- Associated Press - Thursday, July 7, 2011

LONDON — The Murdoch media empire unexpectedly killed off the muckraking News of the World tabloid Thursday after a public backlash over the illegal guerrilla tactics it used to expose the rich, the famous and the royal and become Britain’s best-selling Sunday newspaper.

The abrupt decision stunned the paper’s staff of 200, shocked the world’s most competitive news town and ignited speculation that Rupert Murdoch's News Corp. plans to rebrand the tabloid under a new name in a bid to prevent a phone-hacking scandal from wrecking its bid for a far more lucrative television deal.

“This Sunday will be the last issue of the News of the World,” James Murdoch, son of the media magnate, announced in a memo to staff.

Mushrooming allegations of criminal behavior at the paper — including bribing police officers for information and hacking into the voice mail messages of celebrities, politicians and the families of murder victims — cast a dark cloud over the News Corp.’s multibillion-pound plan to take full ownership of British Sky Broadcasting, an operation far more valuable than all of Murdoch’s British newspapers.

Faced with growing public outrage, political condemnation and fleeing advertisers, Murdoch stopped the presses on the 168-year-old newspaper, whose lurid scoops have ranged from Sarah Ferguson’s claims she could provide access to ex-husband Prince Andrew to motor racing chief Max Mosley’s penchant for sadomasochism.

James Murdoch said all revenue from the final issue, which will carry no ads, would go to “good causes.” The paper had been hemorrhaging advertisers since the phone hacking scandal escalated this week, with companies including automakers Ford and Vauxhall, grocery chain J. Sainsbury and pharmacy chain Boots pulling ads from the paper.

The News of the World, which sells about 2.7 million copies a week, has been engulfed by accusations that it hacked into the cell phone messages of victims ranging from missing schoolgirls to grieving families, celebrities, royals and politicians in a quest for attention-grabbing headlines. Police say they are examining 4,000 names of people who may have been targeted.

The paper has acknowledged that it hacked into the mobile phone voice mails of politicians, celebrities and royal aides, but maintained for years that the transgressions were confided to a few rouge staff. A reporter and a private investigator working for the paper were jailed for phone hacking in 2007.

But in recent days the allegations have expanded to take in the phones of missing children who were found slain, the relatives of terror victims of London’s 2005 transit bombings and the families of soldiers killed in Afghanistan.

James Murdoch said if the allegations were true, “it was inhuman and has no place in our company.”

“Wrongdoers turned a good newsroom bad,” he said, “and this was not fully understood or adequately pursued.”

“While we may never be able to make up for distress that has been caused, the right thing to do is for every penny of the circulation revenue we receive this weekend to go to organizations — many of whom are long-term friends and partners — that improve life in Britain and are devoted to treating others with dignity,” he said.

The announcement sent shockwaves across the British media establishment, and among News of the World staff. Features editor Jules Stenson said the news was met with gasps and some tears.

“There was no lynch mob mentality, there was just a very shocked acceptance of the decision,” he told reporters outside the company’s London headquarters. “No one had any inkling.”

Some suspected shutting the paper was a ploy to salvage Murdoch’s British media empire as well as the job of Rebekah Brooks, the trusted chief executive of his British news operation.

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