News Corp. to shutter News of the World in wake of phone hacking scandal

If the News of the World were covering its own imminent demise, it would probably use a blaring banner headline like: "SHOCKING DEVELOPMENT IN PHONE-HACK-GATE!"

James Murdoch--deputy chief operating officer of the paper's parent company, News Corp.; chairman of its publishing division, News International; and son of News Corp. chief executive Rupert Murdoch--announced on Thursday that the 168-year-old tabloid would be shut down. Sunday's paper will be its final issue.

James Murdoch met with the paper's employees on Thursday to deliver the news.

"I have important things to say about the News of the World and the steps we are taking to address the very serious problems that have occurred," he announced in a statement circulated among News Corp. staff. "News of the World is in the business of holding others to account. But it failed when it came to itself.

"Wrongdoers turned a good newsroom bad and this was not fully understood or adequately pursued," Murdoch continued. "As a result, the News of the World and News International wrongly maintained that these issues were confined to one reporter. We now have voluntarily given evidence to the police that I believe will prove that this was untrue and those who acted wrongly will have to face the consequences. This was not the only fault. The paper made statements to Parliament without being in the full possession of the facts. This was wrong."

He added: "The company paid out-of-court settlements approved by me. I now know that I did not have a complete picture when I did so. This was wrong and is a matter of serious regret."

The decision to shut down the paper comes a day after members of the British Parliament called for News Corp.'s pending takeover of BSkyB, the broadcaster and satellite TV provider, to be put on hold. It also follows the latest developments in the phone-hacking scandal that has clouded News of the World since 2006--The Guardian reported Monday that News of the World "intercepted--and deleted" voicemails on the phone of a missing 13-year-old girl in 2002, giving her family false hope that she may still have been alive.

Alan Rusbridger, editor of The Guardian, which has kept the story in the headlines through its ongoing investigative probe, fired off his own remarks Thursday following Murdoch's announcement.

"[Murdoch] does not say who these wrongdoers were--and that is the crucial question people will be asking, including those who are paying with their jobs and who are angry about the loss of a 168-year old newspaper title," Rusbridger said in a statement. "There are numerous outstanding unanswered questions--over the behavior of the police and the complete failure of the current News International management to uncover what had gone on inside the company."

Two hundred editorial jobs are expected to be eliminated as a result of the closure, a News International spokeswoman confirmed, adding: "There will be a consultation period for staff and they will be able to apply for jobs within News International."

Meanwhile, pressure--from inside the company and out--has been mounting on News Corp. chief Rupert Murdoch to fire Rebekah Brooks, News of the World's former editor and current chief executive of News International, in light of the new hacking allegations.

According to reports from the inside, the rank-and-file are fuming.

"There is mass anger in newsroom," Tim Gatt, a producer for Sky News, wrote on Twitter. "All directed at Rebekah. [Current News of the World editor] Colin Myler absolutely furious. Staff devastated."

Rupert Murdoch, however, released a statement on Wednesday backing Brooks. James Murdoch also came to her defense, telling the BBC in an interview on Thursday: "I'm convinced Rebekah Brooks' leadership is the right thing for the company. Her leadership is crucial, and is leading a lot of this forward."

Andy Coulson, who edited the paper after Brooks, is expected to be arrested Friday by police "over suspicions that he knew about, or had direct involvement in, the hacking of mobile phones during his editorship," the Guardian reported. A second arrest of "a former senior journalist" at News of the World is also expected, according to the Guardian. (The Guardian claims it "knows the identity of the second suspect but is witholding the name in order to avoid prejudicing the ongoing police investigation.")

Coulson resigned as British Prime Minister David Cameron's director of communications in January in the wake of his alleged involvement in the hacking case.

Earlier Thursday, Rupert, who is in Sun Valley, Idaho at the annual Allen & Co. conference, declined to comment. "I made my statement yesterday and I have nothing further to say at this stage," he told reporters, according to Dealbook.

Founded in 1843, News of the World is News Corp.'s top-selling U.K. paper, with an average circulation of 2.66 million, according to the Audit Bureau of Circulations U.K.

News Corp. owns more than a dozen major newspapers in the U.K., United States, and Australia, including the Wall Street Journal and New York Post. Its British portfolio also includes the Times of London and Sunday Times, and the Sun, a similarly lurid six-day tabloid to which News of the World serves as a Sunday sister paper.

There is already speculation among the British press that the Sun will fill the void left by News of the World by beginning to publish a Sunday edition, but a News International spokeswoman would not comment on its future plans.

"There is no comment beyond the statement today. That is a matter for the future," she said.

You can read James Murdoch's full statement here.

Note: This post has been updated from its original version in the wake of later news developments.

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