What does the Select Committee report mean for Murdoch's empire?

Today’s Select Committee report into Phone Hacking and News International is irrevocably damaging for both men.

Rupert Murdoch, chairman and chief executive of News Corporation, was judged not to be “a fit person” to run an international company, because of “wilful blindness” to wrongdoing at the media empire he founded.

Meanwhile his son James, who remains deputy chief operating officer of News Corp and a non-executive director of BSkyB, was found guilty of an “astonishing” lack of curiosity and even “wilful ignorance” about the extent of phone hacking.

"This culture, we consider, permeated from the top throughout the organisation and speaks volumes about the lack of effective corporate governance at News Corporation and News International,” the report said.

Parliament hasn’t even got started on the allegations of police bribery and computer hacking, but if one thing is clear from the Select Committee report, it is that News Corp has not finished paying for the scandal.

The report leaves BSkyB vulnerable under Ofcom’s powerful “fit and proper” test, whereby the regulator can stake away the company’s coveted broadcasting licence if it doesn’t regard its controlling shareholders or directors as suitable.

Ofcom said in a statement that it is was “considering the Committee report”, whose verdict on Rupert Murdoch as “unfit” to run a company will add ballast to the case against him.

If BSkyB fails the fit and proper test, Rupert Murdoch could be forced to dramatically reduce News Corporation’s stake in the broadcaster he founded and of which he tried to take full control only last year. James Murdoch could also be ousted from its board.

Meanwhile, both men will face increasing shareholder pressure to surrender their respective positions at News Corp.

Investor groups including the Local Authority Pension Fund Forum, which controls a fund totalling £100bn, and America’s Christian Brother Investment Services, have already tabled a motion for the News Corp annual general meeting in October, calling for Rupert Murdoch’s position as chairman and chief executive to be split and for a new, independent chairman appointed. They are rallying more support for the motion and Rupert Murdoch is likely to see a swing of shareholder support away from him.

James Murdoch’s continuing involvement with the company at board level is also becoming difficult to justify from a shareholder perspective. He haemorrhaged support at the last AGM, with more than a third of votes cast against, but can expect the shareholder revolt against him to deepen at October’s meeting, assuming he is still in position.

However, arguably the biggest worry for Rupert and James is not whether shareholders are prepared to forgive them. After all, News Corp’s dual class share structure means they control around 40pc of voting rights in the company.

Instead, it is the severe personal repercussions they could face under US law. Various investigations by America’s Department of Justice and the Federal Bureau of Investigation are clear that James and Rupert Murdoch can be held personally accountable for failings by News Corp, regardless of whether they were directly involved in the alleged wrongdoing, on the grounds that they should have known.

The language of the Select Committee report, and in particular the accusations of “wilful blindness” and deliberate obfuscation, leaves them little room to hide.