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British Parliament to Vote Against Murdoch Deal

Reuters
Wednesday, 13 Jul 2011 | 4:18 AM ET

The British parliament will unite on Wednesday to urge Rupert Murdoch to drop plans to further expand his media empire in a move unthinkable before a phone hacking scandal exploded just two weeks ago.

Rupert Murdoch, Chairman and CEO of News Corporation, attends the Allen & Company Sun Valley Conference with his wife Wendi on July 7, 2011 in Sun Valley, Idaho.
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Rupert Murdoch, Chairman and CEO of News Corporation, attends the Allen & Company Sun Valley Conference with his wife Wendi on July 7, 2011 in Sun Valley, Idaho.

The opposition motion against News Corp's bid to buyout BSkyB

is not legally binding but it reflects public disgust at revelations one of Murdoch's newspapers hacked into the telephones of relatives of war dead and of a murdered girl.

The decision by the two ruling coalition parties to support the vote — a level of unity generally only shown at times of conflict — breaks the ties between Murdoch and successive British governments and shows the dramatic fall from grace endured by one of the world's most powerful men.

In a further dangerous sign for the media mogul, the fallout threatened to spread to the United States, homebase of Murdoch's News Corp empire which owns a clutch of prominent U.S. media properties including The Wall Street Journal, the New York Post and Fox Broadcasting.

U.S. Senator John Rockefeller, chairman of the committee on commerce, science and transportation, called for an investigation to determine if News Corp had broken any U.S. laws.

Rockefeller said he was concerned the phone hacking acknowledged in London by News Corp "may have extended to 9/11 victims or other Americans," in which case he said "the consequences will be severe." News Corp has already accepted a lengthy referral to the competition watchdog for the deal, which would significantly boost cash levels but raise questions over Murdoch's power in Britain.

"This is serious in that it shows the political will at the moment but the truth is things are changing by the hour so in a year's time who knows, News Corp may not own any more newspapers," said a media analyst who declined to be named.

British Conservative Prime Minister David Cameron's decision to turn against Murdoch, intended partly to limit the damage the crisis has done to his own credibility, has increased doubts that the 80-year-old media magnate can secure the 61 percent of BSkyB that News Corp does not own.

The Independent newspaper, which has been critical of Murdoch since the scandal broke, quoted ministers as saying privately that the takeover would be "politically dead" after the vote in parliament.

One government insider told the paper that the only way News Corp could complete the takeover of BSkyB would be to sell off his three remaining British newspapers -- The Sun, The Times and The Sunday Times.

But Ian Whittaker, an analyst at Liberum Capital, said it was not clear the vote would create a substantially bigger problem for the bid, which would increase the U.S.-based magnate's domination of British media and secure his pay-TV ambitions.

"It's non-binding, so it doesn't really make a bit of difference from that standpoint," Whittaker said.

News Corp shares on Tuesday lost gains they had made on news of a $5 billion share buy-back that took advantage of a 14-percent slide in the company's stock price since Thursday.

Public Resentment Over Phone-Hacking

Murdoch has closed the top-selling News of the World tabloid to try to salvage the $14 billion bid for BSkyB.

But public anger has continued unabated over allegations that reporters at the paper hired investigators who hacked into the voicemails of thousands of people, including dead British soldiers and a schoolgirl abducted and later found dead.

They also face accusations that they bribed police officers for information.

Murdoch, his son James and Rebekah Brooks, the former News of the World editor who is now chief executive at News International — News Corp's British newspaper arm — have been summoned to answer questions by a legislative parliamentary committee next week.

As a U.S. citizen, Murdoch need not attend. News International has said it is cooperating with inquiries relaunched by police in January.

It did not comment on Cameron's decision to vote for the Labour motion on Wednesday.

Others suggested the heavy political fallout meant that even a favourable outcome of that review would not necessarily clear the way for the takeover, just weeks after Murdoch had seemed close to securing final approval.

Political Battles

Labour has sought to capitalise on Cameron's friendship with Brooks, 43, and his hiring of her successor as News of the World editor to be his spokesman just months after a journalist at the paper was jailed for phone hacking in 2007.

Andy Coulson quit as spokesman in January and was arrested on Friday on suspicion of conspiring to intercept communications and to corrupt officials.

Reacting to public anger over the crisis, Cameron has ordered a police investigation and a public inquiry.

Under scrutiny are British press practices, and some observers say this could shed light on dubious procedures at other media.

Police have been criticised for failing to follow up inquiries into phone hacking by the News of the World after the paper's royal correspondent was jailed in 2007 for conspiring to listen in to the voicemails of court officials.

"This is an unprecedented crisis because it has involved the media, the politicians and the police, three of the most powerful groups in society," Ivor Gaber, professor of political journalism at City University London, told Reuters.

Serving and former senior officers faced questions from a parliamentary committee on Tuesday about allegations police sold information to journalists and may have been bribed or pressured to prevent inquiries.

Several tried to turn the tables, accusing News International of withholding evidence.

Political leaders from both Labour and the Conservatives who took power last year have been criticised — notably by Cameron himself — for being so in thrall to a press baron's grip on the electorate that they failed to challenge media excesses.

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