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Tabloid shut down in midst of scandal

Fri., July 8, 2011

LONDON – Facing a tide of outrage over rampant phone-hacking, Rupert Murdoch jettisoned the notorious News of the World tabloid in an effort to protect his media empire, but the dramatic step may prove insufficient to contain the growing scandal or secure his bid to expand an already-massive presence in Britain.

Murdoch is struggling to ensure that toxic fallout does not infect other parts of News Corp., a media giant with holdings from Asia to the United States, including the Wall Street Journal and Fox News.

Most important here in Britain, Murdoch is eager to shore up his bid for BSkyB, the nation’s biggest satellite broadcaster. The surprise announcement Thursday that the News of the World would cease publication after Sunday despite enviable circulation figures and a 168-year pedigree, is clearly meant to limit any damage to his controversial takeover bid, which is under consideration by the government.

“It’s like the most radical cancer surgery,” said Julia Hobsbawm of Editorial Intelligence, a media analysis firm. “It is an astonishing moment in British media history.”

But critics dismissed it as a cynical maneuver that would cost 200 rank-and-file employees their jobs, while doing little damage to the company’s bottom line and protecting senior executives such as his son, James, and Rebekah Brooks, who is very close to the Murdoch family.

And it may not be enough to quell the public anger.

Daily revelations of new potential hacking targets, including the relatives of murder and military combat victims, have fed a rising tide of popular outrage against Murdoch and News International, the British subsidiary of News Corp. Politicians who once might have feared angering the Australian-born media baron are now denouncing him loudly in Parliament.

Police also are pressing ahead with one of the biggest investigations they have going at the moment, with reports that a former editor of the News of the World – who later became a top aide to Prime Minister David Cameron – is about to be arrested.

Still, the announcement that Murdoch was sacrificing the tabloid took virtually everyone here by surprise, including the paper’s own employees, one of whom likened the news to a “nuclear bomb.”

“The News of the World is in the business of holding others to account. But it failed when it came to itself,” said a statement by James Murdoch, who is chairman of News International and a senior executive of News Corp.

He was referring to allegations that the tabloid authorized the hacking of cellphones belonging to celebrities, politicians and the families of slain schoolgirls and fallen soldiers in its relentless pursuit of scoops. Police say that up to 4,000 people may have been targeted.

While the scandal has simmered for more than a year, it broke wide open earlier this week after reports that a private investigator hired by the News of the World not only intercepted voicemail messages left for a kidnapped 13-year-old girl but erased some of them, interfering with a police investigation. The teenager’s body was later found dumped in a wood.

A number of companies pulled their ads from the News of the World in protest, and lawmakers from all three of Britain’s main political parties called on the government to reject Murdoch’s bid to take over BskyB.

The loss of the tabloid’s estimated $61 million in annual advertising revenue would be little more than a minor blip for News Corp., which generates about $33 billion a year.

Many analysts expect Murdoch to simply start another tabloid in the News of the World’s place, perhaps by creating a Sunday edition of The Sun, which trades in the same kind of celebrity gossip and sex-related stories. The News of the World boasts a circulation of about 2.6 million.

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