Murdochs refuse to go before UK parliament next week

Reuters , Thursday 14 Jul 2011

Rupert Murdoch refused a summons by Britain's parliament to answer questions over alleged crimes at one of his newspapers, leaving a senior executive from his media empire to face lawmakers

Rupert Murdoch
News Corporation chairman Rupert Murdoch arrives at his residence in central London, Wednesday, July 13, 2011. (Photo; AP)

British police arrested a ninth suspect, named by media as a senior former editor of Rupert Murdoch's News of the World, adding weight to a government call for the media regulator to decide whether his business is fit to run British television stations.

Murdoch has already been forced to close the News of the World and back down on his biggest acquisition plan yet -- the takeover of British pay TV operator BSkyB -- due to an outcry over allegations reporters accessed private phone messages.

He and his son James, the heir apparent to his NewsCorp empire, have so far stood by executive Rebekah Brooks, who runs its British newspaper arm and was a friend of Prime Minister David Cameron until he echoed calls for her to go.

Brooks, who edited the News of the World at the time of one of the most serious alleged incidents, agreed on Thursday to appear before the committee next week, but said the police inquiry might restrict what she could say.

Murdoch, a U.S. citizen, said he would only give evidence to a public inquiry announced by Cameron after questions were raised over the role of some police officers in the scandal and over the relations between British politicians and media owners.

Murdoch's son James, chairman of News Corp's UK newspaper arm who the company said had dual U.S./U.K. citizenship, said he could not appear before parliament until next month.

The reception is certain to be hostile. During a heated debate on the hacking scandal on Wednesday, Dennis Skinner, a veteran left-wing Labour member of parliament described Murdoch as "this cancer on the body politic". Murdoch and other senior executives have denied any knowledge of the alleged practices.

The allegations of phone hacking, which reached a peak as Murdoch's British bid came up for approval this month, are now reverberating around the world.
Some U.S. lawmakers called for an investigation to see if the billionaire's News Corp had broken American laws while in Australia, where Murdoch was born, the prime minister said her government may review media laws.

Murdoch, who owns 39 percent of British pay TV operator BSkyB, withdrew his $12 billion bid to take over the rest of it on Wednesday after British politicians united in a call for him to pull out of the deal.

Deputy Prime Minister Nick Clegg noted media regulator OFCOM was already looking into whether News Corp, whose British newspaper arm News International is at the heart of the scandal, should be allowed to maintain its existing stake in BSkyB.

"Clearly there are big questions about the fitness and properness of News International and that is exactly why OFCOM are now looking at it," Clegg, leader of the Liberal Democrat deputy coalition partners, told BBC Radio 4.

"The thing that I think isn't quite clear to me at least is exactly how fit and proper tests are applied," he added.

The catalyst for public disgust over the hacking allegations were reports a News Corp newspaper had hacked into the voicemails of murder victims.

"To see some of the things that have been done to intrude on people's privacy, particularly in moments of grief and stress in the family lives, I've truly been disgusted to see it," Australian Prime Minister Julia Gillard told Australia's National Press Club.

"I anticipate that we will have a discussion amongst parliamentarians about this, about the best review and way of dealing with all of this," she said.

U.S.-based News Corp has been rocked by a series of scandals alleging journalists and hired investigators working for its flagship News of the World tabloid hacked into the voicemails of thousands of people, from victims of notorious crimes to families of soldiers killed in the war in Afghanistan.

The allegations, which include bribing police officers for information, galvanised British lawmakers across parties to oppose a man long used to being courted by the political elite.

The crisis has also tarnished Cameron, who faces questions about why he appointed a former News of the World editor as his communications chief.
Clegg distanced himself from the decision on Thursday.

"We did discuss it. Of course we discussed it. But at the end of the day I make my appointments to my own office and David Cameron makes his own appointments."
Murdoch shut down the News of the World in a move to contain the fallout from the crisis, which included a 15 percent slide in News Corp shares.

A sale of News International could help Murdoch put the crisis behind him. But that may not be his most immediate concern.

Instead, the media baron is primarily focused on sorting out the immediate political and legal issues faced by his company, family and staff, a source close to the situation said.

Clegg said he believed the phone hacking scandal was symptomatic of wrongdoing that went wider than News International, the UK arm of News Corp.
"It clearly goes beyond News International, it's clearly something much more systemic," Clegg said.

USPoliticians in the United States are taking notice, too.  Three prominent U.S. lawmakers called on federal officials to investigate whether News Corp broke any American laws, meaning Murdoch could potentially be battling investigations on both sides of the Atlantic.

The scandal could contaminate News Corp's Wall Street Journal, one of the most-respected newspapers in the United States, and Murdoch's broader U.S. media business.

"I think the UK hacking scandal has the potential to damage the Wall Street Journal's reputation," said Jay Ottaway, whose family owned 6.2 percent of Wall Street Journal publisher Dow Jones & Co before it was sold to News Corp.

"It wouldn't surprise me at all if others call for hearings and investigations, and perhaps they may even be held. There's going to be a lot of activity around this issue," said Jeffrey Silva, analyst with Medley Global Advisors.     News Corp executives, meanwhile, have found themselves suddenly thrust into the spotlight. They include Les Hinton, who headed up News International during the scandal and now runs Dow Jones, and Chase Carey, News Corp's deputy chairman.

Carey would be first in line to become chief executive of News Corp if James Murdoch needs to be sidelined.     Rupert Murdoch has been steadfast in his refusal to dump his beloved newspapers. But the scandal has already taken several unexpected turns, so it may eventually force his hand, several industry bankers said. (Additional reporting by Stefano Ambrogi, Michael Holden, Paul Thomasch in New York and Rob Taylor in Can.

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