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>> Tonight onFrontline... Rupert Murdoch and his son engulfed in scandal.

>> We have nothing to say at all.

>> How did the owner of the Fox Network, the Fox News Channel, the movie studio, the Wall Street Journal, and a worldwide media empire come to be hounded by the press... and haunted by the death of a teenager?

>> That's what absolutely turned the whole thing into a complete nightmare for Rupert Murdoch.

>> Mr. Murdoch, at what point did you find out that criminality was endemic at News of the World?

>> Endemic is a very hard... is a very wide-ranging word.

>> Tonight, Frontline correspondent Lowell Bergman goes inside the phone-hacking scandal... >> They hacked my phone, and they ran some pretty hideous stories about my sexuality.

>> They hacked my messages between myself and the chief executive.

>> That rocked a government... >> This is becoming a very, very big scandal.

Biggest news organization in the country are in trouble, biggest police force in trouble, and furthermore, the new prime minister's right-hand man is in trouble.

>> ...and shook the media giant.

>> I would just like to say one sentence.

This is the most humble day of my life.

>> There is a Shakespearean tragedy to what's happened.

What's created him now looks like it could destroy him.

(phone ringing) >> Please leave your message after the tone.

(beep) >> Hi, love, I was just thinking I'm going to be late home from work tonight.

>> BERGMAN: Britain is still coming to terms with a scandal of historic proportions.

>> That should be fine about the kids, but I'll be seeing Lawrence tomorrow.

>> BERGMAN: Voicemails hacked by the thousands, messages like these... >> Daddy, can you tell us what time you're coming home from work?

>> BERGMAN: Private and intimate.

>> (crying): Clarissa, I've got some terrible news.

Please ring me back.

>> BERGMAN: Stolen and turned into stories for the largest selling paper in the country, a Murdoch tabloid called the News of the World.

It had gone on for years.

>> I first heard about the hacking of voicemail by journalists when somebody called me out of the blue and started telling me what had been going on at the News of the World.

>> BERGMAN: Nick Davies is the reporter who broke the phone hacking story for a rival newspaper-- the Guardian.

He is now writing a book on the revelations.

>> It's not just a story about journalists behaving badly.

It's a story that immediately, by fluke, takes you into not just the most powerful news organization in the country, but also the most powerful police service in the country and the most powerful political party.

And in all of these you find them behaving wrongly, illegally, immorally.

>> BERGMAN: The man whose company is at the heart of all this is escorted into a Parliamentary hearing to answer questions.

He has no doubt about his own role in the gathering scandal.

>> Mr. Murdoch, do you accept that ultimately, you are responsible for this whole fiasco?

>> No.

>> You are not responsible.

Who was responsible?

>> The people that I trusted to run it, and then maybe the people they trusted.

>> BERGMAN: That fateful day was a long time in the making.

He arrived in London an Australian newspaperman and got his hands on the News of the World, a Sunday tabloid.

He made it clear his approach would be different from other owners.

>> How do you see the role of the proprietor?

Would you interfere in editorial policy at all?

>> Oh, yes, if necessary, I would.

I don't take quite the same attitude as Roy Thomson on that.

(bell ringing) >> BERGMAN: An endless stream of sex scandals would make his new tabloid the largest selling Sunday paper in the country.

And then he picked up an ailing paper called the Sun and turned that into Britain's largest selling daily.

One of his favorite editors, Kelvin Mackenzie, is a Fleet Street legend and an ardent supporter.

>> The reality is, decent guy, and because he's successful, people who are by and large unsuccessful dislike him intensely.

He's a pretty rounded guy.

I mean, compared to a lot of people watching this documentary, he'll be a lot more rounded than they are sitting there grinding their teeth and gnashing them away.

>> BERGMAN: The stacks of the News of the World would become the building blocks of the worldwide empire.

The formula for success was simple: screaming headlines about dirty deeds.

>> The tabloids is what really gets him out of bed in the morning.

And it was the British tabloids that created the money to fund the worldwide empire.

Both the News of the World and the Sun were the seed corn that built what he has today.

>> BERGMAN: Andrew Neil edited the Sunday Times for Rupert Murdoch.

>> And he's fascinated by the tabloids as well.

It's tabloids-- not journalism, tabloid journalism-- is in his veins.

He likes the short sentences, the pithy headlines.

And there are two currencies in the Murdoch organization.

One is money, the second is gossip.

And Rupert Murdoch loves gossip.

>> BERGMAN: And he knows how to use it.

Catch bishops, politicians or celebrities in the wrong bed, and you can sell a lot of papers.

And the headlines don't have to be troubled by the truth.

Didn't you have a headline about eating a hamster?

>> Yeah, we did, yeah, but that's, uh... >> BERGMAN: That turned out not to be true?

>> Well, I think he lived off it for about 30 years and then somebody said that it wasn't true.

But I don't know whether it's true or it's not true.

I mean I don't know.

But at the time, they said it was true.

>> Tabloid journalism requires a constant supply of victims.

It doesn't really matter whether they're celebrities fallen on hard times or committing adultery, or footballers who are in trouble for one reason or another, or errant politicians.

So that you need a constant supply of victims, and they decide who the victims will be and you get monstered.

(dial tones) >> BERGMAN: Labour Member of Parliament Chris Bryant understands what it's like to be monstered.

>> (on voicemail): Hi there, it's Chris Bryant.

Leave a message after the tone and I'll try and get back to you.

Many thanks.

Bye.

>> BERGMAN: They threatened.

>> Yeah.

>> BERGMAN: And they humiliated you?

>> Yes.

>> BERGMAN: And that was standard practice.

>> I think it was pretty standard practice for anybody who got in the way.

>> BERGMAN: Bryant got in the way at this Parliamentary committee hearing back in 2003, when he got Rebekah Brooks, then editor of the Sun, to make an astonishing admission.

Brooks was one of Rupert Murdoch's most trusted associates and would become chief executive of his British newspapers.

A friend and confidante of prime ministers, she appeared at the hearing with her colleague Andy Coulson, editor of News of the World.

>> BERGMAN: What was the run-up to that?

Why were they appearing before you?

>> We were doing a report on privacy and media intrusion.

The issue of how you set about getting information is also of course a matter of importance.

It was just a hunch.

You know, sometimes you just have a hunch in politics.

Do either of your newspapers ever use private detectives, ever bug or pay the police?

>> We have paid the police for information in the past and it's been... >> Andy Coulson, who was sitting beside her, tried to say, "But only within the law," and I pointed out, "but it's a criminal offense."

It's corrupting a police officer, suborning a police officer.

>> The same holds for private detectives, for subterfuge, for video... whatever you want to talk about.

It's illegal for police officers to receive payments.

>> No, no, no, we don't-- as I said, within the law.

>> And then the chairman decided to close the meeting, for some bizarre reason.

I would have much preferred to have been able to carry on.

>> Thanks very much.

We're both grateful for your evidence.

>> So I then tried to get other newspapers interested.

Hardly anybody even bothered to run the story.

And I kept on trying to raise it.

But you know, there comes a point at which you feel as if you're banging your head against a wall, and of course then six months later, those two newspapers did me over good and proper.

They hacked my phone and they ran some pretty hideous stories about my sexuality.

>> BERGMAN: He got "monstered."

As a former vicar, a gay politician and an outspoken critic, Bryant was tailor-made for the Murdoch tabloids.

>> I've had people make threats to me, saying, "Look, you should drop all this, because Rupert Murdoch's not going to forget it."

And that's from people pretty close to Murdoch himself.

>> Reward and punishment is how this company works.

And that's essentially the business model, and that's what newspapers are for him.

>> BERGMAN: Michael Wolff interviewed Rupert Murdoch over months for a biography called The Man Who Owns the News.

>> He likes to cultivate the sense that he knows more than you know, and that he has information that he can use.

So on any number of occasions he will have said to me, in reference to somebody...

He says, "We have pictures of him."

In other words, the implication is, we have pictures of him in some kind of compromising situation.

>> (laughing) >> BERGMAN: Compromising situations are the currency of the Murdoch tabloids.

His editors are under daily pressure to feed the machine with salacious scoops.

Since the phone hacking scandal has broken, few insiders have talked, but former News of the World features editor Paul McMullan, who's now in a different business, remembers how it got started.

>> In the early days when mobile phones went digital, people didn't have codes.

So, it was something anyone could do-- something that you could do to your girlfriend's phone or your girlfriend could do to your phone.

And I was shown how to do it by a teenager because all the kids at school were doing it.

You simply hit 9, got the engage tone, and then entered the default code.

I think Vodaphone was four zeroes, T-Mobile was 4-3 or something like that, and then you just listened to all the messages.

>> BERGMAN: But as new laws and new technology made it more difficult, newspapers turned to professionals in the darker arts.

Private investigators were hired, allegedly to mine data banks, bribe or con telephone company employees, and get into private voicemail accounts, all to satisfy the papers' insatiable demands.

>> If you didn't write 12 big stories a year, you would be fired.

So under pressure you will ring up all your contacts, police friends, your PIs, to say, "Can we get anything on this?"

And a PI who knows he's going to be well paid and get a bonus will use his usual tricks, which would include phone hacking.

If you get caught, you go to jail, but if you don't, you get a Pulitzer prize.

>> BERGMAN: That relentless search for gossip led to the story that would ensnare Rupert Murdoch and disrupt British politics.

(tower bells chiming) >> BERGMAN: Like many a tale, it started with, "Once upon a time, there was a handsome prince."

>> Police inquiry into the News of the World starts almost with a fluke.

First the News of the World publish a silly little story about Prince William having injured his knee.

He'd left a couple of messages for people saying, "I think my knee is crocked."

Then the knee sorted itself out.

So when the News of the World published that story, it clearly signaled they must have got it from listening to these messages.

And a newspaper with the power and political and police connections of the News of the World would probably have sailed straight through that problem if it hadn't been for the fact that it was the royal household.

If the royal household are complaining, we'd better jump to attention and look.

>> BERGMAN: And they did.

Their investigations led them to the newsroom of the News ofthe World and the then royal correspondent Clive Goodman.

He was arrested, and together with a private eye, Glenn Mulcaire, would go to jail for hacking the prince's messages and the voicemail of several other people.

Everyone else at the paper would toe the company line, including former editor Rebekah Brooks and the then-editor Andy Coulson.

Both claimed they knew nothing about the actions of one "rogue reporter."

But the former features editor has his doubts.

>> First thing an editor does or says when someone brings in a story is, "Okay, where did you get it and how can you prove it?"

And you can say, "Well, I can prove it because here, ka-ching, is his own voice saying, 'Yes, I had sex with Ulrica last night and it was great, darling.'"

So, that's why the editors loved it so much, because they knew they couldn't be sued.

So, we would get the phone-hacked stories and we would be told, the issue is not that this is true-- we know it's true-- we just have to find a way of writing it.

>> BERGMAN: With his reporter going to jail, Coulson resigned.

But for the next five years, he, Rebekah Brooks and the entire company would steadfastly deny that phone hacking went beyond the private eye and the one rogue reporter.

The police seemed to agree with them.

Despite bags of evidence taken from the private eye, they surprisingly decided to close the investigation.

The case might have ended there, had Nick Davies of the Guardian not bumped into a senior policeman at a social function.

>> I simply casually asked him, "In the trial, when Goodman and Mulcaire came up, "there were only eight victims named.

Is that really all there was?"

And he said, "No, thousands."

And thousands I hadn't dreamed of.

And so that was a very strong incentive to try and dig a little more and find out what really was going on.

>> BERGMAN: If Mulcaire, the private eye, had hacked into thousands of voicemails, the question was, why were the police not informing more victims and taking further action?

>> I slowly began to accumulate material.

And I discovered that one of the victims who had been named in court, a man called Gordon Taylor, who's from the football world, he was suing the News of the World.

And I tried to keep on top of that.

>> BERGMAN: Gordon Taylor is one of the very few people the police told.

Even though no story had been written about him, he got angry.

He hired a lawyer.

He chose this man-- Mark Lewis, a little-known provincial lawyer who has multiple sclerosis-- to take on a global media titan.

>> I'd heard of News Corp. before all this.

I don't think they had heard of me.

I think now they've heard of me.

>> BERGMAN: The response from the chief counsel at News of the World was surprising.

The top lawyer has someone call you and say, can I come see you?

And you're up in Manchester?

>> I mean, it was the mountain coming to Mohammed, rather than Mohammed going to the mountain.

If he'd have phoned me up saying, "You know what, "we don't think you've got a case.

"However, we're going to give you "610,000, 615,000, to settle it without any admission of liability," my client would probably have had to accept that and the case would all have been over.

But they didn't do that.

It was obvious that there was something bigger, and because of that, I asked for damages of 6250,000 at that time.

>> Mark Lewis is an interesting character.

I always say he doesn't have a fear gene.

I mean, I didn't know him at the time, but from the outset, I suppose you could say he was the first person to stand up and confront these people.

>> BERGMAN: At this time there's public testimony going on in which News International was saying this was a rogue reporter.

And you knew differently, right?

>> The line that was being pursued by News International was quite clearly "rogue reporter."

I might have had a wry smile to myself that what they were saying to the public wasn't what I knew to be the case.

>> BERGMAN: He could smile because of what he now knew.

To take on News International, he had sued the police to find out what evidence they were sitting on.

>> Crucially, the police handed over what became known as the "e-mail for Neville."

This was an e-mail from a junior reporter who was sending the transcripts of about 35 intercepted voicemail messages to the then chief reporter of the News of the World, Neville Thurlbeck.

And that clearly showed the intimate involvement of at least two News of the World journalists in handling messages that had been intercepted illegally from Gordon Taylor's phone.

And that completely contradicted the official version of events.

>> BERGMAN: The e-mail would eventually thrust James Murdoch, Rupert's son, into the scandal.

As head of European operations, he had made the fateful decision to settle the Gordon Taylor case with a huge check.

He denies it was hush money, but the sum was unprecedented.

>> We got, including the legal costs, et cetera, something like 6725,000.

>> BERGMAN: Was this a record settlement?

>> It wasn't just a record, it smashed all records.

By comparison, the previous awards of damages for invasion of privacy for nonpublished stories had been in the region of 63,000, 610,000, 615,000, so this was off the scale.

It was an enormous sum.

>> BERGMAN: Under the settlement Taylor's lips were sealed.

The evidence of criminal behavior at News International would be kept secret.

But the Guardian got hold of the story and, in a front-page splash, accused the company of suppressing evidence and revealed there were thousands of mobile phones that were hacked.

It was an assault that immediately was met with a stunning counteroffensive.

First the police took issue with the Guardian's revelations.

>> Their potential targets may have run into hundreds of people, but our inquiry showed that they only used the tactic against a far smaller number of individuals.

>> BERGMAN: Rebekah Brooks, who by now had been promoted to chief executive of Murdoch's British newspapers, also went on the offensive.

>> 48 hours after that first story was published, News International came after us with heavy guns.

Now, they did that because they could see as journalists that in everything that we were writing, we weren't citing a single source.

We had the sources-- either off-the-record human sources or documents we couldn't disclose.

But they could see the gap, so they attacked us.

>> BERGMAN: Rebekah Brooks wrote to the chairman of the Parliamentary committee, pointing out that the paper relied on unnamed sources, that the police contradicted the Guardian story, and accused the Guardian of deliberately misleading the British public.

Davies and his editor were called before the Parliamentary committee.

>> Potentially I was in a lot of trouble because I had no evidence to display to show that the story was true.

But because they put out such an aggressive and dishonest statement, the source then allowed me to use a limited amount of paperwork.

I could then show that to the committee.

>> BERGMAN: Davies gave the committee the "for Neville" e-mail, which showed that more than one rogue reporter was involved in phone hacking.

>> To the extent that the attack on the Guardian story, it is being alleged that this was something that nobody at News International knew about, I think these documents may help you.

>> BERGMAN: But in spite of the evidence, the entire Murdoch organization, including the former editor Andy Coulson, would remain defiant.

>> And I'm absolutely sure that Clive's case was a, uh, very unfortunate rogue case.

>> BERGMAN: Other executives claimed they just couldn't remember.

A frustrated Parliamentary committee would issue a report accusing Murdoch's executives of "collective amnesia."

The investigation stalled.

>> It became apparent post-2009 that nobody really wanted to look at the story.

I think that was one of the most interesting aspects of the story.

So all the things that normally kick in in society-- democratic ways of accountability and transparency that would apply if this was an oil company or actually any kind of large corporation-- didn't kick in.

This was a company that a lot of people were frightened of.

I would say still are frightened of.

>> BERGMAN: The defenses had held.

And besides, there were much greater stakes at hand for Rupert Murdoch.

There was an election coming in 2010, and his papers would throw their weight behind the Conservative Party candidate, David Cameron.

When David Cameron became prime minister, one of the first visitors to Ten Downing Street was the chairman of News Corporation.

>> Mr. Murdoch, why did you enter the back door at Number Ten when you visited the prime minister following the last general election?

>> Because I was asked to.

>> Why would that be?

>> To avoid photographers in the front, I imagine.

I don't know.

I was asked; I just did what I was told.

>> Again, Mr. Murdoch, have you ever imposed any preconditions... >> Which, um, visit to Downing Street are you suggesting... are you talking about?

>> It was just following the last general election.

>> I was invited within days to have a cup of tea to be thanked for the support by Mr. Cameron.

>> BERGMAN: It was not the first time.

For 30 years, Rupert Murdoch had been visiting Number Ten to be thanked for his support by British prime ministers.

>> ...believe in a sound defense policy of the kind... (crowd cheering) >> BERGMAN: The deal-making began in the late '70s, when the "Iron Lady" was given a helping hand when Britain's largest daily threw its support behind her.

>> And I can remember there was someone who was talking to Mrs. Thatcher, well, she was talking to him, um, um, and said, "Why are you being so nasty "about Rupert Murdoch?

"He's going to...

He's going to win the election for us."

>> BERGMAN: Mrs. Thatcher's Tories won the next three elections, all with Rupert Murdoch and his papers by her side.

And Murdoch would gain a great deal from the relationship.

>> Mr. Murdoch, sir... >> BERGMAN: In 1981, two years into Thatcher's first term, he was allowed to circumvent monopoly rules and buy two more papers: the Times of London and the Sunday Times.

Harold Evans was editor of the Sunday Times.

He believes this was a critical moment.

>> The seeds of the corrupt relationship which exploded in the phone-hacking scandal were actually there all the time in News Corp. >> I don't like this at all.

What's the point of this section?

>> BERGMAN: To get around the monopoly rules, Murdoch had made promises to Parliament to stay out of editorial decisions.

>> If you don't listen to me, it'll be your fault, not my fault, if it doesn't work.

>> BERGMAN: Evans says the promises meant little to Murdoch.

>> What's this about?

Oh, no!

>> The promises to Parliament were broken with impunity.

And that was the moment when everybody should have realized that the government was so scared of Rupert, he could do anything.

>> BERGMAN: In 1986, Murdoch did something no one else dared to do.

In a secret operation, he built a new printing plant.

He then fired his union print workers and moved his four papers to the new plant, in London's dock area called Wapping.

He took on the unions to free himself from old technology and archaic work practices.

A battle ensued.

(crowd yelling) >> One thing everybody's missed is that in the battle of Wapping, when we were fighting the print unions, our lives became dependent on the police.

And during these times, a special bond was formed so that the News of the World and the Sun ended up with closer relationships with the Metropolitan Police than any other newspaper group in the country.

Police inspectors would retire and become well-paid columnists on these papers, and journalists would leave the tabloids and become PR flacks in the Metropolitan Police public affairs department.

>> BERGMAN: Set up in Wapping with his four newspapers, Murdoch was a man no politician could ignore.

>> The most incredible aspect I have seen in my lifetime is the queue of politicians anxious to kiss Rupert's backside.

>> BERGMAN: But Kelvin Mackenzie of the Sun knew what Rupert wanted.

He also knew how to use a headline.

In 1992, Neil Kinnock, then the Labour Party leader, was expected to win, right up to election day.

Then he got mugged by a headline.

>> That was a bit of fun, wasn't it?

Don't you think it's fun?

You should get the page 1.

You should stick it on there, make the documentary more interesting.

I took basically an old gag.

I got a light bulb, stuck Kinnock in the middle of it, and the headline simply said, "If Kinnock wins today, "will the last person to leave Britain please turn out the lights."

It was a bit of fun.

>> BERGMAN: When he lost, Kinnock blamed the papers, and the Sun gloated.

>> We had real power.

I mean, five million copies.

I mean, the Guardian sells what, 200,000, 300,000 to a bunch of bearded lesbians who have their opinions pretty well made up.

But sometimes people come into this bar and sprout the same opinions verbatim they've just read in the paper.

And it's quite interesting how you can really mold the mood of a nation and take it one way or the other.

>> BERGMAN: So when Tony Blair took over the Labour Party in 1994, he knew what had to be done.

He had to book a flight to Australia, where Murdoch's top executives and editors were gathering for the annual bash with the boss on his private yacht.

Blair was invited to address the assembled crew.

>> I've been clear right from the very start.

I'm not here to trade policy for editorial support.

What Mr. Murdoch's papers do is up to him.

What the Labour Party does is up to us.

>> BERGMAN: Despite denials, it had all the hallmarks of a pilgrimage.

And it paid off.

Next election, Murdoch changed sides.

>> Tony always took the view, you're better to fight in elections with the media on your side than against you.

And I can understand the argument, but you pay one hell of a price for it.

>> BERGMAN: Like what?

What's the price?

>> Well, he buys influence, doesn't he?

I mean, how did he get us to change our media laws to give him cross-media control?

That requires government to agree.

>> BERGMAN: The Blair government relaxed their media laws to Murdoch's advantage.

>> I remember it very well because it was the very last stages of the Communications Bill, and it was in the House of Lords and suddenly an amendment was put in.

It had come straight from Number Ten.

We had a vote in the House of Lords.

It went down, because I have to say the Conservative, the official Conservative position was also in favor of that, and they both paid court to Mr. Murdoch.

Indeed, had it not been for that, you wouldn't actually have this takeover, the attempt to take over full control of BSkyB.

>> BERGMAN: Murdoch wanted to increase his television holdings and gain a greater share in his satellite television company, BSkyB.

Why is BSkyB so important?

>> If you look about the money the Murdochs get from BSkyB, it's money, money, money.

And the money then keeps on funding papers that don't make money, but papers bring him influence more than television does.

Ask yourself, does that sound to be a good business model?

Whether it's good or not, it's certainly a business model.

>> BERGMAN: BSkyB would become the most profitable network in Europe.

And by 2010, Murdoch wanted to own all of it.

A $12 billion takeover was in the offing when David Cameron took office in May.

>> Morning, Prime Minister.

Looking forward to it.

>> BERGMAN: Once again, Murdoch would need a prime minister's support.

He and his executives had every reason to feel confident that the troublesome threat of a phone-hacking scandal was well behind them.

James Murdoch and Rebekah Brooks were friends of Cameron.

And they had another friend inside Number Ten.

After he resigned from the News of the World, Andy Coulson had been hired by David Cameron as his communications director.

>> I think they thought, "That's it, we've got our guys in.

"Now the priority is to get the BSky bid through because that's our commercial priority," and that was launched within a month of Cameron getting in.

>> BERGMAN: It seemed only a matter of time before Murdoch would get permission from the government to take full control of Sky Television.

But there were a few dissident voices.

>> The evidence of endemic abuse is growing by the day.

>> BERGMAN: Notably, Labour MP Tom Watson.

>> The barons of the media are the biggest beasts in the modern jungle.

They laugh at the law.

They sneer at Parliament.

They have the power to hurt us, and they do with gusto and precision.

>> Every friend and advisor I spoke to in 2009-10 said, "You're not going to get to the truth of this.

"There are too many people at the top with a vested interest for this story not to come out."

At the time, it was a very lonely place to be pursuing the phone-hacking scandal in the UK.

>> BERGMAN: He was proving too persistent.

It's now known that News International, Murdoch's British company, put the member of parliament under surveillance.

>> I'm laughing about it now.

It didn't seem funny at the time.

But I'd say, "The people were outside my flat again.

"There's that funny man on the motorbike.

I think I might have been followed."

And colleagues in Parliament would say, "Who the hell "do you think you are?

"No one's going to put a private investigator on a member of Parliament."

And of course it transpires that actually they did hire a private investigator to follow me, so at the time it was very tough.

>> BERGMAN: Tom Watson was not the only person followed and photographed.

The lawyer Mark Lewis discovered his family was put under surveillance.

These are our pictures of Shelley Lewis, his ex-wife, taken with her permission.

But News International has theirs.

>> I've seen the video of, um, my ex-wife and my daughter, who was 14.

I've seen a video that was found in News International's English offices.

They knew exactly what was going on.

Instructions had been given to do surveillance.

>> BERGMAN: Lewis was already under financial pressure because his law firm didn't want to keep suing News International.

They didn't want you to take any more of these cases.

>> Correct.

>> BERGMAN: And then you get a letter, as I understand it, from attorneys for News International saying that they're going to make sure that you don't take any more cases.

>> Correct.

The words they use is, "It's rare that we have to admonish a fellow professional" and "we will seek, or we might seek, "an injunction against you, but there is still time "for you to do the right thing, to do the proper thing, and not act."

I didn't do what they asked me to do.

>> BERGMAN: The Guardian also felt under pressure.

They received a surprising visitor.

Sir Paul Stephenson would later deny he was trying to influence the Guardian'scoverage.

But that's not how the editor saw it.

>> Chief cop came in here to essentially warn me off the story and said there was nothing in it.

Now, I didn't know at the time, but this was one of those sort of bombshells for me that came out during the summer.

He had just employed the former deputy editor of the News of the World as a, uh, as a special advisor.

>> BERGMAN: The police had hired Neil Wallis, who was Andy Coulson's deputy during the very period when the phone hacking was taking place.

The Guardian was on its own, with no other major newspapers investigating the story.

>> There were points when it was very frightening.

It is no fun at all being attacked by an organization which controls, at that stage, four newspapers and a major television news channel in this country.

And it can fill you with panic, really.

>> BERGMAN: Then Alan Rusbridger took an unusual step.

>> At that point I rang Bill Keller on the New York Times and I said, "I'm living through this sort of strange dream.

Is this a story or isn't it a story?"

>> It seemed like a no-brainer at the... You know, when I thought of it, I sort of wondered, you know, why I hadn't thought about this before.

>> BERGMAN: Did you ever make that kind of commitment based on a phone call?

>> Well, it was based on a body of reporting that had already been done.

>> BERGMAN: I'm only saying that in hindsight, the Wall Street Journal in editorials say things like, "Our biggest competitor goes off and puts all these resources into it," questioning your motives.

>> Sure.

They questioned our motive.

Yeah, it's true that we have a particularly tense relationship with the Wall Street Journal by virtue of the fact that Rupert Murdoch essentially came in and said he wanted to kill us.

>> BERGMAN: That's a competitive relationship.

>> That doesn't make what's going on at News Corp. not a story.

>> BERGMAN: The Wall Street Journal, which Murdoch had bought three years before-- once again assuring that he would not interfere editorially-- had not covered the phone-hacking story in any depth.

And over at his Fox News, there wouldn't be a lot of discussion about the scandal, then or later.

>> The story that is really buzzing all around the country and certainly here in New York is that the News of the World, a News Corporation newspaper in Britain, used... >> Uh, I'm not talking about that issue at all today.

Sorry.

>> Okay.

No worries, Mr. Chairman.

That's fine with me.

>> BERGMAN: The New York Times assigned three reporters, who uncovered two new sources and advanced the Guardian story.

>> And that changed things.

You know, people thought, oh, okay, this is not just a lone obsession of the Guardian, and everything that the Guardian wrote has now been written to the standards of American journalism, with all their fact checking and everything.

People began to take an interest in the story.

>> I mean, after the New York Times story, there was a frenzy of political activity.

And then it died down again.

Then it was really the civil actions from these public figures suing that built it up again in January 2011.

>> BERGMAN: Far from being intimidated, Mark Lewis had been accumulating evidence and taken on dozens of new clients.

>> It wasn't me on my own.

There was a number of civil lawyers who were pursuing cases in terms of hacking, and eventually the Metropolitan Police decided to reopen an inquiry, what the police now call Operation Weeting, where they investigated.

>> BERGMAN: With the new investigation, the police began to go through all that evidence that had first been gathered five years before.

>> Around that time, late 2010- 2011, there's a sense of real crisis inside Murdoch's organization.

This is not going to go away.

People keep dragging out new evidence into the public domain.

We are in serious trouble now.

And it's at that point that the prime minister's right-hand man sees the same, very, very threatening picture and resigns.

>> BERGMAN: Despite Coulson leaving Number Ten, Murdoch was determined to keep his BSkyB takeover on track.

News International had been paying off victims and settling cases in an attempt to keep the lid on the scandal.

By the time of his annual summer party in June 2011, it looks like Murdoch has pulled it off.

Prime Minister Cameron attends what is seen generally as a pre-celebration for the Sky announcement, expected within days.

And then, the Guardian comes out with a devastating revelation, reporting that News of the World journalists had hacked the phone of 13-year-old murder victim Milly Dowler when she was missing, and alleged they deleted messages on her voicemail.

Her story had transfixed the nation when she went missing nine years before.

There was a last glimpse of her alive, on her way home from school.

And then the search that followed.

Now it appeared that the phone hacking had given the family false hope, believing that she was possibly still alive.

>> We were sitting downstairs in reception, and I rang her phone and it clicked through onto her voicemail, so I heard her voice and it was just like... She's picked up her voicemails, Bob, she's alive!

And I was just... it was then, really.

>> BERGMAN: Later doubts arose over whether hacking actually caused the deletions.

But at the time there was outrage, and the family hired Mark Lewis.

>> The impact of the Milly Dowler story, it was like the Berlin Wall coming down.

There'd been a wall of silence from every other newspaper, every other newspaper group apart from the Guardian and the Independent that hadn't talked about hacking.

And then all of a sudden the whole world wanted to know about it.

>> BERGMAN: Then, the next week, a torrent of hacking revelations... the families of dead soldiers; the victims of terrorist bombing; other crime victims; even the newly married Duchess of Cambridge.

And former prime minister Tony Blair and his deputy John Prescott all had their phones hacked.

Frankly, it was kind of unbelievable for me to read that you, the deputy prime minister, and they were listening to your phone messages at least 45 times?

>> At least, for the police.

>> BERGMAN: This is the press.

>> In my case, I suspected my messages were being listened to.

I complained to the police.

The police did an investigation and said no, no evidence whatsoever.

>> BERGMAN: Two years before, the assistant commissioner of the Metropolitan Police, John Yates, had denied the charge.

>> This investigation has not uncovered any evidence to suggest that John Prescott's phone has been tapped.

>> BERGMAN: Now in the face of the evidence, he had little option but to resign.

>> It was only later we found 30 bags of evidence he wasn't looking into, but leaving that aside...

It's a deplorable case.

And we've got to have the courage now to do something about it.

A few years ago, everybody kept their head down, when there was only two or three of us fighting our wonderful British police.

They're not so wonderful as we thought.

Clearly in the pockets of the press.

>> BERGMAN: The Metropolitan Police, the largest police force in Britain.

>> Yeah, in London.

Were in a cozy relationship with the press.

>> BERGMAN: Britain's top cop, Sir Paul Stephenson, who had spoken with the Guardian editor and had ultimate responsibility for the investigation, also decided it was time to go.

And Neil Wallis, the former deputy editor of the News of the World, who had been hired by the police, was arrested and questioned about allegations of phone hacking.

And there was one more casualty.

At the News of the World, after 168 years, the presses made their last run.

>> That was the first paper he bought in this country.

His first love, gave him the money to buy the Sun, gave him the money to then set up Sky Satellite Television, gave him the money to buy the independent big city stations in the United States, which then turned into the Fox Network.

He's had to close it down.

Not change it, not sell it-- close it.

>> BERGMAN: Hundreds of jobs would be sacrificed, but there was hope that the Sky deal could still be secured.

Rupert Murdoch flew in and was widely denounced when he said his priority was protecting his chief executive, Rebekah Brooks.

Within days she would resign, and within a week she would be arrested and questioned about phone hacking and police bribery.

Murdoch was rapidly losing ground.

>> And suddenly, we hit the tipping point.

And politicians said, "Enough.

We're changing sides."

>> BERGMAN: David Cameron, who pursued Murdoch's support before the election, now distanced himself.

Without the political capital, Murdoch withdrew his bid for BSkyB.

The past had caught up with him.

>> Mr. Murdoch, did you read our last report into the matter, where we referred to the collective amnesia of your executives who gave evidence to our committee?

>> I haven't heard that.

>> Parliamentary inquiry found your senior executives in the UK guilty of collective amnesia, and nobody brought it to your attention?

I don't see why you think that's not very serious.

>> Yeah, but you're really not saying amnesia, you're really saying lying.

>> Well, we found your executives guilty of collective amnesia.

I would have thought that someone would like to bring that to your attention.

That it would concern you.

Did they forget?

>> No, that isn't... >> This is all about leadership.

If Rupert Murdoch wants this information in the public domain, it can be in the public domain, but so far, for the last three years, we've had to drag every piece of information out of the company, kicking and screaming.

And that's not a great PR strategy, and ultimately it's only going to cause more reputational harm for News Corp. on every continent.

Are you aware that in March of that year, Rebekah Brooks gave evidence to this committee admitting paying police?

>> I am now aware of that.

I was not aware at the time.

I'm also aware that she amended that considerably very quickly afterwards.

>> I think she amended it seven or eight years afterwards.

But did you or anyone else... >> Sorry.

>> Did you or anyone else at your organization investigate this at the time?

>> No.

>> Can you explain why?

>> I didn't know of it.

I'm sorry, I'm...

I'm... Let me just say something.

This is not as an excuse.

Maybe it's an explanation of my laxity.

The News of the World is less than one percent of our company.

I employ 53,000 people around the world, and I'm spread watching and appointing people whom I trust to run those divisions.

>> The idea that he didn't really know what was going on, that, you know, "it's only three percent of my company," "I delegate this to other people, nothing to do with me, guv"... Just not credible at all, in my view.

It's just my personal view as someone who knows him, because as I've said many times, he is omnipresent.

>> BERGMAN: After years of stonewalling, Murdoch's company finally launched an internal investigation.

The stakes are high for News Corporation, the parent company, because under American law, bribing foreign officials is illegal, and that evidence is coming out.

>> Payments have been made not only to police officers, but to a wide range of public officials.

>> BERGMAN: A police inquiry is discovering widespread bribery, this time by the Sun.

>> There also appears to have been a culture at the Sun of illegal payments, and systems have been created to facilitate those payments, whilst hiding the identity of the officials receiving the money.

>> BERGMAN: Ten more people were arrested for questioning, bringing the number of arrests to over 40.

>> Well, it's very clear the very senior executives had knowledge of phone hacking before they admitted to it.

We have got a criminal inquiry taking place, so it would be wrong to name the names now.

But I think it's going to go very high up the food chain indeed in this company.

>> BERGMAN: Despite all his problems, Rupert Murdoch, in characteristic fashion, confounded everyone.

He launched a new newspaper, the Sun on Sunday.

It was either a bold move to save the business or perhaps something much more important to him.

>> I was brought up by a father who was not rich but made it and was a great journalist.

And, um, he, just before he died, uh, bought a little small paper, specifically in his will saying he'd given me the chance to do good.

I would love to see my sons and daughters follow, if they're interested.

>> BERGMAN: His long-expressed hope for a family dynasty is now in peril.

There is reportedly dissension among the siblings.

His son James, who was the heirj apparent, is in trouble.

It goes back to the beginning, to that enormous 6725,000 settlement with Gordon Taylor.

James Murdoch had approved the payment.

Now members of Parliament wanted to know if he had previously lied to them about a cover-up.

>> Mr. Murdoch, did you mislead this committee in your original testimony?

>> No, I did not.

>> So if you didn't, who did?

>> As I've said to you, as I've written to you and I've said publicly, um... >> BERGMAN: His position was that two other senior executives of News Corporation had misled the committee.

>> So was it Mr. Crone, a respected lawyer and in-house legal adviser for many years?

>> Yes.

>> So do you think Mr. Myler misled us as well?

>> I believe their testimony was misleading, and I dispute it.

>> Do you think Mr. Pike, a partner at Farrers... >> BERGMAN: James Murdoch led the news that night.

For Mark Lewis, who wouldn't give up under intimidation, like the MP Tom Watson, persistence had kept the story alive.

You've said that but for pure chance, pure serendipity, it's very possible none of this would have come out.

>> Correct.

The journey, which is something which had started as a small file in my office in Manchester, had led to the resignation of someone in Ten Downing Street.

But actually that was only about twenty percent of the journey.

I describe my life as that two or so years ago, I walked into a John Grisham novel.

>> BERGMAN: The phone-hacking scandal will roll on for years, uncovering connections to more people yet to be named.

>> It's almost unstoppable, this process.

So you have this very powerful judicial inquiry looking at the relationship between newspapers and the police, or looking at the relationship between the Murdoch organization and politicians, which is going to be extremely interesting because of the possibility that the Murdock people have been telling government how to behave.

Really ultimately this is a story about the power elite and the abuse of power, the cozy assumption that we can all look after each other because we're all part of the same elite... and the rules don't really apply to us and the law doesn't really apply to us.

That's where the trouble comes from.

It's a most extraordinary story, and it's still coming out.

>> Frontline continues online.

With more from the three men who brought the scandal to light.

>> The whole world wanted to know about it.

>> And more from Rupert Murdoch's favorite editor.

>> Yeah, that was a bit of fun, wasn't it?

>> Get insights into the secret world of private investigators, from a man who's worked for the tabloids.

Explore News Corp.'s vast network of holdings, and watch the full program again online.

Follow Frontline on Facebook and Twitter, or join the discussion at pbs.org/frontline.

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