NEW YORK/LONDON (Reuters) – Rupert Murdoch apologized to victims of criminal phone hacking by one of his tabloids and accepted the resignations of News Corp's top two newspaper executives, Rebekah Brooks and Les Hinton.
Rarely one to back down in a fight, Murdoch took a new, more conciliatory stance on Friday in attempting to gain control of a scandal rocking his company and inching its way ever-closer to his son James Murdoch.
The damage control included a personal apology to the parents of a murdered schoolgirl in what appeared to be an admission that the News of the World, then edited by Brooks and overseen by Hinton, had in 2002 hacked into the voicemails of their missing daughter.
It was that damning allegation, in a rival newspaper 10 days ago, which reignited a five-year-old scandal that has forced Murdoch to close the News of the World, Britain's best-selling Sunday paper, and drop a $12 billion plan to buy full control of highly profitable pay-TV operator BSkyB.
The crisis has broken the grip that Murdoch, 80, had over British politics for three decades as leaders from Margaret Thatcher, through Labor's Tony Blair to current Conservative Prime Minister David Cameron sought his support.
It has also forced him to make concessions to public calls that the executives who were in charge at the time of the scandal be held accountable.
Known for his loyalty to those close to him, Murdoch backed down on Friday and accepted the resignations of confidants Brooks and Hinton, a 52-year veteran of the company and the top executive of Dow Jones, publisher of the Wall Street Journal.
With these departures, attention will now turn to Murdoch's son and presumed successor, James, who took over the European operations of News Corp just as the crisis was beginning. He has admitted to approving the payment of out-of-court settlements when he did not have a complete picture of what had happened.
"First Brooks, then Hinton were the firewalls for James. There's no question he's on the hotseat next," said Jeff Jarvis, a journalism professor at City University of New York.
A direct apology from Rupert Murdoch, who has been summoned to answer questions before a parliamentary committee next Tuesday, will be carried in all national newspapers this weekend under the headline "We are sorry." The text was released by News International.
"The News of the World was in the business of holding others to account. It failed when it came to itself," Murdoch wrote in the article, which was signed off "Sincerely, Rupert Murdoch."
"We are sorry for the serious wrongdoing that occurred. We are deeply sorry for the hurt suffered by the individuals affected," he added.
"In the coming days, as we take further concrete steps to resolve these issues and make amends for the damage they have caused, you will hear more from us."
He met parents of Milly Dowler, a 13-year-old abducted in 2002 and found murdered six months later. Police are investigating whether someone engaged by the News of the World not only listened in to the missing teenager's cellphone mailbox but deleted some messages to make room for more.
That misled police hunting for her and gave her parents false hope that their daughter might still be alive. Brooks, now 43, was then editor of the News of the World and has denied knowing of any such practices at the time.
"He apologized many times," said Mark Lewis, the Dowler family lawyer. "I don't think somebody could have held their head in their hands so many times to say that they were sorry."
Newscorp shares closed up 1.33 percent at $15.64 on the Nasdaq.
BRITISH PM UNDER FIRE
The resignation of Hinton, 67, was greeted by gasps and a stunned silence at the Wall Street Journal, where he served as publisher, despite mounting speculation that Hinton could be toppled by transgressions that occurred when he ran News International prior to Brooks.
"I have watched with sorrow from New York as the News of the World story has unfolded," Hinton wrote in his resignation letter.
"That I was ignorant of what apparently happened is irrelevant and in the circumstances I feel it is proper for me to resign from News Corp, and apologize to those hurt by the actions of the News of the World," he added.
Brooks had resisted pressure to quit, but finally resigned as chief executive of News International after a top News Corp shareholder, Prince Alwaleed bin Talal, said she had to go.
The former editor of the News of the World and of flagship daily tabloid The Sun, was a favorite of Rupert Murdoch, who described her as his first priority just days ago.
In her place, he named News Corp veteran Tom Mockridge, who has spent the past eight years running Sky Italia.
Speaking before Friday's resignation Murdoch had defended the way his managers had handled the crisis in an interview with the Wall Street Journal.
He spoke of "minor mistakes" and dismissed suggestions, floated by some shareholders, that he should sell off the troubled newspaper businesses on which his empire was founded but which bring in only limited profits.
Yet within a day of what sounded like an effort to play down the scandal, his abrupt change of tack into a hand-wringing mea culpa appeared aimed at shoring up the wider company.
The scandal has shaken Prime Minister Cameron, who is under fire for his personal relationship with Brooks and for hiring another ex-editor of the News of the World as his spokesman.
Cameron suffered another blow on Friday when an aide said he had hosted a visit from his former spokesman Andy Coulson in March this year -- two months after Coulson quit his job.
Murdoch now faces a showdown with parliament on Tuesday when lawmakers on the media committee grill him, his son James and Brooks. During an angry debate this week, one legislator called him a "cancer on the body politic."
"ROGUE REPORTER" Defense DROPPED
Brooks, whose youth, mane of red hair and former marriage to a soap opera star have given her a high public profile in Britain, said in a message to staff:
"My desire to remain on the bridge has made me a focal point of the debate. This is now detracting attention from all our honest endeavors to fix the problems of the past."
She said she felt "a deep sense of responsibility for the people we have hurt."
That appeared an acknowledgment that the News of the World's invasions of private voicemails went well beyond those of the royal aides whose complaints led to the jailing of a reporter and an investigator in 2007. Police say they are now probing whether another 4,000 people -- including victims of crimes, bombings and war -- were targeted.
Former motor-racing boss Max Mosley told Reuters on Friday he had agreed to underwrite lawsuits that victims of alleged intrusive reporting may bring against News International.
Mosley, who won damages from the News of the World after it published revelations about his sex life, said he would cover the potentially large costs if people rejected settlement offers and pressed forward with litigation.
Tom Watson, a Labor MP who has led the campaign against the News International papers, said Brooks' departure could put James Murdoch, his father's heir apparent, in the spotlight.
"Because she has taken so long to go I think the focus will very swiftly move on to James Murdoch now and what he knew and what he was involved in," Watson told Sky News.
A week ago, Brooks had told News of the World staff, who were sacked with the paper's closure, that she would remain to try and resolve the company's problems -- causing anger among many of the 200 being laid off. Some accused Murdoch of sacrificing their jobs to save hers.
Brooks could receive a seven-figure payoff but that is likely to come with a strict agreement she keeps her silence, legal experts and a former executive said on Friday.
As well as its published apology this weekend, the company would also write to its commercial partners to update them on its actions, James Murdoch said. Many advertisers had said they would boycott the News of the World before the company killed it off and refused paid advertising in last Sunday's final edition.
"The Company has made mistakes," James Murdoch wrote to staff. "It is not only receiving appropriate scrutiny, but is also responding to unfair attacks by setting the record straight."
Analysts welcomed the tone.
"It is obvious that the company is finally listening fully to the political noise around it and is finally taking seriously the issues that have emerged around alleged offences at News International," said Claire Enders, head of Enders Analysis Media Consultancy.
Reuters is a competitor of Dow Jones Newswires, the financial news agency that News Corp acquired along with the Wall Street Journal in 2007.
(Additional reporting by; Stefano Ambrogi, Michael Holden, Matt Falloon, Mark Hosenball, Tim Castle and Karolina Tagaris in London, Basil Katz, Carlyn Kolker and Yinka Adegoke in New York; Writing by Paul Thomasch and Keith Weir; Editing by Alastair Macdonald, Myra MacDonald, Richard Chang and Bernard Orr)
