Murdoch lawyer accused BBC of phone hacking vendetta (Reuters)

LONDON (Reuters) – A lawyer for Rupert Murdoch's News Group Newspapers earlier this year accused the British Broadcasting Corporation of pursuing an investigation of alleged computer and phone hacking to "undermine" Murdoch's bid to acquire full ownership of satellite broadcaster BSkyB.

Julian Pike of the London law firm Farrer & Co, which also represents Britain's Queen Elizabeth, sent a series of letters last March to the BBC expressing concerns at the British arm of Murdoch's News Corporation that the BBC might have transgressed its commitment to impartiality for commercial or political reasons. The BBC denied this was the case.

The letters, whose full contents have not previously been reported, were sent in response to requests by journalists from the BBC newsmagazine Panorama to News Group for comment regarding alleged phone and computer hacking conducted by journalists for the Sunday tabloid News of the World.

Murdoch shut the paper last July amid a torrent of allegations about alleged ethical and legal lapses by its staff.

The Panorama program, headlined "Tabloid Hacks Exposed" focused on the alleged role of Murdoch journalists in employing "dark arts" - Fleet Street jargon for dubious and potentially illegal reporting tactics - and in particular allegations of "blagging" (jargon for pretending to be someone else) and computer and phone hacking at the News of the World.

Pike laid out News Group's complaints about the BBC's investigation in letters sent to Panorama in early March headed

"NOT FOR PUBLICATION & NOT FOR BROADCAST: STRICTLY PRIVATE & CONFIDENTIAL."

In two letters, dated March 10 and 11, Pike suggested that the BBC might be pursuing the hacking story for business or political reasons rather than for journalistic motives.

Pike said that BBC Director General Mark Thompson had been "required to apologize" in November 2010 for adding his signature to a letter from a group of companies who were critical of News Corp's bid to acquire the balance of shares in BSkyB which it did not already own.

In his March 10 letter, Pike noted that the BBC was planning to broadcast Panorama's investigation at a time when the British government was actively considering Murdoch's bid for BSkyB's remaining shares. He noted that the BBC had an "obligation to avoid embroiling itself in a political and commercial battle that it should have nothing to do with."

BSkyB is a principal competitor with the BBC in Britain.

In a lengthy letter sent to the BBC the following day, Pike said it had "not gone unnoticed" that the BBC, along with "certain other media organizations," had been in "the vanguard of running a campaign against" News Corp regarding alleged News of the World phone hacking. Pike asserted that the BBC had "obvious political and commercial reasons" to use the phone hacking allegations "to attack our clients and undermine New (sic) Corp's Sky bid."

Pike said it was "quite apparent" that the program the BBC was preparing was "yet another attempt to undermine New Corp's bid for Sky" (sic).

In the letter, Pike also accused the BBC of planning to take out of context an investigation by Britain's Information Commissioner's Office which alleged that publications other than the News of the World, including The Observer, a Sunday newspaper which is affiliated with the Guardian daily, had also engaged in questionable or illegal reporting practices.

In response to a request for comment, the BBC told Reuters: "Panorama investigations always come from a point of public interest and operate within the BBC editorial guidelines and Ofcom's code. This program was no different and...details of the phone hacking scandal has been widely reported by numerous media organizations. Any suggestion it was made to further the BBC's own interests is utterly without foundation."

A spokesperson for News International, Murdoch's principal newspaper publishing company in Britain, said the company had no comment on Pike's accusation that the BBC had pursued the phone hacking inquiry for ulterior motives.

However, the spokesperson noted that the company on October 14 had issued a statement acknowledging that its Management and Standards committee, supervising News International's response to the phone hacking controversy, had agreed with Farrer & Co. that the law firm would "stand down" from representing Murdoch's News Group properties in "current or future" lawsuits filed by alleged News of the World phone hacking victims.

At a hearing before a British parliamentary committee which has been investigating phone hacking, Pike acknowledged that in 2008 he became aware of documentary evidence contradicting public statements by Murdoch aides that phone hacking at the News of the World had been the work of a "single rogue reporter."

Pike told the committee he did not believe he had an obligation as a lawyer "to go and report something that I see within a case where there might have been some criminal activity."

In a report on his testimony and other aspects of his letters to the BBC, the Guardian last week reported that Pike had admitted to parliament that he knew public statements by News of the World executives about the rogue reporter were misleading when he sent a letter to the BBC threatening "successful" litigation for defamation if the BBC accused News International executives of knowingly making untrue or misleading public statements.

The Guardian also reported that the BBC had referred Farrer & Co to a disciplinary authority for British lawyers because of this aspect of Pike's letter.

The BBC confirmed that it had "written to the Solicitors Regulation Authority. seeking advice in relation to their rules governing the conduct of solicitors."

In Britain, solicitors are lawyers who handle most out of court and pre-trial litigation, while barristers are lawyers who handle trials and appeal proceedings in higher courts.

Pike did not respond to an e-mail requesting comment. But a representative of Farrer & Co. disputed the Guardian's interpretation of Pike's letter and what Pike had said to Parliament. The firm had no further comment on its accusation that the BBC had acted for commercial or political motives.

The Solicitors Regulation Authority said that in July, it had launched a "formal investigation into the role of solicitors in events surrounding the News of the World phone hacking crisis," and that it could make no further comment while that inquiry was under way.

(Created by Simon Robinson)

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Murdoch tabloid private eye to reveal hacking orders (Reuters)

LONDON (Reuters) – A private detective jailed for illegally intercepting voicemail messages on behalf of a journalist at one of Rupert Murdoch's British newspapers has been ordered to reveal who asked him to carry out the phone-hacking.

The demand by London's High Court will shed further light on how widespread the hacking practice was at the News of the World tabloid and add to the pressure on News International, the British newspaper arm of Murdoch's News Corp.

Glenn Mulcaire was jailed in 2007 along with the paper's ex-royal correspondent Clive Goodman for illegally accessing the voicemails of royal aides and five other figures including the model Elle Macpherson.

Lawyers for actor Steve Coogan, who believes he is a victim of phone-hacking and is suing News International, said on Friday the court had refused Mulcaire leave to appeal against a decision ordering him to reveal who instructed him to hack the phones.

John Kelly of law firm Schillings told Reuters that Mulcaire, who is suing News International himself after they stopped paying his legal fees, would have to answer their questions in a formal document to be filed at the court before September. This should be available for the public to see.

"He will now have to identify exactly who at the News of the World asked him to access the mobile phones of the named individuals and who he provided the information to at the News of the World," Kelly said.

"Mr Mulcaire is due to provide these answers by the end of the month and we await his answers with interest."

After Mulcaire and Goodman's conviction in 2007, News International repeatedly insisted that phone-hacking was limited to a single rogue reporter.

But in the face of civil action from Coogan and other figures, the company admitted earlier this year it had evidence that the practice was more widespread, prompting a new police inquiry.

Some executives, including Murdoch's son James, chairman of News International, are facing accusations that they knew about the illegal activities at a far earlier date than they had previously admitted.

Other senior figures, including former editorial staff on the now defunct paper, have been arrested by police probing allegations journalists on the News of the World illegally intercepted the voicemails of mobile phones of celebrities, politicians, as well as victims of crime and their families.

It has also caused embarrassment for Prime Minister David Cameron whose former media chief -- previously a News of the World editor -- is one of those to have been arrested as part of the probe.

PHONE-HACKING DETECTIVE ARRESTED

In a twist on Friday, London police said one of the detectives involved in the inquiry, named Operation Weeting, had been arrested on suspicion of leaking details about the case.

The Metropolitan Police's anti-corruption unit detained the 51-year-old detective constable at work on Thursday. He is accused of misconduct in a public office and has been released on police bail and suspended from duty.

"I made it very clear when I took on this investigation the need for operational and information security," said Deputy Assistant Commissioner Sue Akers who is leading the inquiry.

"It is hugely disappointing that this may not have been adhered to."

On Thursday, detectives arrested a senior Hollywood reporter from the News of the World, an arrest which was reported in detail by Britain's Guardian newspaper before any official announcement from the police.

Meanwhile, detectives from the Weeting team made their 14th arrest on Friday, a 35-year-old man who was held on suspicion of conspiring to unlawfully intercept voicemails. A source with knowledge of the inquiry named him as Dan Evans, a former feature writer on the tabloid.

He was detained after arriving by appointment at a London police station and later released on police bail until October.

(Additional reporting by Georgina Prodhan, editing by Rosalind Russell)

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UK lawmakers likely to recall James Murdoch on hacking (Reuters)

LONDON (Reuters) – British lawmakers said on Friday it was likely they would recall News Corp's James Murdoch to clarify evidence on phone hacking he gave to a parliamentary committee following claims his testimony was "mistaken."

Parliament's Culture, Media and Sport Committee said it would write to Murdoch to ask for more details about evidence he gave earlier this month about hacking allegations at the News of the World tabloid that has shaken his father Rupert's media empire.

The two Murdochs, along with former News International chief executive Rebekah Brooks, appeared before the committee on July 19 when they were pressed about phone-hacking and payments to police by News of the World reporters.

"We are going to write to ask for further details on areas where evidence is disputed," said the committee's chairman John Whittingdale.

James Murdoch has already told the lawmakers he stands by his testimony in a letter dated July 22 and released by the committee on Friday.

While the committee voted against immediately recalling Murdoch, chairman of British newspaper arm News International, Whittingdale said it was likely he would be recalled at a later date over claims some of his original testimony was wrong.

Tom Crone, News International's former top legal officer, and Colin Myler, editor of the News of the World until it was shut down earlier this month, have disputed some of James Murdoch's evidence.

Murdoch said he had not been in possession of all the facts when he approved a large payout in 2008 to English soccer executive Gordon Taylor, one of the phone-hacking victims.

But in a statement, Myler and Crone said they had told him of a 2005 email which suggested phone hacking at the tabloid was more widespread than a single "rogue reporter," as News Corp had until recently maintained.

The paper's royal reporter Clive Goodman and private detective Glenn Mulcaire were jailed in 2007 for intercepting the voice messages of royal aides.

Whittingdale said the statement had "raised questions over some of the evidence that we have received" and they would also be contacting Crone and Myler.

ORAL EVIDENCE

"If they come up with statements which are quite plainly different to those given to the committee by James Murdoch, we will want to hear James Murdoch's response to that, and chances are that may well involve oral evidence again as well," he said.

Lawyers Harbottle and Lewis, who have also faced criticism over their role in an internal News International investigation into phone hacking in 2007, will also be asked by the committee for details of their work.

Later, Mulcaire issued a statement through his lawyer saying he was not acting on his own initiative when intercepting phone messages while in the pay of the newspaper.

"He (Mulcaire) was effectively employed by News of the World from 2002 to carry out his role as a private investigator ... he admits that his role did include phone hacking," the statement said.

"As an employee he acted on the instructions of others.

Any suggestion that he acted in such matters unilaterally is untrue," the statement added.

Allegations of hacking at News Corp's British newspapers, in particular reports that journalists accessed the voicemails of murder victims, have triggered a judicial inquiry and calls from some politicians to cap News Corp's media ownership.

It has already led to News Corp dropping its $12 billion bid for the 61 percent of pay-TV broadcaster BSkyB it does not own and put James Murdoch's position in the spotlight.

The board of BSkyB, which reported a better-than-expected 16 percent jump in full-year revenue to almost 6.6 billion pounds on Friday, voted unanimously on Thursday to keep James Murdoch as its chairman.

However some politicians are keen to keep up the pressure on News Corp and James Murdoch in particular.

"It's my view that Murdoch, Crone and Myler should have been invited today," said Labour lawmaker and Culture, Media and Sport Committee member Tom Watson.

"I understand from the decision we took that when we receive the evidence, no later than August 11, we are meeting the week after that to decide whether to invite them at that point."

Rupert Murdoch described his appearance before the committee as the "most humble day of my life." The 80-year-old's testimony was interrupted when a British protester threw a plate of foam at him during the hearing.

The attacker, Jonathan May-Bowles, a comedian who uses the name Jonnie Marbles, pleaded guilty to causing harassment, alarm or distress on Friday. [nL6E7IT0TF]

The phone-hacking scandal has barely been out of the headlines since it erupted at the start of the month and has engulfed the British establishment.

Baroness Buscombe, the head of the newspaper watchdog, the Press Complaints Commission, which has been heavily criticized for failing to address the issue, became the latest person to step down in the wake of the furor.

London's police chief Paul Stephenson and John Yates, Britain's most senior counter-terrorism officer, have already been forced to quit.

(Writing by Michael Holden and Tim Castle, Editing by Sonya Hepinstall)

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Cameron denies staff tried to halt hacking probe (AP)

LONDON – Prime Minister David Cameron emphatically denied claims that his staff tried to stop an inquiry into phone hacking at the News of the World and defended his decision to hire one of the tabloid's editors as his communications chief.

In a raucous emergency session Wednesday in Parliament, Cameron did admit that both the ruling Conservatives and the opposition Labour parties had failed to pursue key developments in the hacking case and had actively courted media baron Rupert Murdoch.

"The clock has stopped on my watch and we need to sort it out," Cameron told lawmakers, promising that a government inquiry would examine the cozy relationship between British politicians and media and investigate whether other news organizations may have broken the law.

Police are also probing whether news media breached privacy laws.

Cameron cut short his Africa trip and the House of Commons delayed its summer break to debate issues engulfing both Britain's political and media elite and Murdoch's global communications empire, News Corp.

Murdoch owned the troubled News of the World, where the phone hacking claims first emerged in 2005, when the royal household alerted police that the tabloid may have learned about Prince William's knee injury by illegally intercepting phone messages.

Cameron's former communications chief Andy Coulson — a former editor at the tabloid — is among 10 people who have been arrested in the scandal. One has been cleared.

Lawmakers wanted to know why Cameron insisted on hiring Coulson despite warnings and how much the prime minister knew about the phone hacking investigation. There have been allegations that some people on Cameron's staff may have met with police to pressure them to drop the investigation.

"To risk any perception that No 10 (Downing Street) was seeking to influence a sensitive police investigation in any way would have been completely wrong," he said.

Cameron did, however, meet with News Corp. executives more than two dozen times from May 2010 to this month — meetings that were criticized in Parliament by Labour leader Ed Miliband, who said Cameron had made a "catastrophic error of judgment" in hiring Coulson.

Coulson was an editor at the News of the World when royal reporter Clive Goodman and private investigator Glenn Mulcaire were arrested and jailed in 2007 for phone hacking. The original police inquiry into phone hacking was dropped, Coulson quit the paper and Cameron — then opposition leader — hired him.

This January, police reopened the hacking investigation. They are now investigating some 3,870 people whose names and telephone numbers were found in the News of the World files. It remains unclear how many were hacking victims. Coulson resigned his government post that same month.

News Corp. said Wednesday it had now eliminated legal payments to Mulcaire — a day after Murdoch told lawmakers in a special parliamentary committee hearing that he would try to find a way to stop the payments. Mulcaire's lawyer, Sarah Webb, declined to comment on the development.

In other phone hacking news, a judge Wednesday awarded "Notting Hill" actor Hugh Grant — one of the most prominent celebrity critics of the Murdoch empire — the right to see whether he was one of the tabloid hacking victims.

The scandal captivated television audiences from America to Murdoch's native Australia on Tuesday, as Murdoch endured a three-hour grilling by U.K. lawmakers. The media baron said he had known nothing of allegations that staff at News of the World hacked into cell phones and bribed police to get information on celebrities, politicians and crime victims.

He also said he had been humbled by the allegations and apologized for the "horrible invasions" of privacy.

Murdoch flew out of London on Wednesday.

Politicians from both the Conservative Party and Labour Party have been tainted by the scandal.

During Wednesday's session, Miliband reminded Cameron that his own Deputy Prime Minister Nick Clegg had warned Cameron against bringing Coulson into Downing Street last year as communications chief. Clegg sat stone-faced during much of Wednesday's rowdy session.

Cameron later countered, saying the Labour Party was also guilty of hiring questionable characters, including Miliband's current strategist, Tom Baldwin, another former Murdoch journalist from a different paper.

Conservative donor Lord Ashcroft, a Belize-based billionaire who has funded the party for more than a decade, has accused Baldwin of trying to get private banking information in 1999.

Cameron defended Coulson's work and said if it emerged that Coulson had lied to him about his role in the hacking case he would take it seriously.

"Andy Coulson is innocent until proven guilty," Cameron said.

Buckingham Palace reacted sharply to a claim by one lawmaker that it had raised concerns with Cameron's office over his decision to hire Coulson. "It is outrageous to suggest this," said a palace spokesman.

Britain's Conservative Party reported it had just learned that another recently arrested phone-hacking suspect, former News of the World executive editor Neil Wallis, may have advised Coulson before the 2010 national election that put Cameron into power. It said Wallis was not paid for the advice, however.

Cameron also said the hacking affair raises questions over the ethics and values of London's police force and vowed Wednesday that he would bring in new leadership to the force. Two top police resigned this week over their close ties to Wallis.

Meanwhile, a House of Commons committee on Wednesday blasted both News International, the News Corp. unit that operates the British papers, and the London Metropolitan Police for their performance on the scandal.

"We deplore the response of News International to the original investigation into hacking. It is almost impossible to escape the conclusion ... that they were deliberately trying to thwart a criminal investigation," said the Home Affairs committee, which has been grilling past and present Metropolitan Police officials about their decision not to reopen the hacking investigation in 2009.

On Wednesday, police charged Jonathan May-Bowles, 26, with behavior causing harassment, alarm or distress in a public place for trying to hit Murdoch with a foam pie at the U.K. hearing.

As the scandal exploded this month, Murdoch shut down the 168-year-old News of the World, gave up on buying full control of British Sky Broadcasting, Britain's biggest commercial television company, and accepted the resignations of two top executives.

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Cassandra Vinograd, Danica Kirka, Meera Selva and Robert Barr contributed to this report

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Cassandra Vinograd, Danica Kirka, Meera Selva and Robert Barr contributed to this report from London.

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Top British police quit as PM pressed over hacking (AFP)

LONDON (AFP) – Britain's phone-hacking scandal claimed the scalps of two top policeman as Prime Minister David Cameron on Monday cut short a trip to Africa to deal with a crisis that threatens his own position.

Assistant Commissioner John Yates, who refused to reopen an investigation into the now-defunct News of the World tabloid in 2009, resigned Monday, a day after the departure of his boss Paul Stephenson, chief of London's Metropolitan Police.

Yates had expressed regret last week over his earlier decision that the inquiry into the Rupert Murdoch-owned paper did not need to be revived, but pinned the blame on Murdoch's empire for failing to cooperate.

"Assistant Commissioner John Yates has this afternoon indicated his intention to resign," said a Scotland Yard statement. "This has been accepted."

Yates was one of the Met's most senior officers and had responsibility for special operations, but came under fire after dectectives reopened the investigation in 2011 and found thousands of alleged hacking victims.

He quit when he found out he was about to be suspended.

As the scandal kept scything through the heart of the British establishment, Cameron's aides announced that he would cut short a visit to South Africa and Nigeria, flying back on Tuesday evening instead of early Wednesday.

They said the Conservative leader wanted to prepare a statement that he will deliver during an emergency session of parliament on Wednesday, having delayed the summer break for lawmakers for a day.

Cameron has also been forced to defend his own position after Stephenson, Britain's most senior police officer, took a swipe at the prime minister's decision to hire former News of the World editor Andy Coulson as his media chief.

Stephenson quit on Sunday over the force's hiring of Neil Wallis -- who was deputy to Coulson at the tabloid -- and over a spa break he accepted from a firm where Wallis was a consultant.

"I don't believe the two situations are the same in any way, shape or form," Cameron told a joint news conference in Pretoria with South African President Jacob Zuma when asked about a comparison with the troubles at Scotland Yard.

Coulson resigned from Downing Street in January and was arrested on July 8. Wallis was arrested on July 14.

Opposition Labour Party leader Ed Miliband piled pressure on Cameron -- also facing criticism for his social contacts with Murdoch aides -- by calling on him to apologise for hiring Coulson.

Asked whether Cameron should consider his position, Miliband said there was a "sharp contrast between his actions and the honourable actions of Sir Paul Stephenson who resigned over the hiring of Mr Coulson's deputy."

Rebekah Brooks, former chief executive of Murdoch's British newspaper unit, News International, and editor of News of the World when it allegedly hacked a murdered girl's phone, was arrested on Sunday on suspicion of phone hacking and bribing police. Her lawyer Stephen Parkinson said she was "not guilty of any criminal offence" and that Scotland Yard would have to account for the "enormous reputational damage" to the 43-year-old -- who is a personal friend of Cameron's.

He said she still planned to testify alongside the Australian-born Murdoch and his son James, who is chairman of News International, before a committee of British lawmakers on Tuesday.

At a previous hearing in 2003 the flame-haired Brooks, the 10th person and most senior Murdoch aide to be arrested over the scandal, admitted the paper had made payments to police.

An original police investigation into the tabloid in 2006 led to the jailing of its former royal editor and a private investigator, but it later emerged that thousands more celebrities, royals and even crime victims also had their voicemails targeted by alleged "industrial-scale" hacking.

The chairman of a British parliamentary committee which grilled Yates last week over his refusal to reopen the investigation told him his evidence had been "unconvincing".

Senior police officers have since faced criticism for having a series of dinners with top News of the World executives.

Murdoch's US-based News Corp. is in crisis, having also had to abandon its bid for full control of pay-TV giant BSkyB and accept the resignations on Friday of Dow Jones chief Les Hinton, who had worked with the media baron for 52 years.

Shares in News Corp. plummeted 5.82 percent in Australian trade on Monday.

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Brooks arrested in hacking scandal (Reuters)

LONDON (Reuters) – Rebekah Brooks, the former head of Rupert Murdoch's UK newspaper business, was arrested on Sunday in the latest twist of a phone-hacking scandal that has tainted British police and politicians and shaken the tycoon's global media empire.

Several sources familiar with the situation said Brooks, 43, was being questioned as part of an investigation into allegations of illegal voicemail interception and police bribery at the News of the World tabloid she once edited.

Brooks quit as head of News International, the British unit of Murdoch's News Corp, on Friday, but has denied she knew of the alleged hacking of thousands of phones, including that of a murdered schoolgirl.

The revelations have shocked the public and raised concerns not only about unethical media practices but about the influence Murdoch has wielded over successive British leaders and allegations of cozy relationships between some of his journalists and the police.

With politicians from Australia to the United States demanding to know if similar abuses occurred elsewhere in Murdoch's global media business, the 80-year-old has been forced on the defensive and the position of his son James as heir-apparent has been called into question.

In Britain, Prime Minister David Cameron has come under fire for his friendship with Brooks and for employing another former News of the World editor, Andy Coulson, as his press secretary even after Coulson had quit the paper in 2007 following the jailing of a reporter for phone-hacking.

"The waters are very definitely lapping around the Murdochs' own ankles," Chris Bryant, a member of parliament for Britain's opposition Labor Party who has campaigned for years against press malpractice, told Reuters.

Tim Bale, politics professor at the University of Sussex, told Reuters: "I think this was pretty uncomfortable for Cameron already and it will get more uncomfortable now over the next week.

"It brings the whole thing closer to him. If one believes all the talk of a Chipping Norton set, it reinforces this impression of a cozy elite at the top of the media/political complex," he added, referring to a town in Cameron's affluent countryside constituency where Brooks also has a home.

Brooks and Rupert and James Murdoch are due to be questioned in Britain's parliament on Tuesday, including over reports that News International misled parliament during earlier hearings.

But Brooks' spokesman said her arrest may cast doubt on whether she could appear before politicians.

"I think there will clearly be some discussions between her lawyers and the select committee on whether it is still sensible for her to appear," David Wilson told Reuters, adding she was "shocked" by the arrest.

"Anything that will be said at the select committee hearing could have implications for the police inquiry."

Adrian Sanders, a Liberal Democrat politician who sits on the parliamentary media committee, questioned the timing of the arrest and said he hoped it would not scuttle the hearing.

"If this is designed to take the spotlight off the police, at the same time as in a sense giving a shield to Rebekah Brooks, that's a very serious matter indeed," he told BBC television news.

TOUGHNESS AND CHARM

The flame-haired Brooks became the focus of widespread anger over the phone-hacking scandal but was initially protected by Murdoch, who guided her rise through the male-dominated world of UK tabloid journalism to become editor of the News of the World in 2000 and the Sun's first female editor in 2003.

Flying into London a week ago to take charge of the crisis, Murdoch appeared before journalists with his arm around her. Asked what was his first priority, he gestured at her and replied: "This one."

Known for her networking skills, Brooks rose quickly through the ranks of tabloid journalists, combining a tough demeanor that could intimidate hardened 'hacks' with an ability to charm largely male editors.

But her initial refusal to quit, and a faltering speech she delivered when she closed the News of the World and ended the careers of dozens of colleagues, prompted some journalists to say she was out of touch.

The News of the World, which published its final edition a week ago, is alleged to have hacked up to 4,000 phones including that of murdered 13-year-old Milly Dowler, sparking a furor that forced Murdoch to close the paper and drop a $12 billion plan to buy all of highly profitable broadcaster BSkyB.

Murdoch, who some media commentators say at first misjudged the strength of public anger, published apologies in several British newspapers at the weekend.

He lost another loyal executive on Friday when Les Hinton, another former head of his UK newspaper business, resigned as chief executive of Murdoch's Dow Jones & Co which publishes The Wall Street Journal.

"There are no excuses and should be no place to hide ... We will continue to cooperate fully and actively with the Metropolitan Police Service," News International said in an announcement on Sunday.

Leading British politicians renewed calls for greater media plurality and press regulation -- a direct threat to Murdoch's empire, which includes The Sun, The Times and Sunday Times broadsheets, and 39 percent of BSkyB.

The Sunday Telegraph reported that members of the board of BSkyB, where James Murdoch serves as chairman, are due to meet in a special session on July 28 to discuss his future.

If James were to be felled by the scandal, British media speculated that his sister Elisabeth could secure the eventual succession to their father.

The scandal has also embroiled Britain's police, who are accused of being too close to News Corp, of accepting cash from the now defunct News of the World and other newspapers, and of not doing enough to investigate the phone-hacking allegations that surfaced as far as back as 2005.

In 2003 Brooks admitted that the News of the World had made payments to police in the past but could not remember any specific examples.

(Additional reporting by Keith Weir and Georgina Prodhan, Writing by Elizabeth Piper, Editing by Mark Trevelyan)

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London police chief quits over hacking ties (AP)

LONDON – London's police chief has quit over his links to a former News of the World editor caught up in the phone hacking scandal.

Metropolitan Police commissioner Paul Stephenson denies any wrongdoing.

Stephenson has been criticized for hiring Neil Wallis, a former News of the World executive editor arrested last week in the scandal, as a part-time PR consultant for a year until September 2010.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

LONDON (AP) — London's police chief has quit over his links to a former News of the World editor caught up in the phone hacking scandal.

Metropolitan Police commissioner Paul Stephenson denies any wrongdoing.

Stephenson has been criticized for hiring Neil Wallis, a former News of the World executive editor arrested last week in the scandal, as a part-time PR consultant for a year until September 2010.

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Murdoch apologizes for hacking scandal (Reuters)

LONDON (Reuters) – "We are sorry," Rupert Murdoch said in British newspapers on Saturday, as News Corp tried to quell the uproar over a phone-hacking scandal that has shaken the company and claimed its top two newspaper executives.

In full-page adverts, Murdoch pledged "concrete steps" to resolve the issue in a bid to regain the initiative after losing Les Hinton, head of Dow Jones, publisher of the Wall Street Journal, and Rebekah Brooks, head of News Corp's British newspaper arm, on Friday.

But some questioned if the apologies and resignations would allay public and political anger over allegations the Murdoch-owned News of the World newspaper hacked thousands of phones, including that of a murdered 13-year-old girl.

The scandal forced Murdoch to close the best-selling Sunday paper, and drop a $12 billion plan to buy full control of highly profitable pay-TV operator BSkyB.

"The News of World was in the business of holding others to account. It failed when it came to itself," Murdoch said in a rare show of contrition.

"We are sorry for the serious wrongdoing that occurred. We are deeply sorry for the hurt suffered by the individuals affected," added the note, signed by Murdoch.

More apologies are expected to be published in British Sunday newspapers, headlined, "Putting right what's gone wrong."

The spotlight now turns to Murdoch's son and presumed successor, James, who took over the European operations of News Corp as the crisis was beginning. He and Murdoch, along with Brooks, face a grilling in Britain's parliament on Tuesday.

The attempts at conciliation included Murdoch's personal apology on Friday to the parents of Milly Dowler in what appeared to be an admission the News of the World, then edited by Brooks and overseen by Hinton, had in 2002 hacked into the voicemails of their missing daughter who was later found murdered.

That allegation reignited a five-year-old scandal and may have also broken the grip that Murdoch, 80, held over British politics for three decades as leaders from Margaret Thatcher, through Labour's Tony Blair to current Conservative Prime Minister David Cameron sought his support.

SKEPTICISM ON APOLOGY

British parliamentarian John Prescott, asked by the BBC on Saturday if Murdoch's apology changed anything, replied, "Absolutely not.

"For him to say I'm sorry -- it was only 24 hours ago in America in the Wall Street Journal that (Murdoch said) they were only minor offences. ... This is a man desperately trying to save his company and ditching everybody else in the process," Prescott said.

Lawmaker John Whittingdale, head of the parliamentary committee that will question the Murdochs and Brooks, told Reuters on Friday that while an apology was long overdue, investigations into wrongdoing had a long way to go.

Cameron has pledged a judge-led inquiry, and police are renewing their efforts. Questions are being asked over how much News Corp and executives at newspaper arm News International knew about phone hacking, and whether authorities were misled.

In his note, Murdoch admitted that "simply apologizing is not enough," but posting the message could help Murdoch regain his grip on events that in recent days spun out of his control.

"It's a good strategy. The problem is it's too late. Is it repairing the damage? No. But the strategy is that it's trying to move the story into a second phase," said Charlie Beckett of the London School of Economics' Polis journalism think tank.

"The big question mark is how vulnerable is Rupert ultimately, but James in particular, and Rebekah and Les in terms of what they were told and ignored," he added.

GASPS, STUNNED SILENCE

Hinton stepped down as the British phone hacking scandal surrounding News Corp began to spread to the United States. He was the highest-ranking executive yet to resign over the crisis.

"I have watched with sorrow from New York as the News of the World story has unfolded," Hinton wrote in a memo after stepping down as head of Dow Jones.

"That I was ignorant of what apparently happened is irrelevant and in the circumstances I feel it is proper for me to resign from News Corp, and apologize to those hurt by the actions of the News of the World," he added.

At the Wall Street Journal, news of Hinton's departure was greeted by gasps and a stunned silence, despite much speculation in London and New York that he could be toppled by the scandal.

Brooks had resisted pressure to quit, but finally resigned as chief executive of News International after a chorus of calls for her to go. She said remaining had made her a "focus of the debate" and detracted from resolving issues at the company.

The flame-haired and sharp-tongued executive and former editor of News of the World was a favorite of Murdoch, who only days ago described Brooks as his first priority.

Cameron had also called on Brooks to resign. His closeness to her and also his decision to hire former News of the World editor Andy Coulson as his communications chief, embarrassed the prime minister and raised doubts over his judgment.

On Friday, Cameron tried to put the issue behind him by releasing a list of meetings he has had with media executives.

It emerged that Coulson visited Cameron in March, two months after quitting his job on Cameron's staff amid allegations of phone hacking while he was a newspaper editor. Coulson was arrested last week over the issue and later released on bail.

"In inviting Andy Coulson back, the prime minister ... invited someone back to thank him for his work, who worked for him for several years. That is a normal human thing to do, I think that shows a positive side to his character," British Foreign Secretary William Hague told BBC radio on Saturday.

(Reporting by Mohammed Abbas; Editing by Peter Cooney)

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Murdoch pulls BSkyB bid amid UK hacking scandal (AFP)

LONDON (AFP) – Rupert Murdoch dramatically dropped his bid for control of pay-TV giant BSkyB on Wednesday, bowing to pressure from the British government over the phone-hacking firestorm at his newspaper empire.

Hours before Britain's three main parties were set to back an extraordinary parliamentary vote calling for the withdrawal of the bid, Murdoch's US-based News Corp. said it was now "too difficult to progress in this climate".

Prime Minister David Cameron welcomed the news, saying the Australian-born tycoon should focus on cleaning up his business after the scandal which forced the closure of the News of the World tabloid on Sunday.

After decades as Britain's political kingmaker, Murdoch has seen his empire threatened by a wave of public outrage over the hacking of voicemails belonging to people including a murdered girl and the families of dead troops.

"We believed that the proposed acquisition of BSkyB by News Corporation would benefit both companies but it has become clear that it is too difficult to progress in this climate," said News Corp. deputy chairman Chase Carey.

Carey said News Corp., which wanted to purchase the 61 percent of shares in BSkyB it did not own for ￡7.8 billion (8.6 billion euros, $12.5 billion), would remain a "committed long-term shareholder" in BSkyB.

The 80-year-old Murdoch had pushed for the bid as the broadcaster's portfolio includes live English Premier League football and blockbuster films, and this year reached its target of 10 million household subscribers.

Only a few months ago it looked like a sure thing, but the tide of scandal engulfing the News of the World the government put it on ice for at least six months on Monday by referring it to a competition watchdog.

Ed Miliband, the leader of the main opposition Labour party who had proposed the parliamentary motion urging Murdoch to drop the bid, said it was a "victory for the people".

"People thought it was beyond belief that Mr Murdoch could continue with his takeover after these revelations," he said.

A statement from Cameron's Downing Street office said: "We welcome the news. As the prime minister has said, the business should focus on clearing up the mess and getting its own house in order."

The scandal has spread out from Murdoch's newspapers to include the police, members of which allegedly received payments from the News of the World, to politicians accused of being too cosy with Murdoch.

The British premier has himself felt the heat as his media chief from 2007-2010 was former News of the World editor Andy Coulson, who was arrested on Thursday over allegations of voice hacking and paying off policemen.

Cameron told parliament earlier Wednesday he would support the non-binding motion, and announced the details of a full public inquiry into phone hacking, which he said would also include links between politicians and the press.

"There is a firestorm that is engulfing parts of the media, parts of the police and indeed parts of the political system," said Cameron.

He said the inquiry would have the power to summon newspaper proprietors, and warned that executives found guilty of wrongdoing could be barred from future roles in British media.

Murdoch, his son James -- the chairman of BSkyB and an executive at News Corp. -- and Rebekah Brooks, chief executive of News International, News Corp's British newspaper arm, have been called to give evidence to lawmakers next week.

It was reported separately Wednesday that Tom Crone, News International's legal manager, had left the company after 26 years.

In the United States, Senate Commerce Committee Chairman Jay Rockefeller called for an investigation to see if the phone-hacking scandal had spread to Murdoch's US operations, saying there could be "severe" consequences.

News Corp's shares have plummeted in the past week, and the Murdoch-owned Wall Street Journal reported that the media tycoon was considering selling off his remaining British newspapers, The Times, The Sunday Times and The Sun.

Shares in BSkyB were trading down 1.0 percent at 685 pence in late London deals after the announcement, but News Corp. shares gained 1.8 percent on the US Nasdaq index.

The Australian arm of News Corp. separately announced a review of its editorial expenditure over the last three years in a bid to reassure the public that illegal phone-hacking practices in Britain had not taken place there too.

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Murdoch summoned by British MPs over hacking (AFP)

LONDON (AFP) – British lawmakers summoned Rupert Murdoch and his top executives for questioning in a dramatic new turn in the phone hacking row Tuesday, as police accused his newspapers of blocking their investigations.

Former prime minister Gordon Brown also piled pressure on Murdoch's media empire, accusing it of hiring "criminals" to obtain his private documents and suggesting it used illegal methods to break the news of his son's illness.

The government meanwhile said it would back a parliamentary motion by the opposition Labour party on Wednesday calling on Murdoch to drop his controversial bid for control of satellite broadcaster BSkyB.

Brown's claims are the first to explicitly drag other newspapers within News International, Murdoch's British newspaper operation, into the long-running scandal which killed off the News of the World tabloid at the weekend.

Murdoch flew to Britain on Sunday to take control of the crisis and on Tuesday he held meetings with News International chief executive Rebekah Brooks, who was News of the World editor at the time of some of the hacking, and other key figures.

Lawmakers took advantage of his presence to call on him, his son, News Corp. executive James Murdoch, and Brooks to appear before them to face questions about hacking and allegations that Murdoch papers paid police for information.

News International said it would "cooperate" with the request from the House of Commons culture, media and sport select committee to appear next week.

The long-running scandal led to the shock closure of the 168-year-old News of the World last week, and indirectly caused the government to refer News Corp.'s bid for BSkyB to competition regulators.

But Murdoch is not the only one under pressure.

Senior police officers were grilled by a separate parliamentary committee on Tuesday to explain why their original probe into the News of the World in 2006 failed to unearth all the latest allegations.

Scotland Yard Assistant Commissioner John Yates, who decided not to reopen the investigation in 2009, expressed regret at that decision and apologised to the victims but blamed News International for failing to hand over key evidence.

"The evidence that we should have had in 2005-6 and in 2009 has only recently been supplied by News International," he said, adding that the company had "clearly misled us".

He also revealed that his own phone had been hacked during 2005-06, but strongly denied any suggestion that he decided not to reopen the police probe because he feared his private details would emerge in the press.

Committee chairman Keith Vaz said he had found Yates "unconvincing".

A new police investigation was opened in January, and officers are now trawling through 11,000 documents seized from private detective Glen Mulcaire, who was jailed in 2007 as a result of the original investigation.

Peter Clarke, a former deputy assistant commissioner who oversaw the original probe, also accused News International of withholding evidence.

"This is a major global organisation with access to the best legal advice, in my view deliberately trying to thwart a police investigation," he told the parliamentary committee.

He defended his decision not to sift through the 11,000 documents at the time, saying that in the wake of the July 2005 bombings in London, counter-terrorism had been a priority.

The claims in the documents include last week's allegations that the tabloid hacked the voicemails of a murdered teenager and the relatives of dead soldiers, which unleashed the public outrage that led to the demise of the paper.

In another major twist, Brown accused the Sunday Times, the News of the World's upmarket stablemate, of using con tricks to obtain bank details and legal documents relating to a flat he bought.

"I'm shocked, I'm genuinely shocked to find that this happened because of their links with criminals, known criminals who were undertaking this activity, hired by investigators who were working with the Sunday Times," he told the BBC.

He also said he "couldn't think" how The Sun, another Murdoch paper, had obtained information that his son had cystic fibrosis, adding that when the tabloid splashed the news on its front page in 2006 he was left "in tears".

Brown, who was finance minister from 1997 to 2007 and then Labour prime minister until 2010, said it was Brooks who told him about The Sun's story, as she was editor of the tabloid at the time.

A News International source said they were "satisfied that the story about his son came from legitimate sources."

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News Corp U.S. shareholder case adds hacking claims (Reuters)

NEW YORK (Reuters) – News Corp shareholders suing over the purchase of a business run by Chairman Rupert Murdoch's daughter filed a revised complaint, saying the British phone hacking scandal reflects how the company's board fails to do its job.

Shareholders called it "inconceivable" that directors were not aware sooner of the questionable news practices that led to the closure of the News of the World tabloid, given that news of the hackings first surfaced in 2005.

This, the shareholders said, reflects a board that "provides no effective review or oversight," in a corporate culture "run amuck," according to the amended complaint dated July 8 and filed in Delaware Chancery Court. Lawyers for the shareholders provided a copy of the complaint on Monday.

The shareholders had sued News Corp's board in March over the agreement to buy Shine Group Ltd, a television and film production company run by Elisabeth Murdoch, for an estimated $480 million in equity plus $135 million of debt.

They contend the purchase had no legitimate strategic or business purpose, but that Rupert Murdoch agreed to it out of "blatant nepotism" to give his daughter a seat on News Corp's board, and giving her a $250 million windfall.

News Corp has described the claims relating to Shine as meritless.

The plaintiffs include a trustee for several investment funds, and union and pension funds led by the New Orleans Employees' Retirement System and the Central Laborers Pension Fund. The lawsuit seeks to force directors to pay damages to News Corp for having breached their fiduciary duties.

Shares of News Corp were down 5.9 percent at $15.77 in morning trading.

The case is In re: News Corp Shareholder Derivative Litigation, Delware Chancery Court, No. 6285.

(Reporting by Jonathan Stempel; Editing by Lisa Von Ahn)

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UK tabloid writes own obit amid hacking scandal (AP)

LONDON – Writing the obituary for their own newspaper, News of the World's journalists prepared their final edition Saturday as Britain's media establishment reeled from the expanding phone-hacking scandal that brought down the muckraking tabloid after 168 years.

Small clues gave the tone of the London newsroom away — from a commemorative T-shirt bearing a "Goodbye, cruel News of the World, I'm leaving you today" worn by one staffer, to editors typing tributes to the tabloid's journalistic victories into newspaper text boxes.

Rupert Murdoch, whose media empire owns the paper, will arrive in London on Sunday on a scheduled visit, a person familiar with his itinerary told The Associated Press on condition of anonymity because of the sensitivity of the matter.

He is facing a maelstrom of criticism and outrage over the sequence of events set off by allegations the paper's journalists paid police for information and hacked into the voicemails of young murder victims and the grieving families of dead soldiers.

The recent revelations culminated in the decision to close the paper and put 200 journalists out of work.

The paper's editor, Colin Myler, offered words of encouragement and sympathy to his staff on a "very difficult day."

"It's not where we want to be and it's not where we deserve to be," he said in a memo to staff seen by Britain's Press Association. "But I know we will produce a paper to be proud of."

The contents of the front page were privy to "only a special few," according to Helen Moss, a news and features editor who offered refreshments to journalists camped outside the tabloid's headquarters in a bizarre death watch of sorts.

"I expect it'll be a massive tribute to 168 years of history ending today," she said, describing an "extremely emotional" newsroom.

Much of the emotion continued to focus on New International — a subsidiary of Murdoch's News Corp. — which took the decision to jettison the paper on Thursday after the new allegations sparked a fierce backlash and the flight of advertisers.

The scandal exploded this week after it was reported that the News of the World had hacked the mobile phone of 13-year-old murder victim Milly Dowler in 2002 while her family and police were desperately searching for her. News of the World operatives reportedly deleted some messages from the phone's voicemail, giving the girl's parents false hope that she was still alive.

That ignited public outrage far beyond any previous reaction to press intrusion into the lives of politicians and celebrities, which the paper has acknowledged and for which it has paid compensation to some prominent victims, including actress Sienna Miller.

Revelations that journalists paid police for information added fuel to the fire, prompting calls for a boycott and causing dozens of companies to pull their advertising from the paper amid fears they would be tainted by association.

James Murdoch — tipped by many as a likely successor to his father — then announced Thursday that this Sunday's edition of the tabloid would be its last and all revenue from it will go to "good causes."

The closure was seen by some as a desperate attempt by the media conglomerate to stem negative fallout and thus save its 12 billion-pound ($19 billion) deal to take over satellite broadcaster British Sky Broadcasting.

But the British government has signaled that deal will be delayed because of the crisis and the scandal has continued to unfold with the announcement of three arrests linked to the matter on Friday.

Andy Coulson — a former News of the World editor and ex-communications chief to Prime Minister David Cameron — was arrested Friday, as was Clive Goodman, an ex-News of the World royal reporter, and an unidentified 63-year-old man. All three have since been released on bail.

The developments have turned up the heat on Britain's media industry amid concerns a police investigation won't stop with the News of the World.

It has also cast new scrutiny on the cozy relationship between British politicians and the powerful Murdoch empire, putting the media baron's company on the defensive.

Many journalists and media watchers have expressed astonishment that Rebekah Brooks, who was editor of News of the World when some of the hacking allegedly occurred, was keeping her job at head of News Corp.'s U.K. newspaper operations while the paper's 200 employees were laid off.

She told lawmakers she had "no knowledge whatsoever" of the Milly Dowler hacking or any other case while she was editor, according to a letter published by Britain's home affairs select committee on Saturday.

"I also want to reassure you that the practice of phone hacking is not continuing at the News of the World," she said in response to the committee's request for new evidence. "For the avoidance of doubt, I should add that we have no reason to believe that any phone hacking occurred at any other of our titles."

While she has been portrayed as a villain in the unfolding story, Brooks — with strong connections to British politics and decades of experience behind her — has insisted she is the right person to lead News International through the crisis.

Upping the ante, the Church of England threatened to pull nearly 4 million pounds of investments from News Corp. "if does not hold senior executives to account ... for the gross failures of management at the News of the World."

The church's ethical investment advisory group said Sunday it wrote to News Corp. saying closing News of the World was not a "sufficient response" to the "utterly reprehensible and unethical" practices uncovered at the tabloid.

Murdoch has opted to remain largely silent amid the fallout, issuing one official statement that made clear Brooks would remain at the helm.

He spoke briefly to reporters in Sun Valley, Idaho on Saturday, where he was attending a media conference. When asked whose decision it was to close the paper he said, "It was a collective decision."

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Julie Jacobson contributed to this report from Sun Valley, Idaho.

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Cassandra Vinograd can be reached at http://twitter.com/CassVinograd

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Ex-Cameron aide arrested in UK hacking scandal (AP)

By JILL LAWLESS and ROBERT BARR, Associated Press Jill Lawless And Robert Barr, Associated Press – 56?mins?ago

LONDON – Prime Minister David Cameron's former communications chief and an ex-royal reporter were arrested Friday in a phone hacking and police corruption scandal that has already toppled a major tabloid and rattled the cozy relationship between British politicians and the powerful Murdoch media empire.

The 168-year-old muckraking tabloid News of the World was shut down Thursday after being engulfed by allegations its journalists paid police for information and hacked into the phone messages of celebrities, young murder victims and even the grieving families of dead soldiers. Its last publication day is Sunday.

The hacking revelations horrified both ordinary Britons and advertisers, who pulled their ads en masse. News International, the British arm of Rupert Murdoch's News Corp., killed the paper in hopes of saving its 12 billion pound ($19 billion) deal to take over satellite broadcaster British Sky Broadcasting. But the British government on Friday signaled the deal would be delayed as a result of the crisis.

"Given the events of recent days, this will take some time," Cameron said.

A billion pounds ($1.6 billion) was wiped off the value of BSkyB Friday, with shares closing down 7.6 percent in London as investors recoiled at the bad news.

"The pressure on the stock has really been driven by a sense News Corp. is not taking in the severity of its political issues and the embarrassment they are causing the prime minister," said industry analyst Claire Enders.

British broadcast regulator OFCOM — which has a duty to ensure media owners are "fit and proper" — said it was "monitoring the situation closely."

The police investigation into the phone hacking drew uncomfortably close to the prime minister Friday with the arrest of Andy Coulson, Cameron's once-powerful communications chief and a former editor of News of the World.

Coulson, 43, was arrested Friday morning on suspicion of corruption and "conspiring to intercept communications."

Police also arrested Clive Goodman, the former News of the World royal editor who served a jail term in 2007 for hacking into the phones of royal aides. This time the arrest was on suspicion of making illegal payoffs to police for scoops.

Detectives searched Coulson's house in London and Goodman's home south of the city Friday, as well as the newsroom of a second tabloid, the Daily Star Sunday. That paper is owned by Richard Desmond's Northern & Shell media conglomerate, and Goodman has done work for the paper since his release from jail.

The Daily Star Sunday said detectives spent two hours at its offices and took away a disc containing a record of Goodman's computer activity. The paper said there was "no suggestion whatsoever" that Goodman acted improperly during his shifts at the Star.

Allegations of phone hacking by the News of the World first surfaced more than five years ago, but the original police investigation — which saw Goodman and another man jailed — has now been criticized as incomplete and compromised by new bribery allegations.

The Metropolitan Police reopened the hacking inquiry earlier this year, and say they are looking at the names of over 4,000 people as possible victims.

Cameron, realizing that the crisis was knocking at his 10 Downing St. door, moved quickly to distance himself from it. Like predecessors including Labour Prime Ministers Gordon Brown and Tony Blair, Cameron courted the powerful Murdoch empire, whose endorsement is considered capable of swinging elections.

And he's not the first prime minister to hire a former journalist as his top communications aide — Blair's powerful aide Alastair Campbell also had a tabloid background.

On Friday, Cameron acknowledged that British politicians and the press had become too close and promised investigations into both the tabloid's actions and future media regulation.

"The truth is, we've all been in this together," Cameron told reporters at a hastily arranged news conference. "Party leaders were so keen to win the support of newspapers that we turned a blind eye to the need to sort this issue. The people in power knew things weren't right but they didn't do enough quickly enough."

Coulson quit as editor of News of the World after Goodman and private investigator Glenn Mulcaire were jailed in 2007 for hacking into the phones of royal aides. Coulson maintained he knew nothing of the hacking, and was hired soon after as Cameron's director of communications, but resigned in January as it became clear the hacking at the tabloid had been widespread.

Opposition Labour Party leader Ed Miliband had urged Cameron to apologize for "the appalling error of judgment he made in hiring Andy Coulson." Cameron refused, saying Friday that Coulson remained a friend, but clearly moved a further step away from his former aide.

"(Coulson) gave me assurances," Cameron said. "He said he had resigned because of what had happened, but he didn't know the hacking had taken place."

"I took a conscious choice to give someone who had screwed up a second chance," Cameron said. "He worked for me, he worked for me well, but actually he decided in the end the second chance wouldn't work, he had to resign all over again for the first offense."

Cameron said press self-regulation by the Press Complaints Commission had failed and a new body, independent of the media and the government, was needed to properly enforce standards.

Cameron suggested his friend Rebekah Brooks, editor of the News of the World at the Time of the worst hacking allegations, should have resigned as chief executive of News International.

Many observers expressed astonishment that 43-year-old Brooks was keeping her job while the paper's 200 staff were laid off. Enders said the Murdoch group has shown, "an almost maniacal desire to protect Ms. Brooks at all costs."

Brooks met her staff Friday and confirmed she was staying.

Cameron also said there were questions to be answered by James Murdoch, the heir-apparent to his father's media empire.

"I want everyone to be clear: Everything that has happened is going to be investigated," Cameron said.

He said a judge will be appointed to lead a thorough investigation of what went wrong at the News of the World, including alleged bribery of police officers, and a second inquiry to find a new way of regulating the press.

Bets on Ladbrokes that Cameron would be the next Cabinet member to leave the British government were briefly suspended Friday after a flurry of wagers triggered an automatic halt. The bet was put back up, however, at the same price, 33 to 1.

The scandal exploded this week after it was reported that the News of the World had hacked the mobile phone of 13-year-old murder victim Milly Dowler in 2002 while her family and police were desperately searching for her. News of the World operatives reportedly deleted some messages from the phone's voicemail, giving the girl's parents false hope that she was still alive.

That ignited public outrage far beyond any previous reaction to press intrusion into the lives of politicians and celebrities, which the paper has acknowledged and for which it has paid compensation to some prominent victims, including actress Sienna Miller.

Dozens of companies pulled their advertising from the paper this week, fearing they would be tainted by association. James Murdoch then announced Thursday that this Sunday's edition of the tabloid would be its last and all revenue from it will go to "good causes."

News International has not said whether it will put another paper into the Sunday market that has been dominated for decades by News of the World. But according to online records, an unnamed U.K. individual this week bought the rights to the domain name "sunonsunday.co.uk."

The British government gave its qualified approval in June to Murdoch's News Corp. purchasing the 61 percent of British Sky Broadcasting that it doesn't already own, on the condition it spins off news channel Sky News as a separate company.

But Culture Secretary Jeremy Hunt said Friday there had been a huge number of responses to a public consultation on the takeover, said to exceed 100,000 submissions, and that will delay the approval process.

Despite the public outcry, many analysts think Britain will still sanction the takeover but delay it until at least September.

BSkyB's shares closed down 7.6 percent at 750 pence ($12).

Shares in the Nasdaq-listed News Corp., which owns 39 percent of BSkyB, were down 3.5 percent at $16.82 around midday in New York.

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Danica Kirka and Raphael G. Satter contributed to this report.

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Murdoch defends papers as Cameron pledges hacking probe (Reuters)

LONDON (Reuters) – Rupert Murdoch promised full cooperation on Wednesday to resolve a scandal shaking his media empire after British Prime Minister David Cameron promised an inquiry into what he called "disgusting" phone hacking by a newspaper.

Responding in parliament to allegations that the News of the World eavesdropped on voicemail for victims of notorious crimes, including child murders and suicide bombings, Cameron said he was "revolted" and would order inquiries, probably into both the specific case and more widely into Britain's cut-throat media.

The opposition, keen to highlight Cameron's own ties to Murdoch and to two former editors at the eye of the storm, noted that any inquiry would not start, let alone finish, for months if not years. Critics accused the Conservative government of trying to bury the embarrassment of the long-running saga.

Murdoch, whose News International group faces boycotts from advertisers and readers as well as questions over a takeover bid for broadcaster BSkyB, made a rare public statement to say he too found the hacking, and reports of buying tips from police, "deplorable and unacceptable" and would ensure transparency.

But the 80-year-old Australian-born American media magnate made clear he was standing by Rebekah Brooks, the 43-year-old head of his British newspaper operation. She was editor in 2002 when, police say, a News of the World investigator listened to -- and deleted -- voicemails left for the cellphone of missing 13-year-old Milly Dowler, who was later found murdered.

Cameron said: "We do need to have an inquiry, possibly inquiries, into what has happened." The prime minister faces questions over his own judgment in appointing Brooks'successor as editor, Andy Coulson, as his spokesman. Coulson quit Cameron's office in January, but denies knowing of any hacking.

Cameron, who regularly hosts Brooks at his home, said: "We are talking about murder victims, potentially terrorist victims, having their phones hacked into. It is absolutely disgusting."

In a further twist to the affair, a spokesman for Finance Minister George Osborne confirmed media reports that police had told the senior cabinet minister that his name and home number were in notes kept by two people jailed for phone hacking.

"FULLY COOPERATE"

Murdoch said in his statement: "Recent allegations of phone hacking and making payments to police with respect to the News of the World are deplorable and unacceptable.

"I have made clear that our company must fully and proactively cooperate with the police in all investigations and that is exactly what News International has been doing and will continue to do under Rebekah Brooks' leadership."

The leader of the opposition Labour party, Ed Miliband, said Cameron had made a "catastrophic error of judgment" in hiring Coulson as his communication director and said Brooks, a high-flying Murdoch confidante, should resign her current post. She says she knew of no illegal hacking while editing the paper.

When its royal correspondent and an investigator were jailed in 2007 for hacking into the cellphones of royal aides to break a story about an injury to Prince William's knee, the newspaper insisted it was a case of one rogue reporter.

After campaigning by celebrities and politicians who suspected they too had been spied on, police launched a new inquiry in January and, following the arrests of several journalists, the affair has taken on dramatic new proportions.

Shares in Murdoch's News Corp, which also controls Fox television, the Wall Street Journal, London's Times and the New York Post among other titles, were down over 5 percent in New York, while shares in BSkyB fell more than 2 percent.

Major advertisers abandoned the News of the World.

Speaking for one carmaker Lance Bradley said: "Mitsubishi Motors in the UK considers this type of activity-- especially in such a distressing case-- to be unbelievable, unspeakable and despicable ... This is where we draw the line."

Internet campaigns and the actor Hugh Grant urged readers to boycott the paper which, if successful, may prove more damaging than political condemnation to Britain's best-selling Sunday paper, read by some 7.5 million people on sales of 2.6 million.

Sales of News Corp's daily sister paper the Sun never recovered in Liverpool after it offended the city's football fans in the wake of the 1989 Hillsborough stadium disaster.

"We need an inquiry that uncovers all the practices and the culture, not just of the News of the World but all tabloid journalism in this country," said Grant, a fixture of the gossip columns, who says he was a victim of phone hacking.

BROADCASTER BID

Though analysts believe the chances of the BSkyB purchase being derailed are slim, the watchdog which oversees Britain's broadcasting industry issued a statement pointing out that it had a duty to assess whether holders of a broadcasting license are 'fit and proper'. Murdoch is trying to buy the 61 percent of the BSkyB pay-TV group that it does not already own.

"There has been a shift in the last three days, there is now a consensus that this needs full and proper scrutiny," media consultant Steve Hewlett told Reuters.

Police have been criticized for being slow to investigate the phone-hacking claims but reject suggestions this was because of alleged payments to officers. The head of the Metropolitan Police Paul Stephenson said allegations of "inappropriate payments" to some officers were under investigation.

British politicians have said in the past they feared criticizing any of the Murdoch papers because they feared their own private lives might be exposed.

Among further allegations, families of Londoners killed by Islamist suicide bombers in 2005 said police had told them their voicemail messages may have been intercepted.

Graham Foulkes, whose son David was one of 52 people who died in the 7/7 bombings, told BBC radio he was contacted by police after they found his private contact details on a list as part of the investigation into hacking claims.

"We were using the phone frantically trying to get information about David and where he may have been and ... talking very intimately about very personal issues, and the thought that these guys may have been listening to that is just horrendous," Foulkes said. Relatives are preparing to mark the sixth anniversary of the attacks on Thursday.

News International said it would be contacting the Defense Ministry about reports the phone numbers of British soldiers killed in Iraq and Afghanistan were found in the files of a private investigator jailed for hacking phones.

"If these allegations are true we are absolutely appalled and horrified," it said in a statement.

On Tuesday the company said new information had been provided to police. The BBC said the material related to e-mails appearing to show payments to police officers for information and were authorized by Coulson when he was editor.

Commentators suggested information about the payments had been released to deflect attention from Brooks, who unlike Coulson is still a key part of Murdoch's business. The Guardian, a left-leaning daily which has taken a lead in investigating the scandal, said News International would also be saying that Brooks was on holiday at the time of key alleged incidents.

"If Rebekah falls then who is next? Well it's James Murdoch," said media consultant Hewlett, suggesting that keeping her in her position served to protect her superior, Murdoch's son James, from criticism. "This feels to me like a firewall."

Media commentator Stephen Barnett said Brooks's position seemed at risk but that Murdoch would likely support her: "If she has 100 percent backing of Rupert Murdoch then clearly she is untouchable and more importantly it shows that Murdoch himself thinks the company is untouchable," he said.

The Guardian said police investigating the phone-hacking claims were now turning their attention to all high-profile cases involving the murder or abduction of children since 2001.

The key allegation is that journalists, or investigators hired by them, took advantage of often limited password security on mobile phone voice mailboxes to listen to messages left for celebrities or people involved in major stories.

What has particularly outraged many was the suggestion, made by police to the family of Milly Dowler, that a News of the World investigator not only hacked into her mailbox during the six months of 2002 that she was missing but also deleted messages to make room for more -- misleading police and giving her family false hope she was still alive and well.

The child's killer was tried only this year and convicted just last month, refreshing painful memories of the case.

The parents of two 10-year-olds taken and murdered by a school caretaker in the town of Soham in 2002 -- one of Britain's most notorious crimes in recent years -- have been contacted by police probing hacking at the News of the World.

(Additional reporting by Georgina Prodhan, Michael Holden, Keith Weir, Olesya Dmitracova, Stefano Ambrogi and Alastair Macdonald; Editing by Jon Boyle)

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Spreading phone hacking scandal touches UK nerves (AP)

LONDON – Britain's phone hacking scandal intensified Wednesday as the scope of tabloid intrusion into private voice mails became clearer: Murder victims. Terror victims. Film stars. Sports figures. Politicians. The royal family's entourage.

Almost no one, it seems, was safe from a tabloid determined to beat its rivals, whatever it takes.

The focal point is the News of the World — now facing a spreading advertising boycott — and the top executives of its parent companies: Rebekah Brooks, chief executive of News International, and her boss, media potentate Rupert Murdoch.

In his first comment since the latest details emerged, Murdoch said in a statement Wednesday that Brooks would continue to lead his British newspaper operation despite calls for her resignation.

The scandal, which has already touched the office of Prime Minister David Cameron, widened as the Metropolitan Police confirmed they were investigating evidence from News International that the tabloid made illegal payments to police officers in its quest for information.

The list of potential victims also grew. Revelations emerged Wednesday that the phones of relatives of people killed in the July 7, 2005, terrorist attacks on London's transit system, as well as those tied to two more slain schoolgirls, may also have been targeted.

The true extent of the hacking is not yet clear — and may not be known for months as inquiries unfold.

Graham Foulkes, whose 22-year-old son David died in the 2005 terrorist attacks, was told by police that he was on a list of potential hacking victims.

"I just felt stunned and horrified," Foulkes told The Associated Press. "I find it hard to believe someone could be so wicked and so evil, and that someone could work for an organization that even today is trying to defend what they see as normal practices."

Foulkes, who plans to mourn his son on Thursday's sixth anniversary of the attack, said an independent investigation is needed because the police were compromised by accepting payoffs from the tabloid.

"The police are now implicated," he said. "The prime minister must have an independent inquiry and all concerned should be prosecuted."

Foulkes also demanded the resignation of Brooks, the former News of the World editor who is now chief executive of News International, the U.K. newspaper division of Murdoch's News Corp. media empire. News Corp. owns a swath of newspapers, including News of the World, the Sun, and the Wall Street Journal.

"She's gotta go," Foulkes said. "She cannot say, oops, sorry, we've been caught out. Of course she's responsible for the ethos and practices of her department. Her position is untenable."

Brooks, one of the most powerful women in British journalism, maintains she did not know about the phone hacking. She said she will continue to direct the company.

Foulkes also challenged Murdoch — a global media titan with newspaper, television, movie and book publishing interests in the United States, Britain, Australia and elsewhere — to meet with him to discuss the intrusion into his privacy.

"I doubt he's brave enough to face me," he said.

In Parliament, lawmakers held an emergency debate to call for the prosecution of those responsible for hacking into the phone of Milly Dowler, the 13-year-old murder victim whose case touched off the scandal, and others.

The Dowler case touched a raw national nerve because the paper is accused of hampering the police investigation by deleting some of Milly's phone messages, which gave her parents and police false hope that she was still alive after she disappeared in 2002.

Cameron called for inquiries into the News of the World's behavior as well as into the failure of the original police inquiry to uncover the extent of the hacking. Potential victims have cited the tabloid's payoffs to police as the reason the allegations did not surface earlier.

"We are no longer talking here about politicians and celebrities, we are talking about murder victims, potentially terrorist victims, having their phones hacked into," Cameron said.

"It is absolutely disgusting, what has taken place, and I think everyone in this House and indeed this country will be revolted by what they have heard."

British media reported that the parents of two other schoolgirls, Holly Wells and Jessica Chapman, who were murdered in a sensational 2002 case, had been informed by police that they were investigating whether the News of the World hacked their telephones.

Many Britons were horrified.

"It's heartless and inconsiderate that they'd do it to victims and family of murder victims," said Danny Wright, 25, of Liverpool.

He said it was wrong to hack into celebrities' phones but far worse to target victims' families "because of what they've been through."

Bob Satchwell, executive director of the Society of Editors, said the Dowler case was crucial.

"That's why the case has gotten so big," he said. "If celebrities or politicians have their phones intercepted, that's one thing, but the idea that they were doing this while a little girl was missing and a police inquiry was going on makes it a really gross intrusion."

Satchwell said it has become politically sensitive not only because Cameron's communications chief Andy Coulson was forced to resign because of his earlier stewardship of the tabloid, but because lawmakers opposed to Murdoch's growing media power in Britain want to slow his takeover of other properties.

He said the hacking of Milly's phone was revealed just as government regulators are preparing to decide whether Murdoch can take full control of British Sky Broadcasting.

"You have to ask yourself why that happened right now," he said, cautioning that the public has yet to see clear evidence of illegal phone hacking except for two News of the World employees — reporter Clive Goodman and investigator Glenn Mulcaire — who have already served time in jail.

When police arrested Mulcaire, they seized 11,000 pages of notes, including the phone numbers of many suspected hacking victims. But in most cases the police have not yet made clear who was actually hacked.

Actor Hugh Grant said Wednesday that he had been asked to testify at a police inquiry into the hacking allegations. The actor has often claimed he believes his phone was hacked by News of the World.

The scandal has its roots in the tabloid's efforts to scoop its competitors with news about the royal family. Representatives of the royals complained to police in late 2005 that some of their voice mails had been hacked into.

The police inquiry focused on Goodman and Mulcaire, who were jailed in 2007 for the hacking. Executives said at the time that they were the only employees involved, but that has been undermined by a series of arrests at the newspaper earlier this year and by the company's willingness to settle with other victims.

The tabloid's parent company, News International, has insisted it is working closely with police and has a zero-tolerance policy for any wrongdoing or sketchy tactics.

Virgin Holidays canceled several ads due to run in the Sunday newspaper this week. Car makers Ford UK and Vauxhall and Halifax bank also said they have suspended advertising.

Mumsnet — a popular online community for mothers — removed ads from Murdoch broadcaster Sky after its members complained about the tabloid hacking.

Tuna Amobi, an equities analyst with Standard & Poor's, said in a research note Wednesday that the advertising boycott by some companies was not significant for a company as large as News Corp. But he remained "wary of potential regulatory fallout (if not ultimate derailment)" of its pending deal to take over BSkyB.

Phone-hacking featured prominently on the home pages Wednesday of the Wall Street Journal, another Murdoch publication, and the paper mentioned its ties to the scandal-ridden tabloid in the fifth-to-last paragraph of a lengthy piece. The Journal's article made no mention of Murdoch himself.

Murdoch's other properties — tabloids among them — did not distance themselves from the story — phone-hacking revelations were front and center on the Sun's website and Sky news replaced its featured stories home page box with a "breaking news" banner and multiple hacking-related stories. The Sun noted, however, that rival tabloids "have also been accused of dodgy and illegal activities while pursuing stories."

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Robert Barr, Danica Kirka, Meera Selva, David Stringer and Cassandra Vinograd contributed to this report.

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New hacking allegation piles pressure on Murdoch (Reuters)

LONDON (Reuters) – Prime Minister David Cameron led a chorus of condemnation Tuesday over allegations a top-selling British newspaper from Rupert Murdoch's global media empire hacked the voicemail of a missing schoolgirl who was later found murdered.

Suggestions that in 2002 a News of the World investigator listened in to, and deleted, messages left for the cellphone of the 13-year-old, misleading police and her family, caused uproar in parliament, where the tactics and power of the tabloid press, many of them Murdoch titles, have long caused controversy.

The gravest accusations yet drove the long-rumbling scandal into the heart of Murdoch's News Corp: it came as it seeks official approval to take over broadcaster BSkyB; and forced Rebekah Brooks, a Murdoch confidante who was the News of the World editor at the time, to plead ignorance and say she would not resign as head of News Corp's British newspaper arm.

Pressure is unlikely to let up, however. At least one major advertiser, carmaker Ford, said it was pulling ads from the News of the World -- though not the other Murdoch papers -- until it saw how the tabloid dealt with the new allegation.

Lender Halifax said on its official Twitter feed that it was considering its options, while telephone operator T-Mobile UK said on Twitter it was reviewing its advertising position.

And police looking into phone hacking by the newspaper later said they had been in touch with the parents involved in another notorious child murder, when two 10-year-old girls were seized and killed by a school caretaker in the town of Soham in 2002.

Suggestions that the News of the World's activities might have hampered police and given false hope to the family of the murdered teen-ager, Milly Dowler, caused uproar in Britain and moved Cameron to comment while on a visit to Afghanistan.

"On the question about the really appalling allegations about the telephone of Milly Dowler, if they are true, this is a truly dreadful act," Cameron told journalists in Kabul.

Lawmakers agreed to clear three hours of parliamentary time for an emergency debate on the issue Wednesday.

Cameron had until now said little about the phone hacking scandal, which forced the resignation earlier this year of his own spokesman, another former editor of the News of the World.

His government is weighing approval of News Corp's takeover bid for BSkyB though it was unclear the latest twist of scandal would do much to raise what analysts see as a slim chance that his center-right administration would step in to block the move. Critics say the deal concentrates too much political power in the hands of the Australian-born American media baron.

PREMIER'S SPOKESMAN

The phone-hacking affair, in which journalists desperate to boost circulation dialed in to mobile phone voicemail servers of public figures in the hunt for stories, has rumbled for years -- the News of the World's royal correspondent and a private investigator were jailed in 2007 after hacking.

In January, angry celebrities, including entertainment and sports stars, as well as politicians, who feared their messages had been listened to prompted police to open a new inquiry.

Cameron, who is close to the Murdoch family and has often been spotted socializing with Brooks in Oxfordshire where they both have country homes, also reiterated that the BSkyB merger should be handled separately from the phone-hacking probe.

Murdoch transformed the British press landscape in the 1980s during Margaret Thatcher's years as prime minister, bringing in new technology and confronting printers' and journalists' trade unions. He commands audiences with global leaders and, through his media, is seen as one of the world's most powerful men.

Analysts expect the $15 billion-plus BSkyB deal to go through.

"The secretary of state is not entitled to consider these latest appalling allegations when considering the News Corp proposal to buy the rest of BSkyB," said analyst Chris Goodall of media and telecoms research firm Enders Analysis.

The ministry reviewing the bid declined comment. But opposition Labour politician and former deputy prime minister John Prescott, who was told by police his phone may have been hacked, wrote to communications regulator Ofcom to ask it to review the bid and said it was not too late to halt the deal.

Ofcom has the power to decide whether News Corp is a fit and proper owner of BSkyB but an industry source said it would not do anything until the police investigation into the phone hacking scandal at the News of the World was concluded.

BSkyB shares closed 0.6 percent down at 845 pence, underperforming a stronger European media index.

FALSE HOPE

The kidnap and murder of Milly Dowler is among the highest-profile criminal cases of recent years. Revelations from her family's lawyer that police were checking whether journalists manipulated her cellphone account while she was missing come less than two weeks after her killer was finally convicted.

Influential BBC journalist Robert Peston blogged on his Twitter feed: "News Int execs tell me they fear there may have been worse examples of NOTW hacking than that of Milly Dowler's phone. The mind reels." News International declined to comment.

Simon Greenberg of News International told Sky News Tuesday evening that it had found "some significant new information that certainly helps us get closer to establishing the facts of the case about who was involved," without giving further details. He also said it had been in dialogue with its commercial partners, informing them of the steps taken.

Opposition Labour party leader Ed Miliband said News International Chief Executive Brooks, News Corp's most senior executive so far affected, should think about resigning.

"She should consider her position. But this goes well beyond one individual. This is about the culture and practices that were obviously going on at the News of the World, for a sustained period," he said in a statement.

Brooks told staff in a memo she would not go. "It is almost too horrific to believe that a professional journalist or even a freelance inquiry agent working on behalf of a member of the News of the World staff could behave in this way."

Glenn Mulcaire, the private investigator jailed for phone hacking, issued a statement released to the Guardian, the newspaper that has forced much of the agenda, in which he apologized "to anybody who was hurt or upset by what I have done," blaming the constant demand for results.

"I knew what we did pushed the limits ethically. But, at the time, I didn't understand that I had broken the law at all," he was cited as saying.

Media consultant Steve Hewlett told BBC radio it "looks like an industrial-level activity, which makes editors' denial that they knew anything about it even more implausible."

Facebook and Twitter campaigns sprang up in the wake of the latest allegation encouraging to boycott the News of the World.

It is not clear how badly it might be hit commercially but a boycott in 1989 of best-selling sister paper The Sun by Liverpool readers is estimated to have cost tens of millions of pounds.

People in the English city stopped buying the paper after it wrongly accused Liverpool soccer fans of loutish behavior while 96 of their fellow fans were crushed to death ahead of cup tie at Hillsborough stadium.

News Corp long maintained that the cases of phone hacking were isolated and the work of a lone journalist gone off the rails. This year, it admitted liability in a few cases and will pay compensation to victims including actor Sienna Miller. Others, including actor Jude Law and soccer star Ryan Giggs are still suing the paper.

Peta Buscombe, chair of Britain's Press Complaints Commission, said News Corp had lied, leading the PCC to conclude in 2009 that there was no evidence the phone hacking was the work of more than one rogue reporter. "I personally and the PCC are so angry because clearly we were misled," she told the BBC.

Police, who have been accused of being sluggish in probing a media organization to which some officers sold information, have arrested three journalists since relaunching their inquiries.

(Additional reporting by Mohammed Abbas in Kabul and Jodie Ginsberg, Olesya Dmitricova, Keith Weir, Michelle Nichols, Avril Ormsby, Stefano Ambrogi and Matt Falloon in London; Editing by Alastair Macdonald)

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