Murdoch admits Mosley story failure

James Murdoch admitted that News International's corporate systems failed to pick up on legal risks posed by its papers' methods of finding stories.

The media boss also told the Leveson Inquiry into press standards that the News of the World should not have run its story falsely alleging that former Formula 1 boss Max Mosley had a "sick Nazi orgy".

Mr Murdoch, 39, became executive chairman of News International when he took over his father's media empire in Europe and Asia in December 2007.

He was questioned about changes to the management culture he sought to introduce at the publisher.

Robert Jay QC, counsel to the inquiry, asked him: "In your view, were there deficiencies in News International's systems for identifying and assessing legal risk, particularly in the context of potential reputational harm for the company?"

Mr Murdoch said: "With respect to news-gathering processes, for example, one of the subjects of interest here, I think it's self-evident that in hindsight, knowing what we know now, whatever controls were in place failed to create the sufficient transparency around those issues and the risks around it ...

"At the time I didn't have a view that those were insufficient or not."

Mr Mosley was awarded a record £60,000 in privacy damages at the High Court over the March 2008 News of the World story about his sex life.

Mr Murdoch agreed that News International also had to pay "substantial" costs, which he said was a "cause for concern".

"The story shouldn't have been run," he told the inquiry.

The News of the World was closed down last July after revelations that it listened to the voicemails of murdered schoolgirl Milly Dowler.

Mr Murdoch said the Sunday tabloid - Britain's top-selling paper - "had a connection with its readers" and was popular with them and with advertisers.

But he added: "In the end the profitability of the News of the World did not save it."