Facundo Arrizabalaga / EPA, file

James and Rupert Murdoch pictured in London at the height of the phone-hacking controversy in July.

News analysis

LONDON -- Media mogul Rupert Murdoch, CNN anchor Piers Morgan and the entire British newspaper industry are braced for their very own judgment day.

Thursday will see the publication of a report by a major U.K. inquiry into the phone-hacking scandal. It will likely be one of the most important days in the history of the country's newspapers.

Early reports suggest that the findings will be “excoriating.” In the language of the British tabloid press, the U.K.’s journalists are set to get “a bloody good kicking.”

Led by a judge, Lord Justice Leveson's inquiry was set up after journalists, mostly from the now-closed News of the World, were accused of listening to people’s cell-phone messages to gain stories. The paper – owned by Murdoch’s News Corporation -- even allegedly “hacked” the voicemail of a murdered schoolgirl.

News Corporation – home of Fox News, the National Geographic Channel, 20^th Century Fox, and a host of newspapers -- appears to be back on its feet, recently buying into the Yankees Entertainment and Sports Network.

But if Lord Justice Leveson chooses to launch a high-profile attack on the Murdoch’s business practices then the multinational media giant could find itself facing another round of bad publicity.

UK PM's ex-aide, Murdoch protege face charges in phone-hacking scandal

What the Leveson inquiry looked at included what Murdoch’s son James, who was then head of News Corporation’s British newspaper arm, did and didn’t know about phone hacking. It went on to question the Murdochs’ relations with British politicians.

It even asked whether the political support of Murdoch newspapers had been leveraged to gain commercial advantage for the Murdochs’ television networks. Rupert Murdoch told the inquiry that such a suggestion was unfair – he had “never asked a prime minister for anything,” he said. 

Morgan will also be looking anxiously across the Atlantic to see what the Leveson inquiry concludes.

At the end of his evidence in December, Morgan, who was once editor of the News of the World and then the rival Mirror, said he felt like a rock star “confronted with a back catalog of all his worst hits.”

“He made no fatal admission, but the cumulative effect of shifty denials and self-contradictions was awful,” wrote British commentator Michael White in the Guardian, the newspaper which uncovered the phone-hacking scandal.

Former UK PM accuses Murdoch of misleading inquiry into phone-hack scandal

But what matters now is what Leveson has to say. Morgan and the Murdochs await the judge’s verdict.

The British media will concentrate on the proposals for regulation of the newspaper industry.

Dave Hogan / Getty Images, file

Piers Morgan, former editor of the Mirror newspaper, and Rebekah Brooks, ex-editor of the Sun.

But during the inquiry there was one issue that Lord Justice Leveson himself called “the elephant in the room” -- the Internet.

Rupert Murdoch not 'a fit person' to run major company, UK lawmakers say

While the inquiry was still collecting evidence, two stories emerged that suggest Britain is no longer the home of the worst excesses of tabloid journalism.

First, U.S.-based website TMZ published pictures of Prince Harry cavorting naked with girls in a Las Vegas hotel room. Then a French magazine printed topless photographs of Kate Middleton, the Duchess of Cambridge, which were taken with a long lens while she was on holiday.

Prince William, Kate 'hugely saddened' by publication of topless photos

The pictures could be seen by anyone with a computer. And neither was reproduced by a British newspaper, except for News Corporation tabloid The Sun, which published the Harry snaps after days of consideration. 

Little wonder that The Economist described the Internet as “A naked challenge to Lord Leveson.”

The Internet is awash with stories about the duchess, many of which are entirely speculative or plain wrong.

Clearly criminal wrongdoing by journalists will continue to be investigated. Charges against a list of Murdoch journalists await a court hearing. But when it comes to regulation -- Leveson’s main focus -- the Internet poses a challenge.

If Leveson ignores it and regulates British newspapers alone, he may shackle them to an increasingly insignificant existence amid falling sales. But if he proposes shutting down websites, he could be accused of trying to introduce China-style censorship laws.

Many will view it as a battle for the future of free speech in Britain.

Follow NBC News' Keir Simmons on Twitter.

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