Rebekah Brooks resigned as chief executive of News International on Friday, yielding to political and investor pressure over a phone hacking scandal that has shaken Rupert Murdoch's media empire on both sides of the Atlantic.
The 43-year-old Brooks, a former editor of the scandal-hit News of the World and of flagship daily tabloid The Sun, was a close confidante of Murdoch, who described her as his first priority when he flew in to London this week to manage the crisis at News Corp's British newspaper unit.
In her place, he named a trusted News Corp veteran, New Zealander Tom Mockridge, who has spent the past eight years running the group's Sky Italia television interests in Italy.
The public disgust that erupted over reports that the News of the World may have hacked into the voicemails of murder victims and other vulnerable people prompted Murdoch to shut down the paper and pull a $12-billion bid to buy the 61 percent of British pay-TV broadcaster BSkyB he does not own.
Speaking before Brooks's resignation to the Wall Street Journal, which he owns, Murdoch defended the way his managers had handled the crisis. He spoke of minor mistakes and dismissed suggestions, floated by some shareholders, that he should sell off the troublesome newspaper businesses on which his empire was founded but which bring in only limited profits.
British Prime Minister David Cameron is under fire for his personal relationship with Brooks as well as for hiring another ex-editor of the News of the World as his spokesman. He has now launched a judicial inquiry into the affair, which also includes allegations of corrupt payments to police by journalists.
Struggling to quell the crisis, News International chairman James Murdoch, 38-year-old son of the founder, said the company would take out adverts in rival newspapers this weekend to say sorry: We will apologize to the nation for what has happened, James Murdoch said in a statement.
His father endorsed his handling of a crisis.
Rupert Murdoch, 80, has been courted for decades by Britain's political elite as a kingmaker who could influence voters to shift left or right. He now faces a showdown with parliament on Tuesday when lawmakers on the media committee grill him, his son and Brooks. During an angry debate this week, one legislator called him a cancer on the body politic.
BROOKS LEAVES THE BRIDGE
Brooks, whose youth, mane of red hair and sharp tongue have helped give her a high public profile in Britain, said in a message to staff: My desire to remain on the bridge has made me a focal point of the debate. This is now detracting attention from all our honest endeavors to fix the problems of the past.
Therefore I have given Rupert and James Murdoch my resignation. While it has been a subject of discussion, this time my resignation has been accepted.
She said she felt a deep sense of responsibility for the people we have hurt.
That sounded like an acknowledgement that the News of the World's invasions of private voicemails may have gone well beyond those of the royal aides whose complaints led to the jailing of a reporter and an investigator in 2007. Police say they are now probing where another 4,000 people -- including victims of notorious crimes, bombings and war -- were targeted.
A week ago, Brooks had told News of the World staff, who were sacked with the paper's closure, that she would remain to try and resolve the company's problems -- causing anger among many of the 200 being laid off. Some accused Murdoch of sacrificing their jobs to save hers.
Mockridge, who will replace Brooks, has spent two decades in News Corp. Analysts may welcome the New Zealander's recent background in television, an area in which News Corp is keen to expand, as well as his lack of direct involvement in the scandal-hit British newspaper business during the past decade.
Prime Minister Cameron welcomed Brooks' resignation. Cameron often socialized with Brooks and her husband in their country homes, but has sought to distance himself from her as the scandal tarnished his image. His judgment has also been in question for hiring her successor at News of the World as his spokesman. Andy Coulson was arrested last week in the affair.
As well as its published apology this weekend, the company would also write to its commercial partners to update them on its actions, James Murdoch said. Many advertisers had said they would boycott the News of the World before the company killed it off and refused paid advertising in last Sunday's final edition.
Some advertisers had also questioned their spending in other titles, notably the Sun, Britain's best-selling newspaper.
The Company has made mistakes, James Murdoch wrote to staff. It is not only receiving appropriate scrutiny, but is also responding to unfair attacks by setting the record straight.
The left-leading Guardian, which brought many of the most damaging allegations to light against the News of the World, published an apology to the Sun on Friday, retracting a report that the paper might have hacked into former prime minister Gordon Brown's family medical records to run a story on his son.
Analysts said Brooks should have gone sooner. Her departure now would raise further questions, some said: The resignation of Rebekah Brooks raises two important questions, said Ivor Gaber, a professor of journalism at City University London.
Firstly, why did she take so long to do this? Secondly, is this unrelated to her summons to appear before the Culture, Media and Sport Select Committee?
News Corp declined to comment on Brooks's severance package, but analysts said it is expected to include a confidentiality clause -- although she does still plan to give evidence to the parliamentary committee next Tuesday.
Jennifer McDermott, a partner with law firm Withers and veteran media lawyer, said: They can't say she can't talk to committees and things because she's doing that on oath. Confidentiality agreements can only bind people so far.
I would expect that there will be a clause about trying to limit what she can say and to stop her suddenly bad-mouthing other News Corp executives, for example. But she's got to be free to speak and tell the truth to these inquiries.
NO LASTING DAMAGE
Murdoch struck a defiant tone on Friday, saying his media empire would recover from a scandal over alleged phone hacking crimes at the News of the World and an FBI inquiry into similar allegations in the United States.
He has denied that News Corp was drawing up plans to separate its newspaper holdings, which are at the heart of the controversy, from the rest of the company.
It includes the Fox broadcast network in the United States, the 20th Century Fox film studio and newspapers around the world, including The Wall Street Journal, the New York Post and Britain's The Times and the Sun tabloid.
Murdoch said News Corp had handled the crisis extremely well in every way possible making just minor mistakes and called reports he would split off his newspaper assets pure rubbish.
Speaking to the Wall Street Journal, Murdoch said his son James had acted as fast as he could, the moment he could to deal with the scandal.
Murdoch, who is still in London managing the crisis, said damage to the company was nothing that will not be recovered.
We have a reputation of great good works in this country, he added.
However, rival publishers are seeking to capitalize on the company's weakness.
Britain's Daily Mail & General Trust is planning a new mass-market Sunday tabloid to fill the gap left by the News of the World, which had a weekly sale of around 2.7 million.
A source told Reuters the newspaper could be published as early as next weekend if a dummy run this weekend went well.
The Murdochs' hold over British politics appears to have been broken by the scandal, at least for the time being.
They were forced to agree to appear before parliament after Prime Minister Cameron said they should attend and as politicians across the political spectrum united in denouncing the hacking that initially had seemed to focus on celebrities and politicians but has become seen as far more widespread.
Murdoch said lies had been told about his company in the British parliament and that he wanted to put the record straight: We think it's important to absolutely establish our integrity in the eyes of the public, he told the Journal.
London's Metropolitan Police faced embarrassment after it emerged that a former News of the World deputy editor arrested on Thursday had worked as a media adviser to the force.
Police chief Paul Stephenson was given a 90-minute dressing down by London mayor Boris Johnson on Thursday and is expected to appear before another parliament committee next week.
(Additional reporting by Stefano Ambrogi, Michael Holden, Matt Falloon, Mark Hosenball, Tim Castle and Karolina Tagaris in London, Paul Thomasch, Basil Katz, Carlyn Kolker and Yinka Adegoke in New York; Writing by Keith Weir; Editing by Alastair Macdonald)