Murdoch aide Brooks quits as head of UK newspapers

LONDON (Reuters) - Rebekah Brooks resigned as chief executive of News Corp's British newspaper unit on Friday, yielding to political and investor pressure over a phone hacking scandal undermining 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 newspaper and of the flagship tabloid the Sun, was a close confidante of Murdoch, who had signaled her importance to him when he flew into London to manage the crisis at the News International subsidiary.

The public disgust that erupted over reports that one of News Corp's newspapers had hacked into the voicemails of murder victims has so far forced Murdoch to shut down the News of the World and pull a $12-billion bid to buy the shares he does not own in British satellite broadcaster BSkyB.

Murdoch, 80, long courted by Britain's political elite, faces a showdown with parliament on Tuesday when lawmakers on the media committee grill him, his son James, 38, as well as Brooks to find out more about the phone hacking practices.

Tom Mockridge, CEO of the company's Italian pay TV arm Sky Italia, will replace Brooks, who spent more than two decades at the newspaper company. Analysts may welcome the New Zealander's 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.

British Prime Minister David Cameron, as well as his Labour opponents, had said Brooks should have quit. Cameron said last week that an initial offer by her to resign should have been accepted. On Thursday, an influential Saudi investor in News Corp said he agreed.

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."

A week ago, she had told News of the World staff, who were sacked with the paper's closure, that she would remain -- causing anger among many of the 200 being laid off. Some accused Murdoch of sacrificing their jobs to save hers.

DEFIANT TONE

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.

Murdoch 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 media company.

It includes the Fox broadcast network in the U.S., the 20th Century Fox movie 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 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 this weekend went well.

"END OF A DICTATORSHIP"

The Murdochs' hold over British politics appears to have been broken by the scandal.

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.

British Business Secretary Vince Cable, on BBC radio, said of the swift volte-face by politicians queuing up to condemn the Murdochs: "It is a little bit like the end of a dictatorship when everybody suddenly discovers they were against the dictator."

Cable lost responsibility for media policy last December after he was taped saying he had "declared war on Murdoch."

(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)