Companies rushed to pull ads from British tabloid News of the World on Wednesday amid public outcry over alleged phone hacking, but media mogul Rupert Murdoch insisted his top executive in Britain, Rebekah Brooks, would not resign.
As reports emerged that employees at the paper — owned by Murdoch's News Corp. media empire — hacked into the phones of missing schoolgirls and families of victims in London's 2005 terror attacks, the backlash from consumers escalated.
Twitter and Facebook users listed companies that normally advertise with News of the World and urged people to contact them and demand that they pull their advertisements. Some companies, unwilling to alienate their customer base, agreed.
Ford was the first to pull its advertising from Britain's biggest Sunday newspaper, on Monday night. Other car makers including Renault, Mitsubishi Motors and Vauxhall followed on Tuesday as the allegations built.
The Cooperative Group — a retail giant that prides itself on its ethical business model — said it has suspended all advertising until a government investigation is concluded. The group said the allegations "have been met with revulsion by the vast majority of members who have contacted us."
Virgin Holidays canceled several ads due to run in the Sunday newspaper this week, but said it will review the situation on a week by week basis. Halifax bank also said it had canceled ads.
Some of the fury spilled into other parts of Rupert Murdoch's media empire, such as satellite channel Sky. Mumsnet, a popular online community for mothers, said it would refuse to take advertising from Sky after members complained. The contract would have been worth around 30,000 pounds ($47,924).
One week of an advertisers' boycott is unlikely to hurt News of the World's finances much. A large part of the advertisements are already paid for and the advertisers, not the newspaper, will take the financial hit.
But investors seemed worried — they dumped shares in News Corp., causing them to slump 4.2 percent on the Nasdaq index in New York.
Despite the mounting pressure, Murdoch brushed off U.K. politicians' demands for the resignation of Brooks, the tabloid's editor at the time of the alleged phone hacking. She now heads News International, the British newspaper division of News Corp.
Murdoch will be eager to contain the fallout to the one paper — his empire includes the Wall Street Journal, The Times, The Sun, a tabloid, and Sky.
For the most part, those titles did not play down the story. Phone-hacking revelations were front and center on the Sun's website and Sky news' homepage was dominated with multiple hacking-related stories along with a "breaking news" banner.
Phone-hacking also featured prominently on the Journal's home pages on Wednesday — though the newspaper's article addressed its ties to the scandal-ridden tabloid in the fifth-to-last paragraph of a lengthy piece. The Journal's article also made no mention of Murdoch himself, despite heaps of attention paid to the tabloid owner in most other publications.
In the longer term, the scandal threatens the expansion of News Corp., particularly in the U.K., where it is trying to buy British Sky Broadcasting.
Britain's communications regulator said Wednesday it is monitoring the phone-hacking investigation to be sure that News Corp. is a "fit and proper" company to hold a broadcasting license. While a decision allowing the takeover is up to the government, regulator OFCOM has the right to deny News Corp. of a license.
A veteran investor in media, Murdoch has seen a public boycott against one of his newspapers before. In 1989, people in Liverpool boycotted The Sun after its coverage of the Hillsborough disaster, when 96 football fans died at a football game crush.
The Sun ran unsubstantiated stories about drunken Liverpool fans stealing from the dead, sparking outrage in the city. Sales of The Sun in Liverpool have never recovered.
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