During the four decades since the Watergate affair engulfed U.S. President Richard Nixon, politicians have repeatedly ignored the scandal’s main lesson: The cover-up is worse than the crime. Like Nixon, they have paid a higher price for concealing their misdeeds than they would have for the misdeeds alone.

Now, for once, comes a scandal that breaks that rule: Britain’s phone-hacking affair, which has shaken British politics to its foundations. Over the past decade, the tabloid newspaper The News of the World, owned by Rupert Murdoch’s News Corp., targeted 4,000 people’s voice mail. The list includes not only royalty, celebrities and other VIPs, but also the families of servicemen killed in Afghanistan and Iraq and those of victims of the July 2005 terrorist attack in London.

It all unraveled when The Guardian reported that the tabloid had hacked into the voice mail of missing 13-year-old Milly Dowler, apparently in the hope of obtaining some private expressions of family members’ grief or desperation that it could splash on its front page. Until the girl’s murdered body was found six months later, her family and the police thought she might still be alive because The News of the World’s operatives were deleting messages when her phone’s mailbox became full. (According to Scotland Yard, Murdoch hacks reportedly bribed mid-level police officers to supply information as well.)

In the extensive annals of eavesdropping, all of this is something new. Not even Stalin wiretapped the dead.

A cover-up ensued. James Murdoch — Rupert’s son and chairman and chief executive of News Corp.’s European and Asian operations — authorized a secret payment of £1 million ($1.6 million) to buy the silence of hacking victims. Millions of in-house e-mails reportedly have been destroyed. Still, it seems safe to say that the peculiarly repellant inhumanity of the original deeds will remain more shocking than the details of this or any other cover-up.

Even so, the political consequences of the phone-hacking scandal will depend on far more than the outcome of the official investigations now underway in Britain. Above all, the scandal’s impact will depend on how governments and citizens assess what News Corp. really is.

The Murdochs call News Corp. a journalistic enterprise. In fact, it is, above all, an entertainment company, with the bulk of its revenue coming from its film and television holdings. Second, and more important, it is a propaganda machine for right-wing causes and political figures.

This is News Corp.’s main face in the United States in the form of Fox News, whose hallmark has been relentless propagation of right-wing ideology. Whereas political propaganda had once been the domain of governments and political parties, Fox News is formally independent of both, although it overwhelmingly serves the interests of the U.S. Republican Party.

In Britain, News Corp. has been creating a sort of state unto itself by corrupting the police, assuming police powers of surveillance and intimidating politicians into looking the other way. In the United States, it has behaved similarly, using corporate media power to breathe life into a stand-alone political organization, the Tea Party.

All of this is far removed from what a journalistic organization is supposed to do. Journalism’s essential role in a democracy is to enable people to fulfill their roles as citizens by providing information about government, other powerful institutions, civil movements, international events, and so on. But News Corp. replaces such journalism with titillation and gossip, as it did when it took over the 168-year-old News of the World and turned it into a tabloid in 1984, and with partisan campaigns, as it did when it created Fox News in 1996.

Not surprisingly, at Fox News, as at many other News Corp. outlets, editorial independence is sacrificed to iron-fisted centralized control. News and commentary are mingled in an uninterrupted stream of political campaigning. Ideology trumps factuality. And major Republican figures, including possible contenders for the party’s presidential nomination, are hired as “commentators.” Indeed, its specific genius has been to turn propaganda into a popular and financial success.

Given The News of the World’s profitability, no one should be surprised if the Murdochs have been replicating their sunken British flagship’s reprehensible behavior elsewhere. But whatever else is revealed, the British phone-hacking scandal is part of the Murdochs’ transformation of news into propaganda. Both reflect an assault on democracy’s essential walls of separation between media, the state and political parties. The Murdochs are fusing these entities into a single unaccountable power that, as we see in Britain today, lacks any restraint or scruple.

That effort should compel us to confront an uncomfortable reality underlying both the British phone-hacking scandal — with its penumbra of appalling cruelty and wanton corruption — and Fox News, the United States’ most popular news channel: Too many people want what News Corp. has been offering. And what too many people want can be dangerous to a civilized, law-based society.

To glimpse just how dangerous, consider Italy, where Prime Minister Silvio Berlusconi’s MediaSet conglomerate has seduced broad swathes of the electorate since the 1980s with a Murdoch-like combination of insipid variety shows and partisan political theater. When Italy’s postwar party system collapsed in the early 1990s, Berlusconi was able to establish his own political party, win power, and, over the course of three governments, bend laws and government institutions to serve his business and personal interests.

News Corp. seems determined to take Britain and the United States down a similar path. But now, at least in Britain, the political class is in revolt. Prime Minister David Cameron — who previously cultivated close ties with News Corp. leaders, even employing as his press secretary The News of the World’s former editor, who was recently arrested for his role in the scandal — called the phone hacking “disgusting.” Meanwhile, Labour leaders, who had also sought the Murdochs’ favor, have vowed to block News Corp.’s bid for full ownership of Britain’s largest pay-television broadcaster. Whether the rebellion will jump across the Atlantic remains to be seen.