LONDON (Reuters) - James Murdoch denied on Tuesday that he tried to use the political influence wielded by his father's newspapers to steer through the largest takeover in his company's history at a time when it was battling a scandal over hacking phones.
Rupert Murdoch's News Corp. was forced to abandon its cherished $12 billion bid to take full control of pay TV group BSkyB last year after revelations that his News of the World tabloid had illegally hacked into phone messages on an industrial scale to obtain scoops.
At a judicial inquiry into press ethics set up after the scandal, Rupert's son James was questioned at length on his handling of the affair and his dealings with the government. He revealed extremely close ties with the minister responsible for the final decision on the BSkyB takeover, Jeremy Hunt.
He also acknowledged he had discussed plans for the takeover with Prime Minister David Cameron at a private dinner, although he said in general he left politics to his father and their newspaper editors.
The high-profile inquiry has captivated Britain with testimony from movie stars and other celebrities into the behavior of its press. It is looking more broadly at ties between politicians and press barons, especially Rupert Murdoch, who has wielded enormous influence for four decades.
At the time the scandal broke last year, the younger Murdoch ran his father's UK newspaper empire and was chairman of BSkyB, where News Corp, the largest shareholder, was seeking government permission to take full control.
The affair has been deeply embarrassing for Cameron, who has faced scrutiny into his close personal friendships with senior News Corp executives and his judgment in naming a former News of the World editor as his spokesman.
Tuesday's questioning revealed close contacts between News Corp and Hunt's media and culture department, with emails sent between News Corp staff stating that the government minister accepted the strength of their argument and thought it was 'game over' for rivals who opposed the deal.
Emails sent by a lobbyist for News Corp stated that Hunt "shared our objectives" and one email said he had got hold of some information on what Hunt would say in his statement on the deal, although he added that this was "absolutely illegal".
The government's willingness last year to approve the controversial deal prompted critics to argue that Cameron and Hunt had been too close to the Murdochs. After the hacking allegations snowballed, Cameron called on News Corp to withdraw the bid, effectively dooming it.
Investigations into the hacking scandal have hinged on how much James Murdoch new about illegal practices at the News of the World, especially when he approved a large payout for a hacking-related legal claim. He has consistently maintained that underlings - in particular then-editor Colin Myler who is now at the New York Daily News and lawyer Tom Crone - failed to alert him to the extent of the wrongdoing.
"Knowing what we know now about the culture at the News of the World ... then it must have been cavalier about risk and that is a matter of huge regret," he told the packed court room.
He said he had not been sufficiently in touch with the culture at the tabloids to question subordinates.
Asked if he even read the News of the World, he said: "I couldn't say I read all of it". "I wasn't in the business of deciding what to put in the newspapers," he said.
Media consultant Steve Hewlett, who has closely followed the inquiry, said of the testimony: "His lack of engagement with the nuts and bolts of what the business was actually about - i.e. journalism and content - is quite remarkable. I'm not saying it's not genuine but it's quite remarkable."
TOWERED OVER POLITICS
Murdoch at first looked nervous, repeatedly clenching and flexing his fists and fiddling with his tie as he waited for Judge Brian Leveson to appear. He appeared to get more confident as the hearing went on however and at times looked impatient with the line of questioning, even rolling his eyes on occasion.
The inquiry, led by senior judge Brian Leveson, was ordered by Cameron last July and has begun questioning media barons and politicians to examine whether cozy links between them were to blame for a culture of illegality in parts of the press.
Rupert Murdoch has towered over British politics for four decades, fostering close relationships with prime ministers from both main parties. He appears before the inquiry on Wednesday.
His newspapers have long boasted that their endorsements win elections, especially the daily Sun and its weekly sister paper the News of the World, long Britain's two best-selling titles. The News of the World was shut down over the scandal last year and replaced with a Sunday edition of the Sun.
James Murdoch, 39, long viewed as his 81-year-old father's heir apparent, rejected the suggestion that he had used the tabloids' influence to pull strings for the BSkyB bid.
"That's absolutely not the case," he said, raising his voice at prosecutor Robert Jay.
"The question of support of individual newspaper for politicians one way or another is not something that I would ever link to a commercial transaction like this," he said. "I simply wouldn't do business that way."
He said his father and former News of the World editor Rebekah Brooks had managed the relationship with politicians while he focused on growing the television business, where his real interests lay.
"From time to time she (Brooks) would report to me about a discussion that was relevant but she would also communicate directly with my father with some frequency," he said.
(Additional reporting by Paul Sandle and Drazen Jorgic; Editing by Peter Graff)