British government tries to halt Murdoch Sky bid

LONDON Tue Jul 12, 2011 7:10pm EDT

1 of 20. News Corporation CEO Rupert Murdoch holds a copy of The Sun and The Times as he is driven away from his flat in central London, July 11, 2011.

Credit: Reuters/Luke MacGregor

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LONDON (Reuters) - The British government endorsed a move in parliament to block Rupert Murdoch's bid for broadcaster BSkyB on Tuesday, casting more doubt on his hopes to expand in television despite a widening scandal over phone-hacking by one of his newspapers.

By joining a phalanx of resistance to the global media magnate that now includes all Britain's main parties, Prime Minister David Cameron showed how far Murdoch, long feared and courted by both left and right as a kingmaker, may be damaged by outrage at the past week's allegations of criminal journalism.

The U.S.-based media magnate, his son James and Rebekah Brooks, the News International executive and former editor at the center of the storm, were summoned to answer questions next week by a parliamentary committee which on Tuesday grilled police chiefs on failures in earlier inquiries into the affair.

Murdoch, 80, is in London to deal personally with a crisis that has seen him close down the top-selling tabloid News of the World to try to save his pay-TV ambitions. But it was unclear whether he or his two lieutenants would agree to appear before a legislative committee likely to be uniformly hostile.

Questions they face focus on allegations that for years, News of the World journalists and hired investigators hacked into the voicemails of thousands of people, some of them victims of notorious crimes, in search of stories, and that they also bribed police officers for information.

Dozens of such allegations have been aired over the past week. The latest included former Labour Prime Minister Gordon Brown saying Murdoch papers had hired criminals to make investigations at a time they were running stories about his personal finances and the illness of his newborn son.

Two of those papers, the Sunday Times and the Sun, defended their reporting. The Sun hit back in a front-page story in its Wednesday edition over a story it broke in 2006 that Brown's infant son was born with cystic fibrosis.

The Sun said the story was not based on any hacking of medical records and came from information brought to the daily -- then edited by Brooks -- by a member of the public. It said Brown was then approached to discuss the information and that it handled the story "sensitively and appropriately."

"On receipt of the information, The Sun approached Mr Brown and discussed with his colleagues how best to present it," it said. "We are not aware of Mr Brown, nor any of his colleagues to whom we spoke, making any complaint about it at the time."

BID IN DOUBT

News International, the British newspaper arm of U.S.-listed News Corp, has said it is cooperating with inquiries relaunched by police in January. But it had no comment on the decision by Conservative leader Cameron to vote on Wednesday for a non-binding motion proposed by the Labour opposition urging Murdoch to withdraw his bid for BSkyB.

The chairman of the parliamentary committee that wants to question the Murdochs said it had no power to order them, as American citizens, to attend, although they could compel Brooks, the 43-year-old British former editor of the News of the World whom Rupert Murdoch seems determined to defend, to do so.

Some analysts played down the significance of the vote for News Corp, noting that the company had already accepted a referral this week to the competition watchdog, which means a delay -- some called it a "respite" -- of many months for a deal which critics say would give Murdoch too much power in Britain.

Others suggested the heavy political fallout meant that even a favorable outcome of that review would not necessarily clear the way for the takeover.

Labour leader Ed Miliband said on calling Wednesday's vote: "The best way of achieving our objective, which is to make sure that this bid cannot go ahead while the criminal investigation is going on, is for Mr Murdoch to withdraw the bid."

Ministers had looked embarrassed by having already given their provisional blessing to Murdoch's offer to buy out the 61 percent of pay-TV group BSkyB he does not already own, for some $14 billion. That approval left the fate of the deal largely in the hands of independent officials, rather than politicians.

Labour has sought to capitalize on Cameron's friendship with Brooks and his hiring of her successor as News of the World editor to be his spokesman just months after a journalist at the paper was jailed for phone hacking in 2007. Andy Coulson quit as spokesman in January and was arrested on Friday on suspicion of conspiring to intercept communications and to corrupt officials.

Ian Whittaker, an analyst at Liberum Capital, said it was not clear the parliamentary vote would create a substantially bigger problem for the bid, although BSkyB shares fell 3.3 percent on the news.

"It's non-binding, so it doesn't really make a bit of difference from that standpoint," Whittaker said.

News Corp shares nonetheless lost gains they had made on news of a $5 billion share buyback that took advantage of a 14-percent slide in the company's stock price since Thursday.

Much may depend on the mood of politicians and the public in many months' time, and on the findings of the police investigation and public inquiries that Cameron has ordered.

The prime minister has also initiated a wider review of British press practices and regulation, which some believe may shed unflattering light on dubious procedures at other media.

POLICE UNDER FIRE

Police have been under fire for failing to follow up inquiries into phone hacking by the News of the World after the paper's royalty correspondent was jailed in 2007 for conspiring to listen in to the voicemails of court officials.

Serving and former senior officers faced hostile questions from a parliamentary committee about allegations police sold information to journalists and may have been bribed or pressured to prevent inquiries. Several tried to turn the tables, accusing News International of withholding evidence.

Assistant Commissioner John Yates, who in 2009 rejected claims of much wider phone hacking and concluded there was not enough evidence to merit further inquiries, told the committee that he believed he himself had been a victim of hacking.

But he denied a suggestion that fear that this might lead to damaging stories about him in the press had influenced his decision to block a renewal of the investigations -- these were finally reopened in January after further allegations about News International practices in rival media.

"I am 99 percent certain my phone was hacked during the period of up to 2005-06," Yates told the lawmakers. But he called a suggestion that this had influenced his decision in 2009 "despicable" and "cowardly." "It is untrue," he said.

He said he did not know who had interfered with his phone.

The New York Times reported that five senior British police investigators discovered their mobile phones also were targeted soon after Scotland Yard opened an initial criminal inquiry of phone hacking by News of the World in 2006.

Former Assistant Commissioner Peter Clarke said News Corp's British newspaper arm relied on lawyers to "deliberately thwart" police. "If at any time News International had offered some meaningful cooperation instead of prevarication, and what we now know to be lies, we would not be here today," he said.

Political leaders from both Labour and the Conservatives who took power last year have been criticized -- notably by Cameron himself -- for being so in thrall to press barons' grip on the electorate that they failed to challenge media excesses.

Brown and his Labour predecessor Tony Blair won endorsement from some Murdoch titles after Labour's 18 years in opposition, an important element many Labour officials believed in returning the party to power in 1997.

Ivor Gaber, professor of political journalism at City University London said: "This is an unprecedented crisis because it has involved the media, the politicians and the police, three of the most powerful groups in society.

"It has also exposed in a very harsh light the internecine links between the three and suggests that the public have been excluded -- they are people who just buy papers, vote and do what the police tell them. So it is a major crisis of public trust. I think it has a long way to unravel."

(Additional reporting by Michael Holden, Paul Sandle, Keith Weir, Tim Castle, Mike Collett-White, Sudip Kar-Gupta, Sinead Cruise, Chris Vellacott and Karolina Tagaris; Writing by Alastair Macdonald; Editing by Kevin Liffey)

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Comments (14)
justinolcb wrote:
the empire crumbles!

Jul 12, 2011 6:13am EDT  --  Report as abuse
I’ll believe it when I see it. Murdoch is a powerful man, its more likely some patsy will take the fall and the empire will continue.

Jul 12, 2011 6:43am EDT  --  Report as abuse
rpmcestmoi wrote:
Was this story Originaly written in another language and then translated by a non-English speaker? Do have an editor looknatcwork before pressingvthe publish button. The gist of thevstory is fine and important butvthe writing inexplcably poor.

Jul 12, 2011 9:19am EDT  --  Report as abuse
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