Trinity Mirror's £1.2m phone-hacking payouts are an early chapter in what will be a long, ugly and very painful story
As Trinity Mirror is ordered to pay out £1.2m in damages to phone-hacking victims, ex-Sunday Mirror editor Paul Connew assesses the long-term impact on the publisher's finances and reputation.
Not long before a test case civil action against Trinity Mirror over phone-hacking kicked off, a world-famous comedy star, who'd already won a hefty settlement from Rupert Murdoch over hacking, told me over a drink that he wouldn't be suing the newspaper group even though he'd been told by police his phone had been hacked.
His rationale: "I'm a Labour voter and the Mirror is the only left of centre popular paper around and I don't want to risk helping bring it down because the group doesn't have Murdoch's deep pocket."
Unfortunately for Trinity Mirror, owners of the Daily and Sunday Mirror and its stablemate the People, many of his fellow celebrities didn't share that sentiment. And this week the newspaper group discovered the initial cost of a scandal that has a long way to go before the final reckoning comes in. High Court judge Mr Justice Mann ordered the publisher to pay £1.2m in compensation to eight phone hacking victims, including troubled football legend Paul Gascoigne and the actress Sadie Frost,
The £260,250 award to Sadie Frost is believed to be the biggest privacy invasion damages payout ever ordered by a British court and Paul Gascoigne wasn't far behind with an £188,250 award. The other successful claimants were senior BBC executive Alan Yentob, Coronation Street actress Shobna Gulati, Eastenders stars Shane Richie and Lucy Taggart, TV producer Robert Ashworth and flight attendant Lauren Alcorn.
But the real significance of Thursday's ruling – which dwarfed the majority of out of court settlements the Murdoch empire negotiated with victims – was that it only represents the tip of the hacking iceberg threatening Trinity Mirror.
The level of the awards was worse than that anticipated by the company's senior executives and legal advisers. The legal costs involved will heavily swell the £1.2m damages bill imposed by Mr Justice Mann. For this was only the start of a long, legal chain that some pundits predict could even put Trinity Mirror's survival at risk – the very fear that dissuaded my left-leaning comedian friend from joining the growing queue of hacking litigants, some famous, some not.
A sobering statistic the Trinity Mirror board has to take into account is that the compensation bill for those out-of-court phone-hacking settlements, together with legal costs, incurred by the Murdoch empire is believed to have topped £300m, with the great majority coming in substantially lower than Justice Mann's benchmark. Trinity Mirror only has a market capitalisation of around £450m.
For what it's worth, the soothsayers who predict the escalating legal quagmire over past hacking could sink Trinity Mirror are almost certainly overstating the crisis. But there can also be little doubt that the company's commercial health will suffer substantially, in terms of investments cutbacks and probable further reductions in its already-depleted journalistic headcount.
The 'very substantial' payments Mr Justice Mann ordered in his delayed judgement were merely the culmination of a damages-range test case, following an explosive and often bitter three-week hearing back in March. There are already more than 40 other civil actions pending and, according to those lawyers who specialise in privacy law, the total count of claimants against the Mirror titles could run into the hundreds, or even the thousands. Particularly embarrassing for Trinity Mirror are suggestions that a number of senior former Labour politicians may be among victims planning to sue.
In a dramatic announcement in the wake of Thursday's court ruling, Trinity Mirror upped the £12m it earlier told the court it had set aside to settle hacking scandal claims to £28m. But some specialist lawyers suggest even that may prove inadequate. There can be little doubt that the scale of Justice Mann's damages order has sent shockwaves through the ranks of Trinity Mirror's shareholders and the current management team who, like the majority of its present journalistic corps, weren't around during the hacking era.
Meanwhile the spectre of criminal prosecutions looms as police continue their investigations into phone-hacking at the Mirror titles, with whispers emanating from Scotland Yard that charges are 'imminent'. The company also faces the prospect of potential corporate prosecution, following allegations that senior journalistic management were implicated in a 'culture of industrial-scale phone-hacking'. One barrister, David Sherborne, went as far as to claim the scale of phone-hacking at the Mirror titles made what went on at the News of the World look like a 'cottage industry'.
The truth of that may never be known as Rupert Murdoch was able to settle the vast majority of civil actions by victims out of court, a strategy that appears to have eluded Trinity Mirror. Whether that's because the Mirror 'victims' have simply been more determined to have their day in court or whether Trinity Mirror weren't offering generous enough out of court deals is another elusive answer.
Several senior former Mirror group executives have already been arrested or questioned under caution. Among those twice questioned under caution is flamboyant former editor-in-chief turned TV chat show star Piers Morgan, who strenuously denies any involvement in phone-hacking.
During the three-week March hearing that preceded Thursday's reserved judgement by Justice Mann, the court heard from a small cast of TV stars in scenes worthy of a dramatic soap plot, with bitter tears, angry outbursts and tales of lives 'torn apart' by a decade of mistrust and paranoia.
Sadie Frost, whose phone was apparently hacked on an almost daily basis, told the court that she even forced her mother to sign a confidentiality agreement after a series of 'salacious' stories about her personal life. "For many years I was in a living hell," she said.
Eastenders hardman Steve McFadden said he decided not to marry his co-star Lucy Taggart because he wrongly suspected she was leaking stories to the papers without realising extensive phone-hacking was the real source.
Fellow Eastenders star Shane Richie disclosed he didn't speak to his on-screen lover Jessie Wallace for five years because he thought she was 'leaking to the red-tops'. Richie also dramatically slammed his fist down on the witness box as he testified how voicemail were hacked when his father was dying in hospital, telling the judge: "He was dying in my arms and the fuckers were hacking my phone."
While a tearful Paul Gascoigne broke down in the witness box, blaming much of his alcohol and mental health problems on stories obtained by phone-hacking, and Trinity Mirror came under serious criticism in court for compelling the troubled former football legend to testify, even though they accepted his phone had been hacked.
The hearing also took testimony from whistleblowing former Mirror group journalists Dan Evans and James Hipwell, with an apologetic Evans describing how he'd been introduced to the dark arts of phone hacking by very senior journalistic figures and how the euphemistic codename for phone hacking was 'Muppetry'.
Muppetry or not, there can be no doubt that Thursday's historic court ruling by Mr Justice Mann is only a very early chapter in what promises to be a long, ugly and very painful story, both financially and reputationally, for Trinity Mirror.
Paul Connew is a PR adviser, broadcaster and media commentator. He is a former editor of the Sunday Mirror & deputy editor of the Daily Mirror (pre the phone hacking era).