By Matt Falloon
LONDON (Reuters) - "You may wonder what is happening with the Murdoch press," Britain's then Business Secretary Vince Cable said late last year. "I have declared war on Mr Murdoch and I think we're going to win."
At the time, those words were in fact a big loss for Cable, a senior figure in the Liberal Democrat party, the junior partner in the Conservative-led government.
Recorded by two reporters from the Daily Telegraph posing as Lib Dem supporters, the private comments cost Cable some of his ministerial powers. It also hobbled the Lib Dems opposition to plans by News International, Murdoch's British press arm, to buy the 61 percent of satellite broadcaster BSkyB it does not own.
Now, though, the Liberal Democrats may emerge as among the few winners in the phone hacking scandal battering Murdoch's media empire, Scotland Yard and Prime Minister David Cameron's Conservatives alike.
Britain's third party has had a rough time of it lately. Many voters turned on it after it joined with the larger, center-right Conservative party; others blame Lib Dem MPs for not doing enough to take the edge off the government's most painful austerity measures.
The scandal offers the beleaguered party a rare chance to stand apart from its Tory partners.
A non-binding parliamentary vote on Wednesday is likely to see many Lib Dem MPs vote with the Labour opposition to delay News International's takeover of BSkyB.
"The Liberal Democrats are one of the major parties that has never had a special relationship with this company so we will vote without fear of favor," Cable said on Monday.
Gidon Cohen, a senior politics lecturer at Durham University, believes the scandal "changes the dynamics within the coalition -- it puts the Conservatives on the back foot." At the same time, "it will shore up Lib Dem support, rather than increase it."
U-TURNS AND BETRAYALS
Many of the Lib Dem's woes stem from the party's u-turn last year on university tuition fees. During the 2010 election campaign, the party said it wanted to abolish such fees. But once in government it supported an increase in the maximum annual fee to 9,000 pounds from around 3,000 pounds.
The move sparked charges of betrayal, riots in central London, an attack on a car carrying Prince Charles and plummeting opinion poll ratings.
The party got a drubbing in local council elections in May and its poll rating is now in single figures. Many analysts say there is little the Lib Dems can do to avoid a similar beating in the next parliamentary elections in 2015.
But the Murdoch scandal gives the party an opportunity to claw back some of the moral zeal that helped leader Nick Clegg stand out in the 2010 election campaign.
"I hope people realize that the one party that isn't in Rupert Murdoch, or any other tabloid's pocket, is the Lib Dems," said Lib Dem MP Stephen Lloyd, one of 21 Lib Dem MPs who voted against the government on higher tuition fees.
"I hope that people realize that pretty much on a daily basis the Lib Dems have been trashed by News International and the other mid-market tabloids."
It should also help that Lib Dem leader and Deputy Prime Minister Nick Clegg warned Cameron over the appointment of former News of the World editor Andy Coulson as the prime minister's communications chief last year.
Coulson was forced to resign in January as media speculation grew about hacking during his time in charge of the newspaper. Coulson was arrested on Friday, leaving Cameron struggling to brush aside questions about his judgment.
Britain's two main parties -- the Conservatives and Labour -- have both very openly curried favor with Murdoch's newspapers in the past, while the Lib Dems have often been left out of the game.
Up until now that has been seen as a big electoral disadvantage. Now it could work in the party's favor.
"We have the merit of having pretty clean hands on this issue," said Don Foster, a senior Lib Dem MP. "We've been raising concerns about Murdoch's ownership right from the early days. We are not tainted in the way the other parties are."
LONG TERM STRATEGY
But getting that message across to the public without appearing too opportunistic won't be easy.
"It's a bit naive to expect that this is going to be hugely beneficial experience for the Lib Dems and we'll come out as knights in shining armor," said one party leadership source.
"To think we are going to make political hay out of it is probably optimistic -- although I don't think there is anyone in the public who thinks that the Lib Dems are in bed with the Murdoch press."
Party insiders say a smarter, longer-term strategy needs to go beyond winning back a few votes and ensure any inquiry into the hacking scandal does not turn into a whitewash and that press reforms meet public demands.
That could prove beneficial come 2015 if it gives the Lib Dems and other smaller parties a chance to get their voices heard in a press that has often ignored anyone but the big two.
"Just maybe there is a bit more of a decent chance that there will be a slightly more level playing field from the newsprint in the future which will allow the public a more informed choice, other than the obvious slanted choices they have had," Lloyd said.
If that happens, Cable might win his battle with Murdoch after all.
(With reporting by Mohammed Abbas; Editing by Simon Robinson and Jon Boyle)
(Reporting by Matt Falloon)