James Murdoch’s decision to close the News of the World is seen here as the biggest gesture News Corp can make to try and save its takeover of BSkyB. Jeremy Hunt, the UK culture secretary in charge of approving the BSkyB deal, has saved face by announcing that any decision over the deal will be delayed until the fall. Hunt was due to finally approve the deal tomorrow. Owning BSkyB outright would mean News Corp getting its hands on its swelling £5.7 billion ($9 billion) revenues. It would also cement Rupert Murdoch’s position as the most powerful media magnate in Britain.
The decision to close the News of the World tabloid at the center of the deepening phone-hacking scandal has stunned media over here. One insider at News International — Murdoch’s newspaper arm — has told the BBC that “Rupert Murdoch is losing his judgement” in deciding to close the paper rather than fire CEO Rebekah Brooks, who was editing the News of the World at the time of the alleged phone hacking of 13-year-old murder victim Milly Dowler and the families of the London bombing victims. Questions are being asked as to why around 200 journalists on the News of the World should lose their jobs when those at the top of News International such as Brooks or indeed James Murdoch himself are still in place after self-admitted management failure. Murdoch’s biographer Michael Wolff said that Rupert Murdoch is “scared out of his wits … he’s scared for the business commercially. Scandals reach the point where you can’t stop them.” The UK government is considering pulling advertising from all Murdoch newspapers. Wolff added that until this point, Rupert Murdoch has always been seen as invulnerable. Observers says that this afternoon’s announcement may be dramatic, but it doesn’t do much to address the deeper issues facing the News Corp brand: James Murdoch may have sawn off one foot, but it will be enough to stop gangrene spreading to the rest of the company?