British phone hacking scandal widens

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The politicians told Murdoch he should concentrate on "cleaning up" News International rather than seeking more control of other media.

Rupert Murdoch (photo courtesy David_Shankbone via Flickr)

Murdoch and News International did not respond to the government's decision to join the opposition and try to put an end to the big for BSkyB, which has been the centerpiece of News International's UK for the last year.

The rapid erosion of Murdoch's influence, and the fact that the allegations made by Brown have moved the scandal beyond the closed News of the World to include The Sun and The Sunday Times, is raising speculation that Murdoch may decide to close his remaining UK newspapers to avoid further legal problems and boost his fading hopes to seize control of BSkyB.

"I think it's absolutely going in that direction," said Steven Barnett, a communications professor at the University of Westminster. "It would make commercial sense, since newspapers are in decline, and it could be presented as the moral thing to do, given all the horrible things that are emerging."

Barnett said "the real prize" for Murdoch is BSkyB because cable television is a growing enterprise and the company enjoys expanding revenue while newspapers do not. He said News Corp., the parent company headquartered in New York, is essentially a broadcasting company and that Murdoch seems to hang on to his UK newspapers out of nostalgia.

"Newspapers are a sunset industry, and BSkyB is the absolute opposite," he said. "It is projected to return an operating profit this year of 1 billion pounds, ($1.6 billion) and if you look at projections over the next five years, it shows revenues and profits will increase exponentially. You can't bet against an obvious trend."

Murdoch biographer and Adweek editorial director Michael Wolff said the idea of a closure is being discussed at high levels of News International in New York and London.

"It's one of many scenarios," he said. "If they are going to make a fullcourt press for BSkyB, it makes a lot of sense. And there has always been a faction of the U.S. company that thinks the British company has outlived its usefulness."

Others think the idea of a UK newspaper shutdown is absurd. There are also indications that Murdoch plans to continue - Internet domain names that could be used if Murdoch starts to publish the Sun on Sundays have been transferred to News International.

"It's completely bonkers," said Claire Enders of Enders Analysis of the suggestion that a shutdown is possible. "It doesn't make any sense. They just invested $1 billion in new presses. They have revenues of 1 billion pounds a year and around 50 million pounds profit."

Enders said, however, that Murdoch might help his case for the BSkyB takeover by eliminating the newspapers because he would have a much smaller UK media profile, making it easier for regulators to allow him to take full control of the broadcaster.

The scandal has come close to Cameron, who enjoyed the enthusiastic backing of the Murdoch press in his campaign last year. He has been embarrassed by the arrest of former News of the World editor Andy Coulson, who was the prime minister's communications director. His decision to hire Coulson despite suspicions about his possible links to phone hacking has raised questions about his judgment.

The widening allegations of illegal eavesdropping on politicians, royalty and hundreds of ordinary people at Murdoch-owned newspapers has sparked anger at London's Metropolitan Police for dropping an earlier investigation into company practices.

At a tense House of Commons parliamentary committee hearing Tuesday, one current and two former senior officials of London's Metropolitan Police said they regretted that an investigation of the News of the World in 2006 had not uncovered the extent of the alleged phone hacking.

They blamed the News of the World and News International for not cooperating and pleaded that the force was preoccupied with terrorism investigations.

Resources were stretched and there had not had enough officers to fully staff 70 terrorist investigations running at the time, said Peter Clarke, former commander of the anti-terrorist branch. The case yielded convictions and prison sentences for a reporter and a private detective working for News of the World, but the wider abuses were not uncovered.

Documents gathered in the first investigation yielded 3,870 names, 5,000 landline numbers and 4,000 mobile numbers that may potentially have been hacked, Deputy Assistant Commissioner Sue Akers told the committee. So far, she said, police had contacted 170 potential targets of hacking.

The scandal has broadened, with among others accusations, the allegation that Murdoch reporters paid bodyguards of Queen Elizabeth II for sensitive phone numbers and travel plans.

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