News corp. Said to pay $4.7 Million to hacking victim family

News Corp.’s U.K. unit agreed to pay 3 million pounds ($4.7 million) to settle claims that the News of the World tabloid hacked the mobile phone of a murdered schoolgirl, a person with knowledge of the matter said.

The proposed settlement includes a 2 million-pound payment to the family of Milly Dowler and a 1 million-pound donation to charity, said the person, who declined to be identified because the talks are private. News Corp. Chairman Rupert Murdoch was personally involved in the negotiations, the person said.

News Corp. is trying to “be seen to be generous as it’s much more than would be awarded by a court,” said Niri Shan, the head of media law at Taylor Wessing LLP in London. “The only downside is if it potentially sets an unrealistic expectation for others.”

Reports in July that Dowler’s messages had been intercepted triggered a public outcry that forced New York-based News Corp. to close the 168-year-old tabloid and drop its 7.8 billion-pound bid for full control of British Sky Broadcasting Group Plc. The Parliament’s Culture Committee decided last week to recall News Corp. Deputy Chief Operating Officer James Murdoch after former employees questioned statements he made about his knowledge of the extent of hacking at the News of the World.

Mark Lewis, the lawyer for Dowler’s parents and sister, said today he hasn’t yet accepted the offer from London-based News International. The unit said in an e-mailed statement that it was in “advanced negotiations” with the family.

Hugh Grant

The Guardian reported the amount of the settlement yesterday.

The settlement would have been more welcome if it hadn’t been made “only as a result of the exposure of phone hacking” in news stories, the victims’ group Hacked Off said today in a statement. Actor Hugh Grant, the public face of the London-based group, has claimed his phone was hacked.

“The family have been through a terrible ordeal,” the group said in its statement. “This is a welcome signal of remorse from News Corporation.”

Rupert Murdoch met with the Dowler family in July to apologize. “I said I was appalled to find out what happened,” Murdoch said after the July 15 meeting. “I apologized and I have nothing else to say.”

Lewis has been hired by celebrities and other public figures whose phones may have been hacked by the News of the World. He represented Gordon Taylor, the chief executive of the Professional Footballers’ Association, whose secret settlement with News Corp. in 2008 was later made public.

Sienna Miller

While the Dowler family hadn’t filed a lawsuit, the reported settlement would be larger than some others the company has reached in hacking cases. Actress Sienna Miller agreed to a 100,000-pound payout and sports commentator Andy Gray will receive 20,000 pounds. Both will also receive legal costs.

U.K. lawmaker Tom Watson, a member of the Labour party, said the settlement may cause News Corp. to exceed its proposed 20 million-pound fund to settle phone-hacking claims.

“Clearly for a 2 million-pound settlement for a single case” the total amount to resolve the scandal is going “to be dramatically more,” Watson said on the BBC News Channel.

The amount of the Dowler settlement reflects the exceptional circumstances of the matter, the person familiar with the negotiations said.

London police, who have arrested 16 people since reopening the hacking probe in January, are also investigating whether journalists bribed officers for confidential information.

The Metropolitan Police arrested one of its detectives for allegedly leaking information about the probe to the media, and last week said it would seek to force the Guardian to reveal its secret sources for certain hacking stories.

The revelation about Dowler’s voice mail also prompted the resignation and arrest of Rebekah Brooks, the chief executive officer of News Corp.’s U.K. unit and a former editor of the News of the World.