Cameron "regrets" hiring scandal-hit tabloid editor (Reuters)

LONDON (Reuters) – Prime Minister David Cameron, defending his integrity to parliament in emergency session on Wednesday, said he regretted hiring a journalist at the heart of a scandal that has rocked Britain's press, police and politics.

But in hours of stormy questioning he seemed to rally his Conservative party behind him and stopped short of bowing to demands that he apologize outright for what the Labour leader called a "catastrophic error of judgment" in appointing as his spokesman a former editor of Rupert Murdoch's News of the World.

Only if Andy Coulson, who has since resigned, should turn out to have lied about not knowing of illegal practices at his newspaper would the prime minister offer a "profound apology."

Analysts said Cameron emerged from the debate looking stronger than when he was forced to fly home early from Africa to face lawmakers who had delayed their summer recess by a day. But he left some lingering questions unanswered, notably about his role in Murdoch's takeover bid for TV network BSkyB.

After his toughest two weeks in office, the 44-year-old premier spoke with feeling of the Coulson saga: "You live and you learn -- and believe you me, I have learnt," he said.

"It was my decision ... Of course I regret and I am extremely sorry about the furor it has caused. With 20:20 hindsight ... I would not have offered him the job."

He said of Coulson, who is under suspicion of conspiring to intercept calls and bribe police: "I have an old-fashioned view about innocent until proven guilty. But if it turns out I have been lied to, that would be a moment for a profound apology.

"And, in that event, I can tell you I will not fall short."

Beleaguered but hardly under serious threat of being ousted by his party allies after less than 15 months in power, Cameron defended his actions and those of his staff in dealings with Murdoch's News Corp global media empire and with two senior police chiefs who resigned this week over the affair.

"He seems to have gained a bit of breathing space over the course of this debate," said Andrew Russell, senior politics lecturer at Manchester University. "He looked more self assured today than he has been for a little while."

Conservative member of parliament George Eustice spoke for a party relieved by the leader's performance: "Cameron did really well. He's got back on the front foot and taken the initiative."

He added: "The idea that his position as prime minister was in doubt was a complete nonsense."

LABOUR ATTACK

Labour's Ed Miliband, whose muted first year as opposition leader has been fired up by attacking Cameron on the scandal, has not gone so far as to demand Cameron's resignation.

But he asked during the debate: "Why doesn't he do more than give a half-apology and provide the full apology now for hiring Mr Coulson and bringing him into the heart of Downing Street?"

Opposition members of parliament questioned the credibility of Cameron's defense that Coulson had assured him when being hired in 2007 that, as editor of the News of the World, he knew nothing of the hacking of voicemails which led to the paper's royal correspondent and an investigator being jailed.

Coulson left Cameron's office in January just before police reopened an investigation in which Coulson and his predecessor as editor, Rebekah Brooks, have been arrested and bailed.

Labour lawmakers also questioned Cameron about contacts with Murdoch and his staff, including his friendship with Brooks, who resigned as head of British newspaper unit News International.

The prime minister repeatedly deflected questions on what he may have discussed with News Corp about its $12-billion bid to buy out other shareholders in BSkyB. He insisted he had "no inappropriate" conversations and played no role in a government decision to let the bid proceed in the face of protests it would give Murdoch too great a share of media ownership in Britain.

Last week, as scandal engulfed News International, Cameron joined Labour in calling for News Corp to drop it. It did.

While he has derided suggestions from some on the left that backing the BSkyB bid might have been a payback for Murdoch's papers switching from supporting Labour to promoting Cameron at the 2010 election, Cameron told parliament it may make sense to "further remove politicians" from decisions about media mergers.

Tim Bale, politics professor at Sussex University, said Cameron had sounded evasive on the subject and could face a drip-feed of criticism from the scandal for a long time: "There was a very strong sense of him searching for a form of words that would not get him into trouble. The Commons picked up on that and there will be more questions to answer in that regard."

Before the debate, a poll by Reuters/Ipsos MORI showed Britons' satisfaction with Cameron had fallen to its lowest level since he entered office in May last year. Only 38 percent were happy with the way he was doing his job.

But Helen Cleary of Ipsos MORI cautioned: "We know from other scandals that public opinion tends to bounce back."

And she added: "Even now, after Ed Miliband's boost from the scandal, Cameron is ahead ... on personal satisfaction ratings."

Cameron tried during the debate to move the political agenda away from the scandal, saying voters wanted him to concentrate on handling an economic crisis and other pressing matters.

Bale said: "It's going to be very difficult to draw a line under it permanently. But stressing the need to ... start talking about some of the very serious issues on the economy that are going on makes intuitive sense to a lot of people."

CAMERON ATTACKS

As the rowdy session in the House of Commons continued, he also landed blows of his own by pointing out the close relations Miliband's predecessors, Labour prime ministers Tony Blair and Gordon Brown, had maintained with Murdoch, who has been courted and feared by British leaders for four decades.

Referring to Brooks's reported attendance at a gathering hosted by Brown's wife at the prime minister's official country residence in 2008, Cameron taunted the Labour benches: "I've never held a slumber party or seen her in her pajamas."

He referred repeatedly to controversial former journalists hired by Labour and to another former News International reporter, from the Times, who is now a senior aide to Miliband.

A day after Murdoch apologized to a parliamentary committee but denied personal responsibility for the affair, Cameron gave details of a judicial inquiry he has ordered into the scandal and wider issues it has raised over relationships among Britain's media, police and political establishment.

The smoldering scandal exploded in the public consciousness on July 4, when the family of a schoolgirl abducted and murdered in 2002 said police had told them they believed someone from the paper had hacked in to the teenager's voicemail, misleading detectives looking for her and giving her parents false hope.

Police say 60 officers are probing the hacking of messages of possibly 4,000 people, not just the rich, famous or powerful, but crime victims and families of soldiers killed in action.

Many of the leads come from the notes of Glenn Mulcaire, an investigator jailed with the News of the World reporter in 2007.

The 80-year-old Murdoch, who was attacked by a protester with a foam pie during Tuesday's committee hearing, sent a message to his staff that his company was taking steps to ensure that "serious problems never happen again." [ID:nL6E7IK092]

"Those who have betrayed our trust must be held accountable under the law," he said in an e-mail sent late on Tuesday.

An ethics board which Murdoch set up this week said it had now ended continuing payments for legal costs to Mulcaire -- payments questioned by the parliamentary committee on Tuesday.

Cameron's Media Minister Jeremy Hunt said News International still needed to explain how malpractice happened without Murdoch or his son James, now News International chairman, being told. They shut down the 168-year-old News of the World this month.

Shares in News Corp gained 0.7 percent in New York, adding to Tuesday's 5.5 percent rise. Some investors speculate the scandal may hasten a handover of power in the company from the Murdoch family in a way that may streamline global operations.

In Murdoch's native Australia, Prime Minister Julia Gillard said the local arm of News Corp would face "hard questions" after the phone-hacking in Britain.

(Additional reporting by Tim Castle, Kate Holton, Mohammed Abbas, Paul Hoskins, Peter Griffiths, Olesya Dmitracova, Georgina Prodhan and Stephen Mangan; Writing by Alastair Macdonald)

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Murdoch stuns critics, shuts down scandal-hit paper (Reuters)

LONDON (Reuters) – In a breathtaking response to a scandal engulfing his media empire, Rupert Murdoch moved on Thursday to close down the News of the World, Britain's biggest selling Sunday newspaper.

As allegations mounted this week that its journalists had hacked the voicemails of thousands of people, from child murder victims to the families of Britain's war dead, the tabloid had hemorrhaged advertising and alienated millions of readers.

Yet no one, least of all the 168-year-old paper's staff, was prepared for the drama of a single sentence that will surely go down as one of the most startling turns in the 80-year-old Australian-born press baron's long and controversial career.

"News International today announces that this Sunday, 10 July 2011, will be the last issue of the News of the World," read the preamble to a statement from Murdoch's son James, who heads the British newspaper arm of News Corp.

Hailing a fine muck-raking tradition at the paper, which his father bought in 1969, James Murdoch told its staff that the latest explosion of a long-running scandal over phone hacking by journalists had made the future of the title untenable:

"The good things the News of the World does ... have been sullied by behavior that was wrong. Indeed, if recent allegations are true, it was inhuman and has no place in our Company. The News of the World is in the business of holding others to account. But it failed when it came to itself.

"This Sunday will be the last issue of the News of the World ... In addition, I have decided that all of the News of the World's revenue this weekend will go to good causes.

"We will run no commercial advertisements this weekend."

Steven Barnett, professor of communications at Westminster University, said he was "gobsmacked":

"Talk about a nuclear option," he told Reuters.

"It will certainly take some of the heat off immediate allegations about journalistic behavior and phone hacking."

Tom Watson, a member of parliament from the opposition Labor party who had campaigned for a reckoning from the paper over the phone hacking scandal, said: "This is a victory for decent people up and down the land.

"I say good riddance to the News of the World."

GOVERNMENT TIES

There was no immediate response from members of Prime Minister David Cameron's Conservative-led government, which has found itself embarrassed by the avalanche of allegations this week after it gave its blessing in principle to News Corp's takeover bid for broadcaster BSkyB.

It was unclear whether the company would produce a replacement title for the lucrative Sunday market, in which, despite difficult times for newspaper circulations, the News of the World is still selling 2.6 million copies a week.

One option, analysts said, might be for its daily sister paper the Sun to extend its coverage to a seventh day.

News of the World journalists were stunned. Anger may be directed at top News International executive and Murdoch confidante Rebekah Brooks, who edited the paper a decade ago during the period of some of the gravest new allegations.

"We didn't expect it at all. We had no indication. The last week has been tough...none of us have done anything wrong. We thought we were going to weather the storm," said one News of the World employee who asked not to be named.

The scandal had deepened with claims News of the World hacked the phones of relatives of British soldiers killed in action in Iraq and Afghanistan.

The military veterans' association broke off a joint lobbying campaign with the paper and said it might join major brands in pulling its advertising.

The British Legion said it could not campaign with the News of the World on behalf of the families of soldiers "while it stands accused of preying on these same families in the lowest depths of their misery."

Signaling how far the racy, flag-waving title has alienated a core readership already horrified by suggestions its reporters accessed the voicemails not only of celebrities and politicians, but also of missing children and crime victims, an online boycott petition had garnered hundreds of thousands of signatures.

TELEVISION TAKEOVER

The Conservative-led government had already backed a deal for News Corp to buy out the 61 percent of BSkyB it does not already own, and says the two cases are not linked. But U.S. shares in News Corp fell over 5 percent on Wednesday, though they recovered somewhat in a stronger general market on Thursday.

Formal approval for the deal had been expected within weeks after the government gave its blessing in principle. But it now seems unlikely for months, although officials denied suggestions that they were delaying a decision because of the scandal.

"The Secretary of State has always been clear that he will take as long as is needed to reach a decision. There is no 'delay' since there has been no set timetable for a further announcement," a government spokesman said. Some British media reported that a decision was now expected in September.

Critics, notably on the left of British politics, say giving Murdoch full control of Sky television would concentrate too much media power in his hands and risk skewing political debate.

Cameron has proposed inquiries into the newspaper and into the wider issue of ethics in the cut-throat, and shrinking, news business. Arguments over privacy, free speech and the power of the press have already stirred heated debate this year.

However, critics called Cameron's move to set up official inquiries a tactic to push the embarrassing affair far into the future. The precise form of those inquiries is still unclear.

Labor opposition leader Ed Miliband has called for the BSkyB deal to be referred to the Competition Commission and said that Brooks, Murdoch's most senior British newspaper executive, should quit: "The prime minister has a very close relationship with a number of the people involved in this," said Miliband.

"He should ignore those relationships and come out and say the right thing because that is what the country expects."

PERSONAL TIES

So far, Murdoch has said he will stand by Brooks, 43, who edited the paper from 2000 to 2003, when some of the gravest cases of phone hacking are alleged to have taken place. She is a also a regular guest of the prime minister, and enjoys good relations with previous Labor leaders in power until last year.

Senior politicians from all parties, including Cameron and Miliband, rubbed shoulders with Murdoch, Brooks and other News Corp executives at Murdoch's exclusive annual summer party last month, underlining the power his organization wields.

Both Miliband and Cameron chose former News International employees as media advisers, although Cameron's choice of Andy Coulson, who succeeded Brooks as News of the World editor, has caused the prime minister the more obvious problems.

Coulson quit the paper over the first hacking case in 2007 and went to work as Cameron's spokesman. He resigned from the prime minister's office in January as police reopened inquiries.

The main accusations are that journalists, or their hired investigators, took advantage of often limited security on mobile phone voicemail boxes to listen in to messages left for celebrities, politicians or people involved in major stories.

Disclosure that the practice involved victims of crime came when police said a private detective working for the News of the World in 2002 hacked into messages left on the phone of murdered schoolgirl Milly Dowler while police were still looking for her.

Police have also been criticized over allegations officers took money from the News of the World for information. London's Evening Standard newspaper said on Thursday that police officers took more than 100,000 pounds ($160,000) in payments from senior journalists and executives at the paper.

Analysts believe the global Murdoch empire, which includes Fox television and the Wall Street Journal, can weather a storm of reproach from advertisers, readers and politicians in Britain -- though there were signs of international ramifications.

In Murdoch's native Australia, the leader of the Greens party said he wants the government to examine the ramifications on Australia of the phone hacking scandal.

The secretary general of the Council of Europe, Thorbjorn Jagland, said it was concerned by allegations of breaches of privacy. He said: "Governments need to act resolutely to fight and to prevent violations of this fundamental right, whilst actively protecting and promoting freedom of speech."

(Writing by Alastair Macdonald)

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