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"NOT FOR PUBLICATION & NOT FOR BROADCAST: STRICTLY PRIVATE & CONFIDENTIAL."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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Yahoo CEO Bartz fired over the phone, rocky run ends (Reuters)

SAN FRANCISCO (Reuters) – Yahoo Inc Chairman Roy Bostock fired CEO Carol Bartz over the phone on Tuesday, ending a tumultuous tenure marked by stagnation and a rift with Chinese partner Alibaba.

Chief Financial Officer Tim Morse will step in as interim CEO, and the company will search for a permanent leader to spearhead a battle in online advertising and content with rivals Google Inc and Facebook.

Shares in Yahoo jumped 6 percent in after-hours trading to $13.7 after closing at $12.90 on the Nasdaq. They are scarcely higher than where they were when Bartz first took the reins in January 2009 with hopes of reviving stalled growth and competing with up-and-coming rivals.

On Tuesday, her efforts were abruptly halted after Bostock called with the bad news.

"I am very sad to tell you that I've just been fired over the phone by Yahoo's Chairman of the Board. It has been my pleasure to work with all of you and I wish you only the best going forward," the outspoken CEO said in a two-sentence email to employees obtained by Reuters.

The turn of events surprised few Wall Street observers who had tracked a rising torrent of criticism and watched revenue growth falter and sputter out.

Some analysts said Bartz's departure signaled the company had run out of options after failing to dominate the advertising and content markets and handing over its search operations to Microsoft Corp.

That partnership, under which Microsoft handles search for Yahoo's websites and keeps a portion of ad revenue, appears to favor the software company at Yahoo's expense.

STRATEGIC REVIEW

Yahoo is still one of the most popular destinations on the Internet but faces increasing competition from social networking service Facebook and from Google, which has a market value of $170 billion, 10 times more than Yahoo.

Yahoo said a new executive leadership council would help Morse in managing day-to-day operations as well as supporting "a comprehensive strategic review" to position the company for growth.

The decision to oust Bartz was reached by an unanimous vote of Yahoo's eight independent directors late last week, according to a person close to the company. Bartz, and co-founder Jerry Yang, who are also on the board, did not participate in the vote, the person said.

Yahoo has not hired investment banking advisors, but was likely to meet with various firms in the coming weeks, according to the person close to the company.

"It's hard to say what direction they are going to head. What is the next step for Yahoo? They went down the road of search, they went down the road of media, becoming a content company, they went down the road of advertising," said YCMNet Advisors CEO Michael Yoshikami.

"I'm not sure where they go right now. One wonders if this means that they might be ripe for a takeover."

At least three private equity firms had reached out to at least one media firm to gauge acquisition interest two weeks ago, said a second source with direct knowledge of the approaches who declined to be identified because the talks were preliminary.

CROWN JEWELS

Yahoo is worth about $16 billion, with much of that ascribed to its roughly 40 percent stake in China's Alibaba, the parent company of websites including Alibaba.com and Taobao. Yahoo also owns a stake in Yahoo Japan, along with Japanese mobile company Softbank.

Analysts estimate Yahoo's Asian assets are worth about $7-$9 of Yahoo's roughly $13 share price, based on a sum-of-the-parts valuation.

Relations between Yahoo and Alibaba have soured since Bartz took over, with Alibaba founder Jack Ma failing in an attempt to buy out its U.S. partner's stake.

A senior official at Alibaba Group said Bartz's departure was unlikely to solve the ownership issues.

"There won't be much of an impact in the relationship to be honest," the official said on the condition of anonymity. "We have to wait and see till we are working together with the new CEO."

The rocky relationship between the companies came to a head in May when it was revealed that Alibaba had abruptly handed Alipay -- one of Alibaba's crown jewels -- to a company controlled by Ma, apparently without Yahoo's knowledge.

"The immediate impact will not be much because I don't think Yahoo wants to sell its stake although Alibaba wants to buy it. It really depends on how Tim handles this, as in the past Carol has had a strong stance on this," said Hong Kong-based CLSA analyst Elinor Leung.

FALL FROM GRACE

Bostock voiced his public support in June for Bartz, a lightning rod for criticism from Wall Street, and known for her tough attitude and salty language.

Bartz's ouster capped a decade-long fall from grace for a company whose shares traded at more than $125 in January 2000 during the dotcom bubble -- but now languishes at about a 10th of that level.

Bartz arrived at Yahoo in January 2009 after a strong showing at software giant Autodesk with high hopes of turning around Yahoo, after Yang was widely thought to have botched a $47.5 billion proposed takeover by Microsoft, rebuffing that advance as too low.

Yahoo reported a slight decline in net revenue in the second quarter, as efforts to restructure its sales force caused disruptions.

Research firm eMarketer has projected that Facebook would overtake Yahoo this year to collect the biggest slice of online display advertising dollars in the United States.

Bartz, who had more than a year left on her four-year contract with Yahoo, was slated to host a Q&A at the Citi Technology Conference at 1250 pm ET in New York on Wednesday.

Bartz had reserved a room at the St. Regis hotel in Manhattan for Tuesday evening, but a hotel receptionist reached over the phone said the booking had been canceled.

(Additional reporting by Melanie Lee in SHANGHAI; Poornima Gupta and Sarah McBride in SAN FRANCISCO, Jennifer Saba in NEW YORK and Bill Rigby in SEATTLE; Writing by Edwin Chan; Editing by Carol Bishopric and Anshuman Daga)

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Google's Motorola bet to reshape Asian phone makers (Reuters)

SEOUL/TAIPEI (Reuters) – Asian handset makers using Google Inc's Android operating system might turn to rival platforms such as Microsoft Corp's Windows after Google upended the mobile landscape with its $12.5 billion bid for Motorola Mobility Holdings.

Taiwan's HTC and Korea's Samsung Electronics have sold millions of mobile devices running on the free Android system, catapulting Google to the top slot in the booming global mobile software market.

But the acquisition of Motorola could turn Google from a partner to a competitor for more than 30 other Android-handset companies.

"The deal will make most Android players realize how dependent they are on Google and how quickly Google's plans can change their businesses," said Francisco Jeronimo, an analyst at research firm IDC.

Wall Street quickly anointed Microsoft a winner in the deal, with Windows potentially benefiting if the acquisition alienates the other phone makers that rely on Android.

Android held a 43.4 percent share of the smartphone market at the end of the second quarter, ahead of Nokia's 22 percent, according to data from research firm Gartner. Apple ranked third with 18 percent, the data showed.

Nokia earlier this year opted for Microsoft's software, dropping its own software and shunning Android. Its first Windows Phone handsets are due out later this year.

Shares in Nokia, which had fallen around 45 percent since from the start of the year to last Friday due to worries about its declining market share, rose 5.5 percent on Tuesday, extending Monday's 9 percent jump.

Much of that was due to speculation Nokia could become the next buyout target, although analysts were mixed about the possibility of a bid emerging.

Some said the high offer for Motorola made Nokia look cheap by comparison.

But others said that while Nokia could benefit from the deal if it stirs confusion among Google's other handset partners, such a situation could compel a company like Microsoft to shun a buyout of any particular handset maker.

"Eventually, we think that conflicts of interest may force Google to choose between vertical integration and shutting down device production at Motorola Mobility," J.P. Morgan analyst Rod Hall said in a note to clients.

BETS ON MOTOROLA TURNAROUND

Shares in Motorola's Asia's suppliers jumped on the deal.

Foxconn International Holdings Ltd, the world's top contract cellphone maker which counts Motorola as a client, surged as up to 17 percent on prospects of more business.

Shares of Compal Communications Inc and Arima Communications were among a slew of Motorola suppliers that hit the 7-percent daily limit in Taiwan.

"Everybody is betting on a Motorola turnaround. Motorola will get more help from Google to push its Android handsets with the deal," said Yuanta Securities analyst Bonnie Chang in Taipei. "Outsourcing companies such as Foxconn International and Compal Communications will benefit directly the most."

Shares in Samsung, which has businesses from chips to TVs and energy as well as phones, ended 6.1 percent higher. Fellow Korean phone maker LG Electronics edged up 0.3 percent.

HTC closed up 3.1 percent in a Taiwan market down 0.3 percent.

ANDROID UMBRELLA

Some brokers said the Motorola deal could be Google's way to provide support to Android players.

Phone makers and software firms are involved in copy-cat lawsuits in the fierce battle over who owns patents used in mobile devices, with Apple going after Android device makers.

"We suspect that Google will now try to provide an umbrella for the Android community that provides IP protection from key rivals such as Apple and Microsoft. This is broadly how Microsoft protects Windows Phone," Nomura said in a note.

"We do not believe that Google will aim to continue to make handsets long term, but will rather look to spin the business out to an Android partner -- such as Huawei, LG, ZTE, for example."

Globally, HTC has been a standout winner after being the first to roll out an Android-backed smartphone, leaving it most exposed to any shift in the landscape, analysts said.

Nearly all of its smartphones run on Android but it also has a long-standing partnership with Microsoft.

"HTC and Samsung are companies Google can trust but not control to drive market share," Chang said. "If in the long run Google decides HTC and Samsung have very different business roadmaps, it may want to leverage on Motorola to gain market share."

HTC said in May it plans to bring out phones based on Microsoft's new Mango Windows phone software. However on Tuesday, HTC said the Google-Motorola deal would not affect its partnership with Google.

"This is a positive development to the Android ecosystem, which we believe is beneficial to HTC's promotion of Android phones," HTC said in a statement.

(Additional reporting by Faith Hung in Taipei and Lee Chyen Yee in Hong Kong; Writing by Anshuman Daga; Editing by Lincoln Feast and David Cowell)

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UK police now asked to investigate phone 'pinging' (AP)

By RAPHAEL G. SATTER and JILL LAWLESS, Associated Press Raphael G. Satter And Jill Lawless, Associated Press – 1?hr?35?mins?ago

LONDON – With Britain still coming to terms with the illegal voicemail interception at one of its biggest newspapers, Scotland Yard was asked Thursday to look into an even more intrusive technique: "Pinging."

A member of the board that oversees London's police force has asked it to investigate claims that News of the World reporters paid officers to obtain people's locations by tracking their cell phone signals — a practice known as "pinging" because of how cell phones signals bounce or "ping" off relay towers as they try to find reception.

Jenny Jones, a Green Party member of the Metropolitan Police Authority, cited claims that reporters at the now-defunct tabloid were able to trace mobile phones in return for payments to corrupt police officers.

The allegation was made by the late Sean Hoare, a former News of the World reporter who spoke to the New York Times about skullduggery at the tabloid. Hoare — who was fired in 2005 — said that officers were paid 300 pounds (nearly $500) per trace. The paper cited a second unnamed former News of the World journalist as corroborating Hoare's claim.

Hoare was found dead on Monday at his home near London; police say the death is not suspicious.

Jones is asking Scotland Yard to examine the records of all cases in which police accessed phone-tracking data "to ensure those were valid requests."

In an interview with The Associated Press, Jones said that going through the cell phone tracing requests "is a relatively simple way of finding corrupt officers" given that it would be clear who was being targeted and when.

"The information is there and you can check," she said.

Pinging joins a host of alleged media misdeeds being put under the microscope as police, politicians, and the public weigh allegations that journalists at Rupert Murdoch's News of the World engaged in years of lawless behavior to get scoops.

What began in 2005 as a slow-burning scandal over one reporter's efforts to spy on voicemails left on the phones of Britain's royal household has exploded into a crisis which has shaken Murdoch's media empire and led to resignations of two of Scotland Yard's most senior officers.

British politicians have felt the heat too, with the country's top two party leaders falling over each other to distance themselves from papers they once both courted assiduously.

Prime Minister David Cameron's former communications director — a veteran of the Murdoch press — came under fresh scrutiny Thursday after it was reported that he did not have a top-level security clearance, which spared him from the most stringent type of vetting.

The Guardian said that Andy Coulson, a former editor of the News of the World, would have been vetted when he went to work for Cameron once he became prime minister last year. The fact that he didn't have a top-level clearance "will fuel suggestions that Cameron failed to take proper steps to check allegations that Coulson had been involved in illegal behavior," the paper said.

The Cabinet Office, which oversees the civil service, said all employees in the prime minister's office have at least the second-highest level of clearance. They would be subject to a check of company records, credit and MI5 records. An interview can be required if any security concerns are unresolved.

A spokeswoman at Cameron's office said the level of vetting depended on whether someone had access to top secret material. She declined to comment on why Coulson didn't have that level of clearance.

"We don't comment on individual vetting," she said, speaking on condition of anonymity in line with government policy.

Cameron was asked several times about the issue in the House of Commons on Wednesday.

"He had a basic level of vetting," Cameron said. "He was not able to see the most secret documents in the government."

When the question was raised again, Cameron said, "I feel that a number of honorable members are looking for some sort of secret behind a curtain that simply is not there."

Helen Goodman, one of the opposition Labour Party members, said "one can but speculate" why Coulson would not have been subjected to the highest level of vetting.

"Your guess about the prime minister's motives is as good as mine, but I certainly haven't had clear answers from him so far," Goodman said.

Although the issue had been covered off-and-on over the years, almost exclusively by the Guardian, allegations of illegal behavior at the News of the World received feverish attention after July 4, when it was alleged that someone there had hacked the phone of 13-year-old murder victim Milly Dowler at a time when police were still searching for her.

The temperature cooled a bit on Thursday, with Parliament closed for the first day of its summer recess, but the investigation appeared to be intensifying.

London's Metropolitan Police said Wednesday that it was assigning 15 more officers to help the 45 already involved in the investigation.

News Corp., meanwhile, said it had instructed the law firm of Harbottle and Lewis to answer police questions about emails and other documents from an internal investigation at News of the World in 2007. That inquiry said found no evidence that Coulson was aware of hacking by reporter Clive Goodman and private investigator Glenn Mulcaire. Both were sentenced to prison for hacking into phones of the royal household.

Harbottle and Lewis had said there was no evidence of wider criminality at the newspaper.

The file of emails and document was turned over to police in June.

Ken MacDonald, the former director of public prosecutions, reviewed emails from that file which related to payments to police. He had been hired to advise the News Corp. board.

On Tuesday, MacDonald told a parliamentary committee that it took no more than five minutes to read the material. "I cannot imagine anyone looking at that file and not seeing evidence of crime on its face," MacDonald said.

Since the Milly Dowler hacking was reported, London's police chief and the head of its antiterrorist operations have resigned; so have Rebekah Brooks, chief executive of News International, which runs Murdoch's British papers, and Les Hinton, a longtime associate of Murdoch who formerly headed News International. The News of the World was shut down, leaving 200 employees looking for work, and the BSkyB bid was shelved.

Shutting News of the World apparently will cost Rupert Murdoch's surviving British newspapers their exclusive access to British athletes ahead of the 2012 London Olympics.

Team 2012, an initiative supporting British Olympians, had signed up News International as its official partner to help raise funds for athletes. But without the News of the World, Team 2012 said News International can no longer meet its contractual obligations, and it is looking for new media partners.

___

Robert Barr and Cassandra Vinograd contributed to this report.

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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."

____

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

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