Murdoch drops bid for British Sky Broadcasting

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Steven Barnett, communications professor at the University of Westminster, said Murdoch's retreat signaled a new era in British political life.

"This means the British Parliament has discovered its spine," he said. "After 30 years of successive governments caving in to powerful media corporations, finally Parliament has realized it has to take a stand."

It was a bitter irony for Murdoch that it was the News of the World, his first British acquisition in 1969, that sabotaged his ambitions to control the nation's most profitable broadcaster.

Its ramifications for News Corp. and its executives - particularly Murdoch's son James, head of News Corp.'s European and Asian operations, and the chief of its British division, Rebekah Brooks - are still playing out.

The scandal claimed a senior casualty Wednesday as News International, the company's British unit, said its legal director, Tom Crone, had left the company. Crone led an internal inquiry that concluded only two people at News of the World had been involved in phone hacking - a stance that collapsed as numerous revelations tumbled out this year.

Cameron has struggled to control a spiraling scandal that includes his own former communications chief, Andy Coulson – an ex-News of the World editor - being arrested. The prime minister announced he was putting senior judge Brian Leveson in charge of an inquiry into phone hacking and alleged police bribery by the tabloid.

The inquiry will be able to compel witnesses – including government figures - to give evidence under oath.

Leveson will first investigate the culture, practices and ethics of the press, its relationship with police and the failure of the current system of self-regulation. The judge said the inquiry would begin "as soon as possible," but that its second phase, examining what went wrong at the News of the World, would have to wait until the criminal investigation is complete.

Police are pursuing two investigations of News International, one on phone hacking and the other on allegations that News of the World bribed police officers for information. Police have indicated the bribery investigations involve about half a dozen officers.

Detectives have arrested eight people so far in their hacking investigation, including Coulson. No one has been charged. Cameron said police had the names of more than 3,700 potential victims, and would be contacting them all.

The allegation that Murdoch papers may have targeted 9/11 victims comes from the Mirror, which quoted an anonymous source as saying an unidentified American investigator had rejected approaches from unidentified journalists who showed a particular interest in British victims of the terror attacks. It cited no evidence that any phone had actually been hacked.

In Washington, Sen. Jay Rockefeller, a Democrat from West Virginia, urged an investigation into whether News Corp. had violated U.S. law because of the British paper's activities.

If there was any phone hacking of Americans "the consequences will be severe," said Rockefeller, chairman of the Senate Committee on Commerce, Science and Transportation.

A report Wednesday in The Wall Street Journal, which is part of News Corp., said Murdoch met with advisers in recent weeks to discuss possible options, including the sale of his remaining British newspapers - The Sun, The Times and The Sunday Times. The Journal, citing unidentified people familiar with the situation, said there didn't appear to be any buyers given the poor economics of the newspaper division.

A defiant mood was evident at The Sun, which slapped the headline "Brown Wrong" across its front page in response to the former prime minister's claims the paper had obtained confidential medical records of his 4-year-old son Fraser.

The newspaper insisted it learned of the boy's ailment from the father of another child with the same condition, and that it contacted the Browns, who consented to the story.

On Wednesday, Brown accused Murdoch's media empire of "lawbreaking often on an industrial scale."

Speaking in the House of Commons, he said victims saw "their private, innermost feelings and their private tears bought and sold by News International for commercial gain."

"News International descended from the gutter to the sewer," Brown said.

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