At the start of July, Rupert Murdoch was days from acquiring full control of Britain’s most profitable satellite TV, British Sky Broadcasting, known as BSkyB. He already owned 39 percent of it. But a full buyout would clear the way to create a British equivalent of Fox News, the US channel and one of Mr. Murdoch’s biggest cash cows. The step would have marked another triumph for the global Murdoch News Corp. empire. And it had the cultivated support and blessing of Prime Minister David Cameron.

Instead, what Murdoch got on July 4 was a phone-hacking scandal so volcanic that 10 days later he ended his BSkyB bid, and later apologized to a world audience.

What Mr. Cameron got was questions about why he hired Andy Coulson, a former Murdoch editor who presided over the sleaziest period of phone hacking, for one of the most important jobs at 10 Downing Street.

Revelations, starting with the illegally accessed voice mail of a 13-year-old murdered girl, Milly Dowler, quickly grew to include the fact that News of the World (NotW) operatives illegally broke into the phones of some 3,870 people. Public indignation soared over the use of ordinary people’s private tragedies as tabloid fodder. Anger was magnified by evidence of News Corp. executives schmoozing with politicians and police.

On Thursday, Scotland Yard had added another victim to the list – Sara Payne, whose 8-year-old daughter, Sarah, was murdered by a repeat sex offender in 2000. Ms. Payne’s tragedy was the launching point for a NotW campaign to “name and shame” pedophiles. Payne allegedly received the phone that was subsequently hacked as a gift from Rebekah Brooks, then NotW editor.

Officials and executives caught in the scandal’s fallout depict it as bickering over relatively small lapses of judgment. For those who’ve long chafed at Murdoch’s use of media to bully politicians, it is a Watergate-sized affair, a battle between light and dark, with nothing less than the health of British democracy at stake.

Culture wars deepen

However it plays out, analysts say, the Dowler affair has brought into sharper relief a deeper, longstanding culture war that pits Murdoch’s free-market ethos of “giving people what they want” against an establishment that has, until now, been in a losing fight over press standards and a sense of what is civil and progressive.

“What Murdoch wants is Fox News here,” says Polly Toynbee, a columnist with the Guardian, a paper that was instrumental, along with The New York Times, in exposing the phone hacking. “He plays off the BBC as old-fashioned and starchy.... We were days away from Murdoch having complete power ... we were headed for a Berlusconi Britain.”

Murdoch for years has been the savvy corporate buccaneer, siding with the “common man,” poking the British elite as stuffy and old-fashioned. His cry: Privatize! Deregulate! Shake off the past and the lazy and liberal state-funded civil service that is holding back Britain from competitive excellence!

News Corp. vs. BBC

A chief symbolic target in the war is the BBC. BBC defenders, like its historian, Jean Seaton of the University of Westminster, describe the service as “an institution of extraordinary intelligence and honesty.” But for News Corp., the BBC embodies effete upper-class values and is a subsidized bastion of naive internationalism.

In 1989, Murdoch fully opened the war in a keynote speech at the prestigious Edinburgh TV festival. He brilliantly outlined how technology would change media. Yet his address was also a salvo against the BBC. Having earlier put his partisan media at the service of Margaret Thatcher’s vision to rebuild Britain, a rising Murdoch told BBC executives in the audience: “Much of what passes for quality on British television really is no more than a reflection of the values of the narrow elite that controls it.” British media are “propagandists,” “anticommercial,” and “debilitating,” he said.

In broadcast terms, it was “The Simpsons” and prizefighting versus “Jane Eyre” and “Masterpiece.”

Twenty years later, James Murdoch reprised his father’s speech at the same festival. The younger Murdoch, chairman of a News Corp. division that by then owned 40 percent of British newspapers and 39 percent of BSkyB, went further. Noting the 150th anniversary of “The Origin of Species,” he argued that Charles Darwin proved that “the most dramatic evolutionary changes can occur through an entirely natural process. Darwin proved that evolution is unmanaged.”

The BBC, in this view, was a kind of lazy farm animal that must shape up for the hunt. “The [BBC] is incapable of distinguishing between what is good for it and what is good for the country,” he said. “Funded by a hypothecated tax, the BBC feels empowered to offer something for everyone.... The scope of its activities and ambition is chilling.”

His coup de grâce: “There is an inescapable conclusion that we must reach if we are to have a better society. The only reliable, durable, and perpetual guarantor of independence is profit.”

Then came the Dowler affair.

A Guardian exposé showed that the teen’s voice mail was hacked with knowledge that she was dead, and messages were erased to leave room for more calls, leading her family to believe she might be alive. In the aftermath, 10 figures were arrested, seven resigned. NotW was closed. The House of Commons rose in unity to reject the BSkyB bid. Cameron returned early from Africa to say he would not in retrospect have hired Mr. Coulson. Two investigations are under way. A current focus is Chancellor of the Exchequer George Osborne, who met with Murdoch executives at key moments in the BSkyB deal. Mr. Osborne also reportedly persuaded Cameron to hire Coulson.

Tide turns against Murdoch

One effect has been a change in the public view of tabloids and Murdoch’s influence. Before July, criticism of Murdoch came from anticommercial leftists or idealistic scholars. The Dowler case made it a broader issue of public interest.

Views of the media’s importance are also shifting. Britons are unlikely to abandon a good tabloid read. But if media shapes culture, how the public thinks, what it considers appropriate and reasonable, then media are not simply another “industry” or commercial enterprise, like making shoes or cornflakes.

“The soul of democracy is tempered and shaped by the information we live in,” says Ms. Seaton, the historian. “Media industries remain unique as they shape our tastes, our news, our attitudes. The easy thing is to make money off underselling our views of ourselves and our possibilities."