How Hacking Scandal Will Affect Murdoch’s Empire

The British people, who are generally enamored with celebrity scandal sheets, are outraged at tabloid News of the World for an increasing number of cell phone hacking allegations.

The paper is owned by News International, part of Rupert Murdoch's media empire.

NI, as it is known, also owns major UK papers The Sun, The Times and The Sunday Times. The scandal started when News of the World was accused of hacking into the cell phone of Milly Dowler, a missing British teenager who was later found murdered.

The English public is demanding that News International chief executive Rebekah Brooks resign from her post immediately. Brooks was the editor of News of the World at the time of the Dowler case.

The issue is being taken up by the government, and in the House of Commons, Labour leader Ed Miliband insisted that Brooks should take responsibility and stand down.

Brooks claims that she was unaware of what was going on at her paper at the time, and says she was on vacation for most of the Milly Dowler manhunt.

I hope that you all realize it is inconceivable that I knew or worse, sanctioned these appalling allegations, Brooks stated.

I am aware of the speculation about my position. Therefore it is important you all know that as Chief Executive, I am determined to lead the company to ensure we do the right thing and resolve these serious issues, she continued.

So far, Murdoch has stuck by Brooks. He said that he will not punish her for the mobile phone hacking practice that has shamed her news room.

The media mogul, who owns a number of news outlets in the United States as well, such as FoxNews, the Wall Street Journal and the New York Post, may bear the burden of the indignity financially. There is a movement in Britain to boycott the News of the World, and many speculate that the paper will not survive the near future.

Additionally, many advertisers -- the life's blood of any newspaper -- have pulled their spots from the paper. Ford Motors, Dixons, Virigin Holidays and Mitsubishi have all cancelled their contracts with News of the World and other businesses like Currys, PC World and T-Mobile are considering doing the same.

British movie star Hugh Grant, himself familiar with UK scandal sheets, is calling for people to vote with their wallets. Grant claims that the News of the World hacked his cell phone as well.

The scandal started when allegations surfaced that Murdoch's paper intercepted and used text messages from Dowler's phone while the police -- and the nation of England -- anxiously searched for the abducted girl.

Since then, a number of other supposed charges have surfaced. Apparently, News of the World was paying police for information on hot crime stories. They also hacked and tapped the phones of the victims of the tragic 7/7 bombings, which killed 52 people in London in 2005.

New reports are saying that News of the World also hacked the phone of the relatives of British servicemen who died fighting in Iraq and Afghanistan.

Recent allegations of phone hacking and making payments to police with respect to the News of the World are deplorable and unacceptable, Murdoch said in a statement published on the News of the World Web site.

I have made clear that our company must fully and proactively cooperate with the police in all investigations and that is exactly what News International has been doing and will continue to do under Rebekah Brooks' leadership.

The British government has thrown its hat into the ring, and Prime Minister David Cameron has called the hacking disgusting and is demanding a full investigation.

We do need to have an inquiry, possibly inquiries, into what has happened, Cameron, told Parliament. We are no longer talking here about politicians and celebrities, we are talking about murder victims, potentially terrorist victims, having their phones hacked into.

It is absolutely disgusting, what has taken place, and I think everyone in this House and indeed this country will be revolted by what they have heard and what they have seen on their television screens, Cameron added.