Murdoch's News Corp under fire for phone hacking

British parliament urges mogul not to expand his empire; US senator wants investigation to see if News Corp hacked phones of 9/11 victims.

By REUTERS
Rupert Murdoch 311 R (photo credit: REUTERS)
Rupert Murdoch 311 R
(photo credit: REUTERS)
LONDON - 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.
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.
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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 US media properties including The Wall Street Journal, the New York Post and Fox Broadcasting.
US Senator John Rockefeller, chairman of the committee on commerce, science and transportation, called for an investigation to determine if News Corp had broken any US 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 US-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.