News Corp shuts News of the World after hacking scandal

News Corporation has taken the extraordinary step of closing its UK Sunday tabloid News of the World after the paper was boycotted by advertisers following revelations that its phone-hacking victims included the families of UK soldiers and a murdered schoolgirl.

The decision to close the 168-year-old paper is seen as a push to put the scandal behind it and to end protestations about the legality of its conduct.

The closure comes as News Corp seeks to buy the 61% of British broadcaster BskyB that it does not already own and is seen as a way for News Corp to try a win British Government support for that deal.

Announcing the surprise decision overnight James Murdoch – who chairs the British newspaper arm of News Corp – said that “wrongdoers turned a good newsroom bad”.

Murdoch said News of the World has been “sullied by behaviour that was wrong”.

“Indeed, if recent allegations are true it was inhuman and has no place in our company,” he said. “The News of the World is in the business of holding others to account. But it failed when it came to itself.”

Murdoch said this Sunday will see publication of the last edition of the News of the World, with revenue going to “good causes”.

The News of the World is the highest-selling newspaper in Britain, with 2.6 million copies sold each Sunday.

Media analyst Mark McDonnell of BBY says the scandal will have wider repercussions for the News Corp brand and could be a game-changer for its £12 billion ($17.8 billion) BSkyB bid.

“Whether News Corp can successfully pursue UK ambitions is in doubt,” McDonnell said, citing questions about whether News Corp’s promises to get the BskyB deal across the line needed a fresh look. The Government has deferred its decision on the takeover.
 
“The idea that a company can treat this exercise like a parochial brand damage issue I think is going to be sorely tested,” McDonnell said.

“There’s quite clear intent for this matter to be prosecuted both through the official legal challenges as well as politically and through competitor media outlets.”

Police said about 4000 people may have been targeted by News of the World illegal phone taps.

According to McDonnell beyond the reputational damage, loss of advertising clients and closure of the title News will need to fight management distraction and targeting of its executives, particularly former NOTW editor Rebekah Brooks who is now CEO of News International.

“Quite clearly there will be some efforts to claim scalps, which will be disruptive and possible costly,” McDonnell said.

“And whether punitive damages will ultimately be rewarded is open question.”

The closure cannot be interpreted as a sign that chairman Rupert Murdoch has lost his love of newspapers, McDonnell says, with expectations that The Sun daily newspaper would soon publish seven days a week.