Sachsgate, the death of kiss 'n' tell – and start of a very big squeeze

Britain's traditional media spent 2008 on the ramparts fighting the dual threats of economic meltdown and technological revolution, only to be undone by the enemy within. For the two most humiliating and damaging episodes of the year concerned such staples as an old-fashioned saucy Sunday tabloid expose and a radio phone stunt involving a much-loved veteran of television sitcom. And both back-fired spectacularly.

Between them, these two incidents comprised a cast beyond the imagination of the most ambitious producer of a Whitehall farce. First, there was the international head of Formula One racing having his bare bottom spanked by a woman dressed in suspenders and a Luftwaffe jacket, barking orders at him in German. Then we had the BBC's highest-paid presenter dancing around a radio studio like a naughty schoolboy, shouting obscenities about a young woman who styled herself a "Satanic Slut". And there was even Manuel, the Spanish waiter from Fawlty Towers, who happened to be the young lady's grandfather.

Both episodes prompted much tittering. The News of the World decried Max Mosley's S&M adventures as a "sick Nazi orgy with five hookers", and as the paper pressed the back of its hand against its forehead in horror, it felt obliged to post on its website a video showing the naked racing boss getting a jolly good thrashing. The public lapped it up. In October, when Jonathan Ross's japery with modern-day dandy Russell Brand on the latter's Radio 2 show led to "Wossy" leaving a message on the telephone of actor Andrew Sachs, saying Brand "fucked your granddaughter", the network's head of compliance, Dave Barber, noted on a BBC document that the skit was "v funny".

But no one is sniggering any more. Not now that Colin Myler, editor of Britain's biggest-selling newspaper, has been humiliated by Mosley in the High Court, leaving the tabloids collectively bemoaning the death of "kiss-and-tell" stories and the entire press fearing that the sorry episode has brought in a privacy law "by the back door". And not now that Lesley Douglas, controller of Britain's most popular radio network, has quit ahead of an inquiry that showed she had signed off the Sachs prank. Brand also resigned and Ross was given a humbling three-month unpaid suspension from his £6m-a-year job, damaging the integrity of the BBC and leaving the broadcasting industry treading on eggshells.

These would have been dangerous own goals in the best of times, but 2008 has also been a year when the business model of traditional media has deteriorated at a terrifying rate, as the downturn in the global markets prompted a collapse in advertising revenues. Media businesses have been forced to restructure, ahead of what is expected to be a painful 2009. Redundancy programmes were unveiled at Trinity Mirror, which has cut 1,200 jobs and axed 44 titles, Channel 4, which will reduce its workforce by 200, and at Independent News & Media, where 90 jobs are being lost.

The Daily Mail and General Trust announced the cutting of 400 jobs last month. Publishers Emap and Haymarket also undertook significant reductions in their headcounts. Further cuts are taking place at Telegraph Media Group and job losses are expected at the Financial Times. Some 500 posts are believed to be under threat at ITV's regional news operations, according to the National Union of Journalists. Although regional newspaper groups were heartened by the BBC Trust's decision last month to reject the corporation's plans for a local video-based online service, the BBC said the decision would cost the jobs of 200 journalists.

But 2008 wasn't bad news for everyone. Robert Peston took advantage of the banking crisis to turn himself into that rare thing: a business journalist who is recognised by the public. Previously criticised for lacking the diction and personality to be a good broadcaster, Peston was honoured by the Royal Television Society in February for last year's scoop on the collapse of Northern Rock and then bettered it in September with an exclusive on the Lloyd's TSB takeover of HBOS.

Andrew Gilligan, the former Radio 4 Today programme correspondent, who was pilloried for having triggered the events that led to the disastrous Hutton Inquiry that destabilised the BBC in 2004, found himself named Reporter of the Year for his investigations for the London Evening Standard into the office of the London Mayor, Ken Livingstone. Though Gilligan claims his reporting did not determine the election result in May, it can only have helped his fellow journalist (and friend) Boris Johnson to win office. Livingstone, meanwhile, rejoined the media himself, taking a presenting role on London radio station LBC.

The year had begun with another remarkable media comeback, as Sir Trevor McDonald brought back the bongs, presenting a revived News at Ten alongside Julie Etchingham. The move was not a ratings winner. Fellow newscaster Natasha Kaplinsky left the BBC to become the face of Five News in February, leaving shortly afterwards to have a baby and prompting a row over her maternity cover that led to Selina Scott taking action for age discrimination when she was overlooked.

Channel Five also got a new chief executive, Dawn Airey, who quit after just a year as director of global of content at ITV, where she had been seen as a possible successor to chief executive Michael Grade. Airey's resignation in May was just one of a series of setbacks for ITV. The organisation's share price, at 109p when Grade took over at the start of 2007, was down to 42p before the regulator Ofcom decided in September to grant its wishes to scale down its regional programming. Ofcom was less sympathetic in the summer, when it fined ITV £5.67m for the fixing of the British Comedy Awards, giving a trophy to Ant and Dec for their Saturday Night Takeaway in order to entice Robbie Williams, a pal of the Geordie twosome, to present the prize (which should have gone to the BBC's Catherine Tait).

ITV's best news of the year may have been the hiring of Peter Fincham as director of television in February, replacing Simon Shaps only months after his departure from the BBC following last year's Queengate fiasco. Meanwhile, another BBC executive, Newsnight editor Peter Barron, shocked colleagues by quitting television to take a role at Google, while the BBC's new media wizard Ashley Highfield quit the online television project Kangaroo to take a post at Microsoft. There was also change at the Department of Culture, Media and Sport, where the Culture Secretary, James Purnell, who had impressed with his vision for the future of the creative industries, was replaced by another young high-flyer, Andy Burnham.

The BBC – in spite of being comparatively well insulated from the economic storms – had another year of pain. While Sir David Attenborough voiced fears over the fate of the BBC natural history unit in Bristol, Newsnight's Jeremy Paxman caused embarrassment with his public outcries over the state of men's underpants and then the difficulties of the white male in forging a career in the broadcasting industry. In June, despite widespread pressure, the BBC Trust approved Jonathan Ross's £18m contract, a decision which fuelled the outrage over the presenter's treatment of Andrew Sachs three months later. By the end of the year Noel Edmonds and the former Daily Telegraph editor Charles Moore were merely the most prominent of a vociferous group of licence fee refuseniks.

The press endured another turbulent year, buffeted not just by the pace of change online but attacked by the judiciary and even from within their own ranks. In February the Guardian journalist Nick Davies published Flat Earth News, a book which Peter Preston, a former Guardian editor, described as "a tirade against the sins of modern journalism". Davies's claims of a collapse in journalistic standards that reduced many reporters to mere "churnalists", caused widespread anger and had colleagues in the fourth estate calling up their lawyers.

Further rows over journalistic standards emerged from the battlefields of Afghanistan, the supermarket aisles and from beyond the grave. Prince Harry's deployment to a conflict zone went completely unreported by the British media following an unprecedented arrangement between the Ministry of Defence and editors, who agreed that releasing details of Harry's combat role would make him a trophy target for the Taliban and put him and his colleagues at an unacceptable level of risk. But the deal, by which the media was granted considerable access to Harry through a journalistic pool that supplied interview material and pictures for use after his return to Britain, was wrecked when the prince's presence in Afghanistan was revealed by Matt Drudge on his American website The Drudge Report. Jon Snow of Channel 4 News led critics of the media's kowtowing to the MoD.

Meanwhile the Daily Telegraph and The Spectator were embarrassed by discovery of their attempts to censor criticism of their owners, the Barclay brothers, who were described by the late Telegraph editor Bill Deedes as a "stinking mob" in an authorised biography published after his death.

The Guardian also found itself with egg on its face after running a bungled front-page investigation into the financial affairs of Tesco and then having to publish a grovelling apology.

But in the eyes of many editors the most damaging development was the determination of a single judge to limit the freedom of the press. Justice David Eady has almost single-handedly introduced a privacy law in Britain, through a series of rulings that culminated with his finding in the Mosley case. Eady is said to have come to the view that there were deficiencies in the law in 1990 after journalists working for the Daily Sport posed as medical staff to take pictures of the actor Gordon Kaye when he was recovering from brain surgery. In a succession of cases, he has taken the view that article eight of the Human Rights Act of 1998, which guarantees the right to privacy, outweighs article 10 of the same legislation, guaranteeing the right to freedom of expression.

In November, Paul Dacre, the editor of the Daily Mail, returned fire. Addressing the Society of Editors conference in Bristol, Dacre said: "The British press is having a privacy law imposed on it, which is, I would argue, undermining the ability of mass circulation newspapers to sell newspapers in an ever more difficult market. The law is not coming from Parliament – no, that would smack of democracy – but from the arrogant and amoral judgements, words I use very deliberately, of one man."

In the Mosley case, no evidence was found to support the Nazi allegation and Eady's decision to fine the News of the World £60,000 was described by some as the death of the "kiss-and-tell" story. But you don't kill off a News of the World tradition that easily. By November, and only a few days after Dacre's speech, the Murdoch title was splashing allegations that the TV chef Gordon Ramsay, a media industry in his own right, had been having an affair.

And though the Andrew Sachs scandal has done lasting damage to the BBC and the broadcasting industry in general, the chief protagonists are largely unscathed. Russell Brand has a string of Hollywood projects to work on. Lesley Douglas has already taken a senior position at Universal. Jonathan Ross, meanwhile, is back on air next month.