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Arrests Expected 'Within Days' Over Hacking: Sources

Thursday, 7 Jul 2011 | 8:54 AM ET

The storm clouds brewing over Rupert Murdoch's UK media empire are set to move closer, with the arrest of up to five employees expected within days, sources familiar with the situation told CNBC.com Thursday.

Rupert Murdoch
Nick Laham | Getty Images
Rupert Murdoch

News Corp shares fell in New York as advertisers pulled out of the News of the World, the tabloid newspaper at the center of allegations that the voicemails of murder victims, relatives of British soldiers killed in Iraq and Afghanistan and people killed in the July 7 bombings, were hacked into in an effort to find stories.

British Culture Secretary Jeremy Hunt has received around 100,000 submissions about NewsCorp's planned takeover of British Sky Broadcasting (BSkyB) in the past week, meaning that a final decision on the takeover will not be made until September, the BBC reported Thursday.

Shares in BSkyB fell in London this morning.

In the House of Lords, Lady Royall asked whether the British government will suspend consideration of News Corporation's bid in the light of the most recent allegations.

It is not known which reporters and executives at NewsCorp will be arrested, but more news is expected by the end of the week, the sources said.

Representatives of News International and of the police were unavailable to comment when contacted by CNBC.com.

British Prime Minister David Cameron called for an inquiry into the allegations Wednesday and said that the public had been "revolted" by them. Worries that News Corp's planned takeover of the 61 percent of BSkyB it does not already own would be jeopardised helped bring the share price down.

Members of the British parliament have called for the decision on whether NewsCorp can complete the purchase of BSkyB to be delayed until after the investigation into phone hacking concludes.

News International, the British newspaper group which includes the News of the World, the Sun, The Times and the Sunday Times, said yesterday that it was close to identifying who within the organization authorized the phone hacking by private investigators paid by the News of the World.

The spotlight has fallen on Rebekah Brooks, now head of News International, who was editor of the News of the World during some of the period when phone hacking took place.

On Wednesday, Murdoch backed Brooks in a statement. "I have made clear that our company must fully and proactively co-operate with the police in all investigations and that is exactly what News International has been doing and will continue to do under Rebekah Brooks' leadership," he said.

"As chief executive, I am determined to lead the company to ensure we do the right thing and resolve these serious issues," Brooks said in a memo to staff.

The role of her former deputy Andy Coulson, who also worked as the Prime Minister's head of communications before quitting over earlier allegations of phone hacking, has also been questioned.

The global News Corp media reach includes film studios 20th Century Fox and Fox Searchlight Pictures, as well as Fox TV and Fox News, the Wall Street Journal, Dow Jones Newswires, the New York Post, and the Australian, plus publishing company HarperCollins.

Rival Trinity Mirror , which publishes the Daily Mirror and the Sunday Mirror, could benefit from "very negative advertiser response to News of World phone hacking scandal," according to analyst Alex DeGroote at Panmure Gordon.

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