HACKING BY NEWS CORP CAUSES IT STOP PRODUCTION

News Corp.’s Chief Executive Officer Rupert Murdoch is headed to London to help manage fallout from the phone-hacking scandal that forced the closure of News of the World, Britain’s biggest Sunday newspaper.
Murdoch will work from News International’s headquarters in London’s Wapping neighborhood and meet with staff.
The unfolding crisis led to the arrest of the tabloid’s former editor, Andy Coulson, and prompted public anger over allegations its journalists bribed police for stories and hacked into the voice mails of crime victims. The U.K. government said yesterday it will take some time before ruling on News Corp.’s 7.8 billion-pound ($12.5 billion) plan to buy a satellite- TV service.
News Corp., based in New York, said this week it will close the 168-year-old News of the World, a move that failed to stem the company’s stock slide or silence calls for the ouster of Rebekah Brooks, CEO of the News International publishing unit. While Murdoch, 80, and Deputy Chief Operating Officer have both supported Brooks, U.K. Prime told reporters he would have accepted her resignation.
Brooks, 43, said in a letter to the U.K. Parliament’s Home Affairs Committee published today, that she had no knowledge of any phone tapping and has no reason to believe any other of the company’s newspapers used the method to get stories. News International also manages The Times, The Sunday Times and daily tabloid The Sun.
Brooks told News of the World employees yesterday she will try to find them jobs after the newspaper shuts down, while signaling she will remain in her post. All the newspaper’s employees, about 200, will be paid for the next three months, she said.
Murdoch plans to arrive tomorrow.
Shares of News Corp. and BSkyB, the U.K.-based broadcaster it partially owns, have fallen since accusations that its journalists hacked the phones of murder victims and the families of soldiers who were killed in Afghanistan.
News Corp., which operates the Fox television networks and film studios, the Wall Street Journal newspaper and book publisher HarperCollins, fell 68 cents, or 3.9 percent, to $16.75 yesterday in Nasdaq Stock Market trading. The shares were down 7.3 percent for the week. BSkyB fell 7.6 percent yesterday to 750 pence in London, and lost 12 percent this week.
Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.
Coulson, 43, who resigned as press chief in January, was arrested in connection with the phone-hacking probe and an investigation begun this week into claims the tabloid paid police officers for stories. The arrest is the highest-profile so far in the investigation that has ensnared seven people, including six with connections to the paper. Coulson has denied any knowledge of illegal activity when he was editor from 2003 to 2007.
News of the World’s former royal reporter, was re-arrested yesterday and his office at the Daily Star tabloid was searched. London police confirmed they arrested a 53-year-old man and searched his home in Surrey, Englan, yesterday and also raided a London business.
A 63-year-old man was also arrested at a residence in Surrey in connection with the investigation, police said yesterday without identifying him. The 43-year-old man and a 53- year-old man were released on bail, police said in an e-mailed statement without disclosing the names.
Brooks hinted she expects more damaging information to surface. She said that eventually it will come out why things went wrong and who was responsible, and that will be another very difficult moment in this company’s history.
Brooks told News of the World staffers she was among those betrayed by the acts of others. She rejected resignation, saying she is much more useful leading the company through the crisis.
Brooks became head of News International in 2009 after serving as editor of The Sun for 6 1/2 years. Beginning her career as a feature writer for the News of the World in 1989, Brooks rose through the ranks and was editor of that newspaper from 2000 to 2003.
Criticism of Brooks intensified this week with a report that in 2002, when she was editor, the News of the World hacked into the phone of murdered schoolgirl Milly Dowler and deleted voice-mail messages, misleading her parents into thinking she might be alive and complicating the police investigation of her disappearance. Before this week, the phone-hacking scandal had centered on celebrities, politicians and athletes.
Brooks said in her letter to the U.K. lawmakers she wanted to be absolutely clear that as editor she had no knowledge whatsoever of phone hacking in the case of Milly Dowler and her family, or in any other cases during her tenure.
News Corp.’s decision to close the Sunday tabloid came after companies halted advertising in the paper to protest its activities.
The company now needs to find new revenue sources to replace the sales lost in the shutdown. It may add a Sunday edition of the daily Sun.
A website titled thesunonsunday.com was registered July 5. The company hasn’t made any decisions on any new publications or expanding existing ones, Brooks said in the memo.
News Corp. can quickly regain advertisers trust with an overhaul of the outrageous journalistic practices that led to News of the World’s closure. If the company in the next couple of weeks creates a new News of the World with much more ethical behavior, advertisers will return.
A final edition of the News of the World, to be published tomorrow, won’t carry commercial advertising, and News Corp. has offered its ad space to charities. So far household name charities have turned down the offer, preferring not to be associated with the tabloid.