Murdoch Hack Attack: More Papers Caught in Scandal

July 12, 2011— -- Fresh allegations that not one but three of Rupert Murdoch's newspapers have been involved in illegal activities have marred the media mogul's multi-billion dollar deal to buy full control of British Sky Broadcasting. Many analysts believe the deal may be dead in the water.

Monday's allegations that News International's Sunday Times and Sun newspapers allegedly used deception to try to obtain former Prime Minister Gordon Brown's private financial records were the latest in an unfolding scandal that saw Murdoch's News of the World fold last Sunday.

The Sunday Times allegedly had details that Brown obtained an apartment from controversial publishing magnate and former member of parliament Robert Maxwell for a "knock-down price," according to the BBC.

Brown told the BBC that he believes the paper was "trying to prove a point," that it was "completely wrong" and wanted to bring him down in his then role as Britain's Chancellor of the Exchequer.

"I'm genuinely shocked to find that this happened because of the links with criminals, known criminals, who were undertaking this activity, hired by investigators who were working for the Sunday Times, Brown said in an interview with the BBC.

The Sun went much further when it allegedly stole Brown's family's medical records. Though no one but his family knew in 2006 that Brown's newborn baby son, Fraser, had cystic fibrosis, the Sun splashed the exclusive across its front page in November 2006.

"Sarah and I were incredibly upset about it," said Brown. "We were thinking about his long-term future, we were thinking about our family," Brown told BBC News, adding that he was in tears when he was told by News International journalists that the Sun had the information about his son's condition.

The Sun claimed that "the story was used to increase national understanding of the condition, in partnership with the Cystic Fibrosis Trust."

News International was allegedly aware as far back as 2007 about questionable practices used by the News of the World to obtain the confidential information about the royals. Such a breach, if true, represents a huge lapse in security and a threat to Queen Elizabeth.

If News Corp., the Murdoch conglomerate that includes News International, did know of News of the World's practices, it did nothing.

In emails received by police last month, Clive Goodman -- the paper's recently arrested royals reporter -- requested cash from the now-deposed editor Andy Coulson to buy a top secret directory called the "Green Book," according to the BBC. The directory contained all the confidential phone numbers of the royal family and their staff.

In the email, Goodman allegedly said that a royal protection officer had stolen a copy and wanted £1000 for it.

"If, as alleged, somebody has taken money not only to disclose telephone numbers not only of the royal family but also of their staff and their friends, then it's an appalling breach of security," said Dai Davies, former head of royal protection.

Murdoch's Deal: Dead in the Water?

The unfolding scandal couldn't come at a worst time for Murdoch, who days ago believed he would be closing one of the biggest deals of his life. The worldwide media mogul was on the verge of buying full control of British Sky Broadcasting, Britain's biggest commercial network.

The British government signaled Monday that it would delay -- and possibly halt -- Murdoch's $19 billion deal to purchase BSkyB as a result of the public outrage surrounding the growing scandal.

'Not the End of News Corp.'

The announcement came from Culture Secretary Jeremy Hunt after News Corp. said it would no longer spin off Sky News, a condition that the government imposed for the company to purchase the remaining 61 percent of BSkyB that it does not own.

The British Competition Commission must now investigate whether the purchase would violate the country's anti-monopoly laws. The review could take up to six months.

If the deal goes through, it would give Murdoch 100 percent control of BSkyB and 40 percent ownership of all of British commercial TV. He already owns 37 percent of newspapers in Great Britain.

With public opinion so against him, Murdoch agreed to at least delay that purchase. But the feeling among many now is that the deal is dead -- though that does not necessarily spell demise for Murdoch's resilient company.

"This is not the end of News Corp. It is simply the end of News Corp. as a constant picture over the next decade of growth and of influence," Claire Enders, a media analyst, told ABC News.