News Corp. U.K. Newspaper CEO Brooks Resigns

July 15 (Bloomberg) --Rebekah Brooks, the News Corp. (NWSA) executive at the center of a phone-hacking scandal that forced the closure of a 168-year-old U.K. tabloid she edited, has resigned amid pressure from politicians and shareholders.

Brooks stepped down as chief executive officer of the News International U.K. publishing unit as she was “detracting attention” from attempts to “fix the problems of the past,” she wrote in a letter to employees today. Tom Mockridge, head of News Corp.’s Sky Italia division, will succeed her.

Brooks’s departure is a blow for Rupert Murdoch and his son, News International Chairman James Murdoch. Both had backed her in the past week as allegations that employees at the News of the World tabloid hacked into voicemails of murder and terrorism victims led to U.K. police arrests, a probe by the FBI and shelved News Corp. (NWS)’s 7.8 billion-pound ($12.6 billion) bid for all of British Sky Broadcasting Group Plc. (BSY)

“In any other business she would have gone straight away,” Charlie Beckett, director of the media institute Polis at the London School of Economics, said in a phone interview. “It would’ve been an obvious thing to sack her early on.”

U.K. Prime Minister David Cameron and News Corp. investors including Prince Alwaleed bin Talal Al Saud have called for Brooks to be removed since the phone-hacking scandal escalated last week.

First Female Editor

(For a story on Murdoch plans for a Sunday tabloid, click here. To read about the FBI probe into News Corp., click here. For a profile of Brooks's successor, click here.)

Brooks became head of News International, which also publishes the Sun, the Times and the Sunday Times, in 2009 after serving as editor of the Sun for 6 1/2 years. Beginning her career as a feature writer for the News of the World in 1989, Brooks rose through the ranks and was editor of that newspaper from 2000 to 2003.

Brooks was the first female editor of the Sun, a tabloid known for printing pictures of topless women on the third page, and earned a reputation for aggressive tactics. She told lawmakers in 2003 that her publication had in the past paid police officers for information.

Brooks was close to the Murdoch family, attending Elisabeth Murdoch’s wedding in 2001 and reporting to son James.

News Corp. dropped 19 cents, or 1.2 percent, to $15.25 at 9:58 a.m. New York time in Nasdaq Stock Market trading, and earlier fell to $14.89, its lowest level since Jan. 21.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

‘Right Decision’

Rupert Murdoch, 80, and James, News Corp.’s deputy chief operating officer, are scheduled to testify about the phone- hacking scandal before the U.K. Parliament on July 19. Brooks will also give evidence at the parliament’s Culture, Media and Sport Committee.

“My desire to remain on the bridge has made me a focal point of the debate,” Brooks wrote in the memo. “My resignation makes it possible for me to have the freedom and the time to give my full cooperation to all the current and future inquiries, the police investigations and the CMS appearance.”

Cameron said Brooks’s resignation was “the right decision,” his spokesman said. “Clearly there have been mistakes made. There are a lot of questions to answer,” Steve Field told reporters in London.

Misleading Parliament

Following Brooks’ resignation, lawmakers started increasing the pressure on James Murdoch.

“Her departure will move the spotlight onto James Murdoch,” Labour lawmaker Tom Watson, who has been investigating phone-hacking for two years, said on the Sky News channel today. “Terrible things happened over a long period of time in that company, and they tried to cover it up. They must be held to account.”

In a note last week to employees to announce the closure of the News of the World, the younger Murdoch said the company had misled the British Parliament. During hearings in 2007 and 2009, executives including Les Hinton, former News International chairman, and Colin Myler, News of the World editor, said that there was no evidence that more than one reporter had been involved in phone hacking.

James Murdoch also has said that out-of-court settlements he approved that included non-disclosure agreements were “wrong” and “a matter of serious regret.”

Apology

The settlements were criticized in Parliament during an emergency debate on July 6, when Watson said James Murdoch should face criminal charges and was unsuitable to be a director of the company.

Among those who received payments was Gordon Taylor, chief executive of the Professional Footballers’ Association, after his lawyers uncovered an e-mail suggesting more than one journalist at the News of the World knew Taylor’s phone had been hacked, Myler said in July 2009.

News Corp. will issue an apology for the phone-hacking scandal in “all national newspapers” in the U.K. over the weekend, James Murdoch said in a letter to employees, adding that the company will also send letters to its commercial partners.

In the U.S., the FBI began a probe whether employees tried to hack into the phones of victims of the Sept. 11 terrorist attacks. London police have made at least nine arrests as part of the investigation. Among those arrested was Andy Coulson, another one-time editor of the News of the World and former communications chief for Cameron. Coulson has denied any knowledge of reporters tapping phones when he led the paper.

Rupert Murdoch yesterday defended his handling of the crisis. In an interview with the Wall Street Journal, which is owned by News Corp., Murdoch said an independent committee led by a “distinguished non-employee” will investigate the phone- hacking allegations. The company has handled the crisis “extremely well,” while there were “minor mistakes,” he said.

To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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