Rupert Murdoch’s empire going into meltdown after the Milly Dowler phone hacking?

Well it just might be.

Leading advertisers, including Ford, are pulling their ads from the News of the World following revelations that the paper’s private investigators hacked into Milly Dowler’s voicemail and may have impeded police investigations into her abduction and subsequent murder.

The News of the World editor in charge at the time, Rebekah Wade (now Rebekah Brooks) is now CEO of News International, the News Corporation subsidiary that runs the Sun and the News of the World, and Rebekah says she’s staying.

Well she will for a bit but she’s toast.

Advertisers like Ford and others like Lloyds Bank wading into proceeding is significant; not because New Corporation boss Rupert Murdoch (pictured) gives a monkey’s about the occasional advertiser but because advertisers as a group hate becoming involved in these affairs so when they do it’s a sure sign that the ordure has well and truly hit the fan.

Rupert Murdoch knows Alan Mulally, CEO of Ford, well and he also knows Sir Martin Sorrell, boss of WPP and ultimate guardian of the Ford account, WPP’s biggest.

Ten years or so ago Sorrell was on a flight from Heathrow to New York where he found himself chatting to Murdoch. Then one of the engines conked out and the plane had to make a hasty and rather wobbly return to Ireland.

Numerous executives in both empires are said to have been a trifle conflicted as they wondered whether or not the plane would land safely.

But the point is that Sorrell and Murdoch are pals, in so far as anyone in truly big business can be so described.

But Ford wouldn’t have pulled its advertising from the NoW this weekend without the decision going all the way upstairs, to Sorrell. Any media manager at Mindshare taking such a decision would have to be Spartacus-like brave or drunk.

So Rupert’s friends, including Sir Martin, are heading for the exit.

Adweek editor Michael Wolff, the author of a recent biography of Murdoch, was on the BBC tonight saying that this was the biggest crisis Rupert had faced in his whole career.

And (despite the UK coalition government saying that News Corp’s bid for BSkyB is nothing to do with this) Wolff is right: a potentially game-changing deal to take control of BSKyB is at risk and James Murdoch, Rupert’s son and heir, might well be dragged into the same legal mire as Rebekah Brooks and countless other News executives.

Can Murdoch get away with it?

Well he shouldn’t be able to. Ever since he bought the News of the World in 1969 Murdoch has stayed close to his newspapers and, although he almost certainly didn’t know the detail of what was going on, he knew, and was close to, the people who did.

Many of these characters have been lying through their teeth about what they knew about phone hacking (and still are by the looks of it).

So there’s a reckoning coming, and soon.

Will it derail the News Corporation bid for BSkyB? It might do. This is a media story that’s become a mainstream story.

The British public is outraged by the Milly Dowler phone hacking scandal and politicians, even Murdoch-friendly Tories like PM David Cameron, ultimately deal in votes.

It’s certainly the biggest challenge Rupert Murdoch has so far faced, after 40-plus years as a media magnate.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.