A committee of British lawmakers called Rupert Murdoch unfit to run his global media empire — a finding that reflects just how deeply the phone hacking scandal born of his defunct News of the World has shaken the relationship between the press and politics.
The divisive ruling Tuesday against Murdoch, his son James and three of their executives also exposed the waning influence of the media tycoon, and could jeopardize his control of a major broadcaster.
Parliament's Culture, Media and Sport committee — a panel that scrutinizes the standards of Britain's press and sports authorities — began an inquiry amid disclosures about widespread tabloid hacking of voice mail, concerns over bribes paid to police for scoops, and politicians who may have overstepped the bounds by cozying up to key players in the Murdoch empire.
Tarring the credentials of both the 81-year-old media mogul and James Murdoch, a former executive chairman of News Corp.'s U.K. newspaper division, the committee's scathing words on the Murdochs could affect their controlling stake in British Sky Broadcasting.
Britain's broadcasting regulator Ofcom acknowledged it was studying details of the report, which unanimously agreed that three key News International executives had misled Parliament — a verdict that can see offenders hauled before legislators to make a personal apology.
"We conclude, therefore, that Rupert Murdoch is not a fit person to exercise the stewardship of a major international company," the report said.
In a message to News International staff, Murdoch said he found the findings "difficult to read" and that he deeply regretted what took place.
"We certainly should have acted more quickly and aggressively to uncover wrongdoing," he wrote. "There is no easy way around this, but I am proud to say that we have been working hard to put things right."
Among the 11-member committee, four lawmakers from Britain's Conservative Party — which Murdoch's flagship The Sun tabloid now supports — refused to endorse the report. It was supported by one Liberal Democrat and five members of the opposition Labour Party, which Murdoch ditched before Britain's 2010 national election.
The chairman, a Conservative, did not vote in line with parliamentary convention.
Philip Davies said the conclusion on Murdoch supported by Labour members was "not only over the top, but ludicrous."
The fallout has jolted Prime Minister David Cameron, who lost his top media adviser over the scandal and is fighting demands to sack a Cabinet minister over the links his office had to some of Murdoch's key staff.
Cameron may also face new embarrassment if, as expected, Britain's media ethics inquiry orders him and ex-News of The World editor Rebekah Brooks to disclose scores of text messages they exchanged while she ran the tabloid.
Murdoch closed down the 168-year-old News of the World in July amid a public outcry over intercepted voice mail of celebrities and the murdered schoolgirl Milly Dowler.
Ofcom, which decides if broadcasters in the U.K. are "fit and proper" to hold a license, launched an inquiry last year into BkyB following revelations about phone hacking.
If the regulator were to determine that News Corp. does not meet that test, it could be forced to divest part of its 39 percent stake, depriving it of a controlling interest in the British broadcaster.
British law offers no legal definition of "fit and proper," meaning that Ofcom must use its judgment in deciding whether executives should be trusted to hold a broadcasting license. Analysts say that likely leaves any Ofcom decision open to legal challenges in the courts.
The committee said the House of Commons would need to decide on the punishment meted out to the three executives accused of misleading it: Colin Myler, an ex-News of The World editor who now works as editor-in-chief at the New York Daily News; Tom Crone, the British tabloid's longtime lawyer; and Les Hinton, the former executive chairman of News International and the former publisher of The Wall Street Journal.
All three issued statements denying they had misled the committee, or had taken part in any cover-up of phone hacking.
Parliament's power to fine such offenders or send them to jail lapsed in the 18th century — and a cell underneath Big Ben has long been in disuse. However, offenders can be called to the House of Commons to be publicly admonished, a sanction last used against a non-lawmaker in 1957.
Murdoch has insisted he was unaware that hacking was widespread at the News of The World, blaming staff for keeping him in the dark and failing to inform him about payouts to victims.
The panel agreed that James Murdoch, 39, was badly at fault over the scandal — but they were again divided over the tone of their criticism. Lawmakers said they agreed that phone hacking at the News of The World dated back to at least 2001, and that James Murdoch could have halted the practice as early as 2008 if he had acted correctly.
James Murdoch had displayed a "lack of curiosity ... willful ignorance even," in failing to demand evidence that would have shown the extent of phone hacking, the report said.
Legislators agreed that both Murdochs must be "prepared to take responsibility" for corporate failures.
"Everybody in the world knows who is responsible for the wrongdoing of News Corp. — Rupert Murdoch. More than any individual alive, he is to blame," committee member Tom Watson, a Labour lawmaker and among the tycoon's fiercest critics, told reporters. "It is his company, his culture, his people, his business, his failures, his lies, his crimes."
Conservative panel members said divisions over Murdoch would undermine the serious findings made on Myler, Crone and Hinton — who worked as a top Murdoch aide on both sides of the Atlantic for decades and resigned from his post as the publisher of The Wall Street Journal amid the hacking scandal.
Legislators said Hinton had misled them over his repeated claim that hacking was not rife at the News of The World, while Myler and Crone had failed to present factual accounts of what they knew. All deny that charge.
Still, some analysts say the report's savage criticism of the Murdoch empire could have implications in the United States.
Murdoch's U.S. media empire includes the Fox television network and 20th Century Fox film studio, publisher Harper Collins, Dow Jones Newswires, The Wall Street Journal and the New York Post. He also owns British newspapers The Times, The Sunday Times and The Sun; the stake in BSkyB; and outlets around the world from broadcaster Sky Italia to Australian cable provider Foxtel.
"A question for Americans is whether his empire and methods will come under scrutiny in this country," said Louis Ureneck, a journalism professor at Boston University.
News Corp. acknowledged the panel's report had uncovered some "hard truths," including that its "response to the wrongdoing was too slow and too defensive, and that some of our employees misled the select committee."
However, it denounced "the unjustified and highly partisan" attack on Rupert Murdoch — noting objections raised by panel members.
The corporation has been rocked by the scandal, which has claimed the jobs of a string of senior executives and several top British police officers.
Lawmakers lambasted Britain's top prosecutor and Scotland Yard's initial failure to investigate tabloid wrongdoing properly.
The police dropped their phone hacking investigation in 2007, only beginning a new inquiry in 2010. London's then police chief quit amid the scandal, while several serving police officers have been arrested.
Police appeared to have "no interest or willingness to uncover the full extent of the phone hacking," and repeatedly failed to act on evidence they had, the report said.
A total of 43 people, including at least 25 past and present employees of News International, have been arrested in a new investigation into phone hacking, bribery and computer hacking.
Seeking not to prejudice those police inquiries, the panel declined comment on the culpability of ex-News of The World editors Brooks, an ex-News International chief executive, and Andy Coulson, the former communications director to Cameron.
Lawmakers did, however, criticize Brooks for a culture that permitted illegal acts at her newspaper in the Dowler case.
The claim that the tabloid not only listened to but interfered with messages left on the cellphone of 13-year-old Dowler in 2002 — before she was found dead — appalled many Britons as it exposed how grief-stricken ordinary people, in addition to celebrities and politicians, had been pursued.
Murdoch has so far paid out millions to settle lawsuits from 60 celebrities, athletes, politicians and other public figures whose voice mails were hacked. Dozens more lawsuits have been filed.