Murdoch wields axe on News of the World amid hacking outcry

As yet more firms pulled their advertising from Britain’s best-selling newspaper following days of allegations about phone-hacking and illegal payments to police officers by News of the World employees, News International chairman James Murdoch told shocked staff this coming Sunday’s edition will be the last in the paper’s 168-year history.

On yet another day of hugely dramatic developments, it was reported last night the News of the World’s former editor Andy Coulson, who until January was the Prime Minister’s head of communications, will be arrested by the Metropolitan Police today on suspicion of knowing about or being involved in phone-hacking during his tenure at the paper.

The Met yesterday finally revealed the full scale of the scandal, with some 4,000 people potentially having had their voicemails illegally hacked into by private investigators employed by the paper.

The force, which now stands accused of a full-scale cover-up over its failed initial inquiry, had previously insisted only a “handful” of people were targeted.

With analysts suggesting each victim could be entitled to compensation of around £30,000, the legal bill for News International could potentially top £100m.

The move to close down the News of the World was instantly dismissed by politicians as a cynical ploy to sacrifice an historic newspaper – and some 200 employees – in a move to save the jobs of embattled News International executives including Mr Murdoch and his chief executive, Rebekah Brooks, who have come under immense pressure in recent days over their own roles in the affair.

Analysts expect the firm to launch an alternative Sunday paper within weeks, most likely a Sunday version of the Sun – thus saving the company significant money on overheads. The website names TheSunOnSunday.co.uk, TheSunOnSunday.com and Sun OnSunday.co.uk were all registered two days ago.

The final straw for the News of the World, the world’s biggest-selling English-language title, appears to have been yesterday’s revelation the families of Britain’s war dead may have been targeted by its freelance investigator Glenn Mulcaire in the hunt for exclusive stories.

The Royal British Legion dropped the newspaper as its campaigning partner, and more than 30 major companies pulled all advertising from its pages. Their actions followed revelations that other targets may have included murdered schoolgirl Milly Dower; relatives of victims of the 7/7 bombings; the families of murdered Soham youngsters Holly Wells and Jessica Chapman; and Clarence Mitchell, spokesman for the family of missing Madeleine McCann.

With only a handful of advertisers remaining and boycott campaigns being mounted across the internet, Mr Murdoch – the son of media baron Rupert – said the paper must now close.

Describing the allegations as ”inhuman”, he said such behaviour “has no place in our company”.

He praised campaigns undertaken by its reporters, but added: “The good things the News of the World does ... have been sullied by behaviour that was wrong.”

He said this coming Sunday’s edition would be the last, carrying no commercial advertising and with all profits given to charity.

But Mr Murdoch again gave his backing to under-fire chief Ms Brooks, who was editor when many of the worst offences allegedly took place.

He insisted she had not known about the illicit practices apparently going on in her own newsroom, and said her leadership remains “crucial to the company”.

News of the World journalists reacted furiously to the announcement, demanding to know why they were losing their jobs when Ms Brooks was keeping hers.

Current editor Colin Myler said the News of the World had been a huge part of many people’s lives for 168 years. “Sundays without this great British institution will not be the same,” he said.

Yesterday’s announcement wiped further value off the plummeting shares of News Corporation, the Rupert Murdoch-owned parent company of News International. Its share price has fallen almost £650m in the past week.

It is thought the Government’s decision on whether to wave through Mr Murdoch’s proposed takeover of BSkyB could be delayed several months.