Video: Murdoch's empire fights back

Image: Former Prime Minister Gordon Brown
Salvatore Di Nolfi  /  AP
Former British Prime Minister Gordon Brown said he was left "incredibly upset" when The Sun newspaper obtained details of his son's health.
msnbc.com staff and news service reports
updated 7/12/2011 5:27:01 PM ET 2011-07-12T21:27:01

Rupert Murdoch's cozy relationship with the British power structure came to an abrupt end Tuesday after Prime Minister David Cameron joined the opposition in calling for the media magnate to withdraw his bid for control of a lucrative satellite broadcaster.

Cameron's turnabout means all three major political parties are now lined up against Murdoch in his bid for the BSkyB gold mine, which enjoys profits that dwarf revenue from his dwindling British newspaper holdings.

The news came in a stunning announcement from Cameron's office indicating that the government would join the opposition in a parliamentary vote Wednesday urging Murdoch — who until recently kept British politicians in his hip pocket — to withdraw the bid

The statement was a clear indication that Murdoch's magic carpet ride is over, at least in Britain: "This House believes that it is in the public interest for Rupert Murdoch and News Corporation to withdraw their bid for BSkyB," it read.

The resolution is nonbinding but is likely to be seen as a powerful expression of united opposition to any substantial expansion of Murdoch's holdings.

Cameron, who has enjoyed a close social friendship with some top Murdoch executives, took action after his predecessor, former Prime Minister Gordon Brown, gave an emotional televised interview Tuesday describing how Murdoch journalists with ties to the criminal underworld grossly invaded his family's privacy.

Brown told BBC Newsthat Murdoch's papers, including the Sun and the Sunday Times, had obtained his confidential bank accounts, tax records and even health information about his son, who suffers from cystic fibrosis, using fraudulent, criminal means.

"I'm shocked, I'm genuinely shocked, to find that this happened because of their links with criminals, known criminals, who were undertaking this activity, hired by investigators with The Sunday Times," he said.

He told the BBC that he was "in tears" after the Sun ran a story about his son despite Brown and his wife wanting to keep this information private.

"Sarah and I were incredibly upset about it, we were thinking about his long-term future, we were thinking about our family," Brown told the BBC.

The fact that the scandal reached the prime minister meant ordinary people — like the family of teenage murder victim Milly Dowler — are even more vulnerable to the illegal means used by the Murdoch press, Brown said.

"What about the person, like the family of Milly Dowler, who are in the most desperate of circumstances, the most difficult occasions in their lives, in huge grief and then they find that they are totally defenseless in this moment of greatest grief from people who are employing these ruthless tactics with links to known criminals?" Brown said.

Story: Murdoch empire left shaken as deal collapses

The Sun denied it obtained the medical records of Brown's son and said it didn't commission anyone to do so.

"The story The Sun ran about their son originated from a member of the public whose family has also experienced cystic fibrosis," said statement from The Sun's parent company News International.

"He came to The Sun with this information voluntarily because he wanted to highlight the cause of those afflicted by the disease."

Video: Murdoch's empire fights back (on this page)

Brown's allegations seemed to only heighten the anti-Murdoch mood spreading through Parliament.

Three senior Liberal Democrats — deputy leader Simon Hughes, party president Tim Farron and culture spokesman Don Foster — wrote to Murdoch on Tuesday evening urging him to drop his bid for the broadcaster in light of the long-running scandal.

"News International is simply no longer respected in this country," they wrote. They said the company is tainted "by a history of completely unacceptable journalistic practices," and that Murdoch should concentrate on cleaning it up rather than expanding his media empire.

Image: James Murdoch
Akira Suemori  /  AP
James Murdoch, the chief executive of News Corporation Europe and Asia, leaves News International's office in London on Monday.

Deal in the Sky
Murdoch and News International did not respond to the government's decision to join the opposition and try to put an end to the bid to buy BSkyB in full. Murdoch already owns a partial stake in the company.

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."

Story: Murdoch empire left shaken as deal collapses

Murdoch, his son James and News International Chief Executive Rebekah Brooks have been asked to appear before British lawmakers to answer questions about the hacking allegations. News International said it was aware of the request and would cooperate with it, but has not formally responded to the invitation.

The company, which is not under any legal obligation to attend, has until Thursday to respond.
The allegations of illegal eavesdropping on politicians, royalty and hundreds of ordinary people at Murdoch-owned newspapers has broadened, with among other accusations, the allegation that Murdoch reporters paid bodyguards of Queen Elizabeth II for sensitive phone numbers and travel plans.

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.

Slate: Why the US should prosecute News Corp.

Police grilled
At a tense House of Commons parliamentary committee hearing Tuesday,top serving and retired policemen told skeptical lawmakers they had been too busy trying to prevent terrorism to investigate the abuse adequately.

All the officers pointed the finger at News International, part of Rupert Murdoch's News Corp media group and publisher of the now-defunct News of the World weekly at the center of the scandal, for obstructing their investigation.

The MPs did not contest that assertion but queried why police were not more determined about getting to the truth.

"All of this sounds like Clouseau rather than Columbo," said Keith Vaz, a Labour party politician who chairs the Home Affairs Select Committee.

London's Metropolitan Police has been under fire for failing to follow up inquiries into phone hacking by the top-selling Sunday tabloid after its royalty correspondent was jailed in 2007 for conspiring with a private investigator to listen in to the voicemails of figures in the royal household.

One serving and two former senior officers denied accepting money from journalists and the current head of the Scotland Yard investigation, Sue Akers, pledged to widen the probe beyond the News of the World if new information came to light suggesting other media companies were involved.

"We will go where the evidence leads us," she told the MPs.

Much of the legislators' hostility was reserved for John Yates, an assistant commissioner, who said he was "99 percent certain" he had been the victim of phone hacking but denied a suggestion that this had intimidated him.

Yates has been criticized for concluding in 2009 there was not enough evidence to reopen the London force's original investigation into phone hacking at the News of the World after claims the original probe had not gone far enough.

As lawmakers took it in turns to take a pop at his decision and express their derision, Yates admitted he had probably done only the minimum work required before his flawed decision.

Yates said he was never contacted by News International about his private life or put under any pressure by the newspaper group on that front.

"I categorically state that was not the case," he said. But he admitted corruption in the Met was inevitable.

"...We're an organization of 50,000 people, we have always said from time immemorial that some of those 50,000 people will be corrupt and accept payments," he said.

Reuters and The Associated Press contributed to this report.

Timeline: Tabloid stir: Phone-hacking scandal intensifies

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