Murdoch empire in crisis after newspaper closes: BSkyB bid halted, former editor arrested, anger at chief executive

Sunday, July 10, 2011

Murdoch with his wife, Wendi, in 2011.
Image: David Shankbone.

Rupert Murdoch, the media billionaire giant at the head of News Corporation, flew to London today amid a growing storm over allegations of phone hacking at the News of the World, which this week closed down the bestselling newspaper in the country, saw a former editor of the newspaper arrested, and halted his hopes of taking full control of broadcaster BSkyB.

After a devastating week for Murdoch which saw new allegations that journalists from the tabloid hacked into the phones of a missing schoolgirl and relatives of victims of the 7/7 attacks, his empire was in crisis last night as it emerged the British government had put on hold his bid to take over BSkyB.

Investors rushed to ditch their shares BSkyB as Cameron announced an independent inquiry into hacking at the newspaper and Jeremy Hunt, the culture secretary, said it would be "some time" before a take-over bid was authorised after a massive public response. "Shareholders are discounting the possibility that this bid won't happen for the foreseeable future. Some people wonder if it will happen at all," said media analyst.

I decided to give him a second chance but the second chance didn't work. The decision to hire him was mine and mine alone.

—David Cameron, speaking about Andy Coulson

Prime minister David Cameron was forced on the defensive Friday after the arrest of Andy Coulson, a former editor of the NotW who later went on to work at Downing Street. Cameron tried to distance himself from the allegations of phone hacking, but refused to apologise for hiring Coulson. "I decided to give him a second chance but the second chance didn't work. The decision to hire him was mine and mine alone," Cameron said on Friday.

Coulson was bailed until later this year on Friday evening after he was questioned by officers working with Operation Weeting, which is investigating phone hacking, and his house was searched. As he left a police station in Lewisham, he said that "[t]here is an awful lot I would like to say, but I can't at this time."

News Corporation executives are also facing new allegations that they have disrupted inquiries at Scotland Yard into hacking at the NotW by deleting millions of incriminating e-mails. A report in The Guardian newspaper indicated that the "massive quantities" of deleted e-mails revealed discussions between journalists and editors.

Labour politicians have now demanded in a letter to Cameron that he start an inquiry before more evidence is deleted or hidden. Harriet Harman, the deputy Labour leader, said computers may be destroyed and journalists may become difficult to contact once the paper closes. A spokesperson for News International, the British arm of News Corporation, said the allegations of obstructing the police investigation were "rubbish".

Journalists at the NotW were on Saturday putting together the final publication of the paper at News International headquarters in Wapping. There was fury in the newsroom of the tabloid on Friday as Rebekah Brooks, the chief executive of News International, told reporters the brand had become "toxic" and had to close. Sources at the paper said journalists who are being made redundant as the paper closes feel they are being sacrificed to save Brooks. "They have to make us redundant first and then they will recruit some people again," a reporter at the tabloid said, speaking on condition of anonymity. "They have to do that to show they're scrapping the old paper."