It hasn't gone wrong at all. His mission is to make them distrust each other. He can't make them distrust each other if he hasn't been watching them. All they care about is how they look on TV, and he and Ryan are the only ones that can tell them. So he immediately knew that he had to tell them he has been watching.
They walked away from him telling him they didn't want to hear it. They don't want to hear anything that bursts their little fake bubble. They don't want to find out that their new best friend is in the diary room laughing at them. They want it all to be real and that they will be friends for life. For now all he can do is sow that first seed of doubt, which he has done. They may pretend to ignore it and choose to be in denial, but something will happen to trigger it off soon.