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Thu 7 Jul 2011 08:55 PM

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Murdoch's News Corp closes UK's News of the World

Tabloid Sunday newspaper will close on Sunday as result of escalating phone hacking scandal

Murdoch's News Corp closes UK's News of the World
Rupert Murdoch. (Getty Images)

In a breathtaking
response to a scandal engulfing his media empire, Rupert Murdoch moved
on Thursday to close down the News of the World, Britain's biggest
selling Sunday newspaper.

As allegations mounted this
week that its journalists had hacked the voicemails of thousands of
people, from child murder victims to the families of Britain's war dead,
the tabloid had haemorrhaged advertising and alienated millions of
readers.

Yet no one, least of all
the 168-year-old paper's staff, was prepared for the drama of a single
sentence that will surely go down as one of the most startling turns in
the 80-year-old Australian-born press baron's long and controversial
career.

"News International today
announces that this Sunday, 10 July 2011, will be the last issue of the
News of the World," read the preamble to a statement from Murdoch's son
James, who heads the British newspaper arm of News Corp.

Hailing
a fine muck-raking tradition at the paper, which his father bought in
1969, James Murdoch told its staff that the latest explosion of a
long-running scandal over phone hacking by journalists had made the
future of the title untenable:

"The
good things the News of the World does ... have been sullied by
behaviour that was wrong. Indeed, if recent allegations are true, it was
inhuman and has no place in our Company. The News of the World is in
the business of holding others to account. But it failed when it came to
itself.

"This Sunday will be the
last issue of the News of the World ... In addition, I have decided that
all of the News of the World's revenue this weekend will go to good
causes.

"We will run no commercial advertisements this weekend."

Steven Barnett, professor of communications at Westminster University, said he was "gobsmacked":

"Talk about a nuclear option," he told Reuters.

"It will certainly take some of the heat off immediate allegations about journalistic behaviour and phone hacking."

Tom
Watson, a member of parliament from the Labour party who had campaigned
for a reckoning from the paper over the phone hacking scandal, said:
"This is a victory for decent people up and down the land.

"I say good riddance to the News of the World."

There
was no immediate response from members of Prime Minister David
Cameron's government, which has found itself embarrassed by the
avalanche of allegations this week after it gave its blessing in
principle to News Corp's takeover bid for broadcaster BSkyB.

It
was unclear whether the company would produce a replacement title for
the lucrative Sunday market, in which, despite difficult times for
newspaper circulations, the News of the World is still selling 2.6
million copies a week.

One option, analysts said, might be for its daily sister paper the Sun to extend its coverage to a seventh day.

News
of the World journalists were stunned. Anger may be directed at top
News International executive and Murdoch confidante Rebekah Brooks, who
edited the paper a decade ago during the period of some of the gravest
new allegations.

"We didn't expect
it at all. We had no indication. The last week has been tough...none of
us have done anything wrong. We thought we were going to weather the
storm," said one News of the World employee who asked not to be named.

The
scandal had deepened with claims News of the World hacked the phones of
relatives of soldiers killed in action in Iraq and Afghanistan.

The
military veterans' association broke off a joint lobbying campaign with
the paper and said it might join major brands in pulling its
advertising.

The British Legion
said it could not campaign with the News of the World on behalf of the
families of soldiers "while it stands accused of preying on these same
families in the lowest depths of their misery."

Signalling
how far the racy, flag-waving title has alienated a core readership
already horrified by suggestions its reporters accessed the voicemails
not only of celebrities and politicians, but also of missing children
and crime victims, an online boycott petition had garnered hundreds of
thousands of signatures.

The
government had already backed a deal for News Corp to buy out the 61
percent of BSkyB it does not already own, and says the two cases are not
linked. But U.S. shares in News Corp fell over 5 percent on Wednesday,
though they recovered somewhat in a stronger general market on Thursday.

Formal
approval for the deal had been expected within weeks after the
government gave its blessing in principle. But it now seems unlikely for
months, although officials denied suggestions that they were delaying a
decision because of the scandal.

"The
Secretary of State has always been clear that he will take as long as
is needed to reach a decision. There is no 'delay' since there has been
no set timetable for a further announcement," a government spokesman
said. Some media reported that a decision was now expected in September.

Critics,
notably on the left of British politics, say giving Murdoch full
control of Sky television would concentrate too much media power in his
hands and risk skewing political debate.

Cameron
has proposed inquiries into the newspaper and into the wider issue of
ethics in the cut-throat, and shrinking, news business. Arguments over
privacy, free speech and the power of the press have already stirred
heated debate this year.

However,
critics called Cameron's move to set up official inquiries a tactic to
push the embarrassing affair far into the future. The precise form of
those inquiries is still unclear.

Labour
leader Ed Miliband has called for the BSkyB deal to be referred to the
Competition Commission and said that Brooks, Murdoch's most senior
British newspaper executive, should quit: "The prime minister has a very
close relationship with a number of the people involved in this," said
Miliband.

"He should ignore those relationships and come out and say the right thing because that is what the country expects."

So
far, Murdoch has said he will stand by Brooks, 43, who edited the paper
from 2000 to 2003, when some of the gravest cases of phone hacking are
alleged to have taken place. She is a also a regular guest of the prime
minister, and enjoys good relations with previous Labour leaders in
power until last year.

Senior
politicians from all parties, including Cameron and Miliband, rubbed
shoulders with Murdoch, Brooks and other News Corp executives at
Murdoch's exclusive annual summer party last month, underlining the
power his organisation wields.

Both
Miliband and Cameron chose former News International employees as media
advisers, although Cameron's choice of Andy Coulson, who succeeded
Brooks as News of the World editor, has caused the prime minister the
more obvious problems.

Coulson quit
the paper over the first hacking case in 2007 and went to work as
Cameron's spokesman. He resigned from the prime minister's office in
January as police reopened inquiries.

The
main accusations are that journalists, or their hired investigators,
took advantage of often limited security on mobile phone voicemail boxes
to listen in to messages left for celebrities, politicians or people
involved in major stories.

Disclosure
that the practice involved victims of crime came when police said a
private detective working for the News of the World in 2002 hacked into
messages left on the phone of murdered schoolgirl Milly Dowler while
police were still looking for her.

Police
have also been criticised over allegations officers took money from the
News of the World for information. London's Evening Standard newspaper
said on Thursday that police officers took more than 100,000 pounds in
payments from senior journalists and executives at the paper.

Analysts
believe the global Murdoch empire, which includes Fox television and
the Wall Street Journal, can weather a storm of reproach from
advertisers, readers and politicians in Britain -- though there were
signs of international ramifications.

In
Murdoch's native Australia, the leader of the Greens party said he
wants the government to examine the ramifications on Australia of the
phone hacking scandal.

The
secretary general of the Council of Europe, Thorbjorn Jagland, said it
was concerned by allegations of breaches of privacy. He said:
"Governments need to act resolutely to fight and to prevent violations
of this fundamental right, whilst actively protecting and promoting
freedom of speech."