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Murdoch scrambles into damage control in wake of phone hacking scandal

July 11th, 2011 9:21 am by GREGORY KATZ

LONDON (AP) — Leading politicians including the deputy prime minister lined up Monday to attack media mogul Rupert Murdoch's damage control efforts over the News of the World phone hacking scandal, cascading their condemnation as they pressured him to drop his bid to take over satellite broadcaster BSkyB.

As the political world seethed with hostility to Murdoch's bid, one key figure was conspicuously silent: Prime Minister David Cameron. He's seen as close to central figures in the scandal, and his awkward position is raising questions not only about the business fallout but the political cost as well.

Deputy Prime Minister Nick Clegg emerged from a meeting with the family of the murdered schoolgirl girl whose phone was hacked by the tabloid's reporters to deliver a harsh message to Murdoch, urging him to do the "decent and sensible thing" and backtrack on his power play.

"I would simply say to him, 'look how people feel about this, look how the country has reacted with revulsion to the revelations," said Clegg, the leader of the Liberal Democrats.

As Britain's outrage showed no sign of abating, the family of 13-year-old Milly Dowler was preparing to meet Britain's opposition leader Ed Miliband on Tuesday and Cameron on Wednesday

The scandal has proven particularly embarrassing for Cameron because the former editor of the paper, Andy Coulson, later worked for the Conservative leader as his communications director. Cameron is also reportedly close to Rebekah Brooks, chief executive of the tabloid's publisher, News International.

Britain had become accustomed to accounts of the News of the World eavesdropping on royals and celebrities, but revelations that it broke into the cell phone of a teenage murder victim — even as her family and police were frantically searching for her — set of a torrent of horror and disbelief.

The tabloid's operatives reportedly deleted some messages from the phone's voicemail, giving the girl's parents false hope that she was still alive.

The scandal forced Murdoch's News Corp. to shutter the 168-year-old tabloid, and the media tycoon flew to London on Sunday — the day of its last edition — to take charge of damage control.

But the fallout could just be beginning.

For now, the News Corp. chief appears focused on scrambling to prevent his controversial $19 billion bid for BSkyB from becoming a casualty of the scandal. But questions are mounting about his future and that of his sprawling business empire amid a wave of global revulsion.

Clegg's lack of hesitation in condemning Murdoch amid Cameron's perceived dithering also is also generating speculation about the health of the Conservatives' coalition with the Liberal Democrats, which was already on shaky footing.

The criminal activities at Murdoch's now shuttered tabloid have given his many adversaries an opening amid signs that the government is leery of its once close ties to Murdoch, who has substantial newspaper, television, film and book publishing interests in Britain, the United States, Australia and other countries.

Murdoch got more bad news Monday when Culture Secretary Jeremy Hunt, who had given preliminary approval to the BSkyB bid, announced plans to ask the communications regulator, OFCOM, whether News Corp. is "fit and proper" to hold a broadcasting license.

He raised questions about whether the phone hacking charges undermine Murdoch's bid for the satellite broadcaster.

"These allegations are stomach-churning and everyone is shaken." Hunt said. "New information has come out in the last week. Things have changed in the last week, and these things have shocked everyone." He said Britain's long tradition of quality journalism is under threat.

If OFCOM decides Murdoch is not fit, a license would be denied. The uncertainty sent BSkyB shares sharply lower Monday. Miliband, the Labour Party leader, also said Murdoch must end his bid for BSkyB and called for a udge-led inquiry to avoid the risk of evidence being destroyed.

One of Murdoch's short-term goals is to keep Brooks, widely described as being as close to him as a daughter. Top lawmakers, including opposition leader Miliband are demanding she step down.

Brooks maintains she didn't know about the widespread hacking at the paper, which listened to the voicemails left on cell phones belonging to a number of celebrities, including film stars, politicians and sports figures, as well as murder victims and their bereaved families.

She has volunteered to be interviewed by police investigators as a witness.

The British press has reported that emails given to police indicate that News International chiefs knew that phone hacking was more widespread than acknowledged and that police were being paid for information.

The police position is difficult because of allegations that some of its officers received payoffs from News of the World journalists. This possible conflict of interest has led the Independent Police Complaints Commission to announce that it will review all police actions on the case.

Some British papers have suggested Murdoch could face legal problems in the United States because of payoffs to police under U.S. laws governing corruption overseas.

Police Chief Paul Stephenson has vowed that police who took illegal payments will face criminal charges.

The News of the World used its farewell editorial to admit wrongdoing.

"We praised high standards, we demanded high standards but, as we are now only too painfully aware, for a period of a few years up to 2006 some who worked for us, or in our name, fell shamefully short of those standards," the editorial read. "Quite simply, we lost our way."

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