Bloomberg News

Murdoch Makes Fresh Apology as Brooks Is Arrested By U.K. Police

July 17, 2011

July 17 (Bloomberg) -- Rupert Murdoch’s News Corp. made a fresh apology for the phone-hacking scandal in U.K. national newspapers as Rebekah Brooks, ousted last week as the publishing unit’s chief executive officer, was arrested by police.

Brooks, 43, was arrested today in London, according to a person familiar with the matter, who declined to be identified because the information is confidential. Police said in an e- mailed statement they arrested a 43-year-old woman on suspicion of corruption and conspiring to intercept communications.

The escalating crisis around the News of the World has within two weeks forced the closure of the 168-year-old tabloid and the resignation of executives including Brooks and former News International Chairman Les Hinton. Murdoch withdrew its 7.8 billion pound ($12.6 billion) bid for full control of British Sky Broadcasting Group Plc.

“He has too much power over British public life,” Opposition Labour Party leader Ed Miliband said in an interview with the Observer newspaper today, calling for a breakup of the 80-year-old’s media empire. “We’ve got to look at the situation whereby one person can own more than 20 percent of the newspaper market, the Sky platform and Sky News. I think it’s unhealthy.”

Under the headline “Putting right what’s gone wrong,” News International, News Corp.’s U.K. publishing unit, said it’s the company’s obligation to provide full cooperation with the police and compensation for those affected. The publisher is “committed to change” and said “apologising for our mistakes and fixing them are only the first steps.”

July 19 Hearing

In advertisements in its own and rival U.K. newspapers for a second day, News International said there should be “no place to hide” from the police investigation into phone hacking. Yesterday, the company issued an apology in similar ads signed by Murdoch, the chairman and CEO of New York-based News Corp.

News International also manages The Sun tabloid, the Times of London and the Sunday Times.

Murdoch has been in London since July 10 as the scandal escalated and politicians of all parties called on him and his son, James, to take responsibility for a crisis that has spread beyond the U.K.

The Murdochs and Brooks are scheduled to appear before a panel of U.K. lawmakers on July 19. John Whittingdale, chairman of the U.K. cross-party parliamentary committee, said Brooks may be interviewed separately.

“Now that Brooks is no longer an employee of News Corp. we will probably want to talk to her separately,” Whittingdale told the BBC’s Andrew Marr program today.

Market Values Slide

News Corp. will take over from News International a committee set up to work with police over the phone-hacking scandal, according to people with knowledge of the matter. Simon Greenberg, corporate affairs director at News International, and General Manager Will Lewis will be employed full time by the management and standards committee, which will report to Joel Klein, Murdoch’s top adviser, and Viet Dinh on behalf of News Corp.’s independent directors, said the people, who asked not to be identified. An announcement may be made as early as tomorrow, they said.

Hinton, chairman of News International in the years the alleged phone hacking occurred, stepped down as head of the Dow Jones division on July 15. That followed the exit of Brooks, who was editor of the News of the World, the newspaper implicated in the scandal, from 2000 to 2003, which was closed down last week.

Market Value

The Dow Jones Special Committee said in a statement it didn’t see any relationship between Hinton’s resignation and his tenure at Dow Jones or the Wall Street Journal, where he was the publisher. The committee was formed in 2007 to monitor journalistic integrity and independence at the newspaper.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

About $4.4 billion has been wiped off News Corp.’s market value, and 2.5 billion pounds for BSkyB, since the Guardian reported on July 4 that the News of the World in 2002 hacked into the voice mails of kidnap and murder victim Milly Dowler and deleted messages. The allegations have extended to include victims of terrorism including the Sept. 11, 2001, attack.

The Federal Bureau of Investigation, prodded by members of Congress, began looking into whether News Corp. employees may have targeted the phones of victims of the Sept. 11 attacks.

U.S. Representative Peter King, the Republican chairman of the House Committee on Homeland Security, asked FBI Director Robert Mueller in a July 13 letter to investigate whether News of the World employees tried to access voicemails belonging to the victims through bribery and illegal wiretapping.

Sienna Miller

In two cases settled by the company, News Corp. agreed to pay actress Sienna Miller 100,000 pounds in June, while sports commentator Andy Gray received 20,000 pounds.

News Corp. could end up paying a total of 120 million pounds in damages and legal fees, says Niri Shan, a media lawyer at U.K. law firm Taylor Wessing. Shan based that figure on an average settlement of 30,000 pounds for each of the 4,000 victims identified by police. “More people are going to come forward. News Corp.’s exposure is massive,” Shan said.

BSkyB’s independent directors will consult with shareholders over the next 10 days about whether James Murdoch should continue as chairman, the Sunday Times reported, without citing anyone. The discussions will be led by Nick Ferguson, chairman of SVG Capital, according to the report. A call to BSkyB spokesman Robert Fraser’s mobile phone wasn’t answered.

--With assistance from Kit Chellel, Chris Spillane, Amy Thomson and Michael Harrison in London. Editors: Kenneth Wong, Guy Collins

To contact the reporter responsible for this story: Mike Harrison at mharrison5@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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