Bloomberg News

News Corp. to Pay $4.8 Million to End Dowler Hacking Case

October 21, 2011

(Updates with Dowler family’s comment in fifth paragraph.)

Oct. 21 (Bloomberg) -- News Corp.’s U.K. unit agreed to pay 3 million pounds ($4.8 million) to settle claims that its News of the World tabloid hacked the mobile-phone messages of a murdered schoolgirl in 2002, hampering a police investigation.

The deal -- the biggest payout by News Corp. since the hacking scandal erupted -- includes a 2 million-pound payment to the family of Milly Dowler and a 1 million-pound donation to charity, London-based News International said today. News Corp. Chairman Rupert Murdoch, 80, was personally involved in the negotiations, a person familiar with the matter said last month.

“When I met with the Dowlers in July, I expressed how deeply sorry I was for the hurt we had caused this family,” Murdoch said in the statement, which indicated he would personally pay the 1 million-pound charitable donation. “The behavior that the News of the World exhibited towards the Dowlers was abhorrent.”

The settlement was confirmed by News Corp. the same day as the New York-based company’s annual shareholder meeting in Los Angeles. U.K. lawmaker Tom Watson, who is part of a government probe of the scandal, said he would attend the meeting to speak against the company’s management. The California Public Employees’ Retirement System and other large investor groups have also taken stances aimed at loosening Murdoch’s control, citing concerns about how the phone-hacking issue was handled.

Substantial Donation

“The only way that a fitting tribute could be agreed was to ensure that a very substantial donation to charity was made in Milly’s memory,” the Dowler family said in the joint statement. “We hope that projects will be undertaken so that some good can come from this.”

Reports in July that Dowler’s messages had been intercepted, hampering a police search when she was still missing, triggered a public outcry that led News Corp. to close the 168-year-old tabloid and drop its 7.8 billion-pound bid for full control of British Sky Broadcasting Group Plc. The hacking was previously thought to be limited to celebrities, athletes, royalty and other public figures.

Police in Surrey, England, admitted they were aware in 2002 that the News of the World had intercepted Dowler’s phone messages and failed to inform any other police force or investigate the hacking, the U.K. Parliament’s Home Affairs Committee said yesterday.

Endemic Hacking

“Had Surrey police acted in 2002, it may have prevented the culture of hacking becoming endemic at News of the World,” lawmaker Keith Vaz said in a statement. “This was a serious omission.”

A Parliamentary committee recalled News Corp. Deputy Chief Operating Officer James Murdoch to answer more questions after former executives challenged his testimony about his knowledge of the extent of hacking at the tabloid. James and Rupert Murdoch were questioned by the lawmakers for three hours on July 19.

Dowler’s body wasn’t found for six months after her murder. The case received widespread media coverage at the time and again in June this year when her killer, Levi Bellfield, was sentenced to life imprisonment. The News of the World’s private detective Glenn Mulcaire, who was jailed for hacking in 2007, allegedly deleted some of Dowler’s messages to make room for new ones, giving her family false hope that she was still alive, according to a Guardian newspaper report.

--Editors: Anthony Aarons, Christopher Scinta

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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