The ruling could prompt British regulators to force him to sell his controlling stake in British Sky Broadcasting, a significant part of his media empire.
The damning report accused Murdoch and his son James of showing “willful blindness” to phone hacking at News of the World, and said the newspaper “deliberately tried to thwart the police investigation” into the illegal activity.
The paper’s publisher, News Corp. subsidiary News International, “wished to buy silence in this affair and pay to make the problem go away,” the Parliament’s Culture, Media and Sport Committee found.
Ofcom, the British media regulator that could force Murdoch out of BSkyB, said it is “reading with interest” the report from Parliament.
The agency noted that it “has a duty under the Broadcasting Acts of 1990 and 1996 to be satisfied that any person holding a broadcasting license is, and remains, fit and proper to do so.”
Allegations of widespread illegal eavesdropping by Murdoch journalists in search of stories have shaken the media baron’s News Corp. empire and the British political establishment, up to and including Prime Minister David Cameron.
Police have arrested dozens of people as part of investigations into phone hacking, e-mail hacking and police bribery, while two different Parliamentary committees and an independent inquiry led by Lord Justice Brian Leveson are all probing aspects of the scandal.
Testifying before the Leveson Inquiry last week, Rupert Murdoch admitted that there had been a “cover-up” of phone hacking at News of the World.
But Murdoch, who owns the Sun and the Times in London, as well as controlling The Wall Street Journal, New York Post and Fox News, said his News Corp. had been a victim of the cover-up, not the perpetrator.
“Someone took charge of a cover-up, which we were victim to and I regret,” he said Thursday at the Leveson Inquiry.
He apologized for not paying more attention to the scandal, which he said had been “a serious blot on my reputation.”
Tuesday’s report by the Culture, Media and Sport Committee is based partly on earlier testimony by Rupert and James Murdoch.
John Whittingdale, the chairman of the committee, said Tuesday that while there is “no definitive evidence to prove whether or not James Murdoch was aware of … evidence which indicated that phone hacking was widespread, the committee was nevertheless astonished that he did not seek to see the evidence.”
Tom Watson, the Labour lawmaker who has long been one of the fiercest critics of Murdoch, was blistering in a news conference announcing the Parliamentary findings.
“These people corrupted our country. They have brought shame on our police force and our Parliament. They lied and cheated — blackmailed and bullied and we should all be ashamed when we think how we cowered before them for so long,” he said.
But Louise Mensch, a Conservative member of Parliament who is on the committee with Whittingdale and Watson, said the report had gone too far.
She was one of the four Conservative MPs who dissented from the amendment to the report finding that Murdoch was not a fit person to run a company.
She called the amendment “faintly ridiculous” given Murdoch’s decades in the business, and accused the Labour members of the committee of pushing through a “nakedly political” statement.
“The amendments were so far out of left field they made a mockery of the whole thing,” she said.
The section declaring Murdoch “not fit” passed by a vote of 6 to 4, with support from Labour and Liberal Democrat lawmakers, over opposition from Conservatives. Committee chair Whittingdale, a Conservative, did not vote.
The report did not accuse either Murdoch of misleading Parliament, but said three of their underlings had done so when they testified before the committee.
Longtime Murdoch right-hand man Les Hinton was criticized, as were Colin Myler, the last editor of News of the World, and Tom Crone, who was the paper’s lawyer for decades.
The full House of Commons will have to rule on whether the three committed contempt by misleading the committee, “and, if so, what punishment should be imposed,” the report says.
“It is effectively lying to Parliament,” Whittingdale said. “Parliament at the end of the day is the supreme court of the land. It is a very serious matter.”
News Corp. said it was “carefully reviewing the Select Committee’s report and will respond shortly.
“The company fully acknowledges significant wrongdoing at News of the World and apologizes to everyone whose privacy was invaded,” its statement said.
BSkyB shares were up slightly in London on the news. News Corp. is traded in New York, where the markets were not open when the report was published.
Rupert Murdoch said last week that if he had known the depth of the problem in 2007, when a private investigator and a Murdoch journalist were sent to prison for phone hacking, he “would have torn the place apart and we wouldn’t be here today. But that’s hindsight.”
But he also suggested last week that key parts of the scandal have been overblown.
“The hacking scandal was not a great national thing until the Milly Dowler disclosure, half of which has been somewhat disowned by the police,” Murdoch said.
He was referring to the revelation that people working for him had hacked into the voice mail of a missing 13-year-old who later turned out to have been murdered.
The Guardian newspaper originally reported that the hackers had also deleted some of the girl’s voice mails, leading to false hopes that she was still alive and deleting them herself. In fact, the messages may have expired automatically.
Murdoch was also grilled over his media empire’s back-channel lobbying of the British government, and said he learned of the existence of one of the key lobbyists only “a few months ago.”
Murdoch said he was “surprised” by the extent of the contact by the employee, Fred Michel, with the British government as it considered a bid by News Corp. to take full ownership of British Sky Broadcasting.
That bid collapsed because of the phone-hacking scandal.
The scandal has forced News Corp. to pay hundreds of thousands of pounds in compensation to the victims of phone hacking.
Murdoch and his son James have been hammered over the past year about what they knew about phone hacking by people working for them.
They have always denied knowing about the scale of the practice, which police say could have affected thousands of people, ranging from celebrities and politicians to crime victims and war veterans.