News of the World: More companies pull advertising

image captionOpposition to News Corp's bid for BSkyB has increased in the wake of the phone-hacking scandal

More companies have withdrawn advertising from the News of the World in light of the phone-hacking scandal.

Major advertisers Boots and O2 are the latest to join a list of businesses wishing to distance themselves from the paper while the situation unfolds.

The government is to review its advertising contracts with the paper.

It also said that it would "consider carefully" whether to allow the proposed takeover of BSkyB by NoW's parent company News Corporation.

'Rising concerns'

Commons leader Sir George Young was asked if the government would follow the lead of private businesses and withdraw advertising from the paper.

"I will raise the matter urgently with my right honourable friend who has responsibility for this in the Cabinet Office and see if the House can be kept in the picture," he replied.

The government's Central Office of Information spent £54,000 on advertising in the News of the World last year, according to market research firm Nielsen.

Mobile phone company O2, who spent more than £1m on advertising in the News of the World last year, said it would not be purchasing advertising "while the situation unfolds".

Boots, who spent £800,000 last year, said it had also put further advertising on hold.

But it said that one advert, which was printed some time ago, would appear in the newspaper's Fabulous magazine this weekend.

The Co-operative Group said: "These allegations have been met with revulsion by the vast majority of members who have contacted us."

Energy firm Npower also said it was suspending current advertising, while the Royal British Legion has dropped the paper as its campaigning partner.

The Confederation of Retail Newsagents says its members are expecting to take a big hit on Sunday due to customers boycotting the News of the World.

Organisations have come under growing pressure from the public via social media sites such as Facebook and Twitter to boycott the paper.

On Wednesday, a slew of companies withdrew their advertising from the News of the World, including Ford, Vauxhall, Halifax and Virgin Holidays.

Takeover fears

media captionNicola Mendelsohn, Institute of Practitioners in Advertising:"We're in the eye of the clients are listening to what their consumers are saying on social media".

The News of the World is owned by News International, which is part of the News Corp media conglomerate.

News Corp is attempting to take full control of broadcaster BSkyB, in which it already holds a 39% stake.

News Corp's bid has faced opposition from rivals in the media industry and some politicians, who argue that the company would own too much of the British media if the deal went through.

That opposition has increased in recent days, with critics claiming that the phone-hacking scandal shows that News Corp is not "fit and proper" to own the broadcaster, as required by the media regulator Ofcom.

Shares in BSkyB were down 2% in afternoon trade in London, following a similar fall on Wednesday, on fears that the phone-hacking scandal could hinder the bid.

Earlier, News Corp shares also fell more than 3% in both New York and Sydney.

Last week, the takeover had appeared to move a step closer after Culture Secretary Jeremy Hunt said he was "minded to accept" News Corp's assurances about the spin-off of Sky News.

He began a seven-day consultation which closes at midday on Friday, and has since received 100,000 submissions about the bid - almost all of them opposed to it.

The sheer volume of submissions means Mr Hunt will not make his final ruling on whether the takeover should be allowed for many weeks, probably not until September at the earliest, BBC business editor Robert Peston said.

Speaking in the House of Lords, Conservative peer Baroness Rawlings said Culture Secretary Jeremy Hunt would not be hurried into making a final decision on whether to allow the takeover or to refer it to the Competition Commission.

"The Secretary of State will need to consider all the answers and all the presentations [from the consultation]," she said.

"The Secretary of State will not be rushed. He will be fair. He has to make [a decision] strictly on media plurality, within the law."

She was responding to Labour's Baroness Royall, who warned that refusing to suspend the process would be seen as "incomprehensible both by the public and by News Corporation's advertisers and investors".

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