Murdochs in the dock

The phone hacking scandal that has claimed the jobs of Britain's two most high-profile police officers, caused the closure of one of the country's most famous newspapers, prompted 10 arrests so far and led to calls for the resignation of the Prime Minister reaches a critical juncture today with a moment of high drama to rival anything that the British media has produced before, either in real life or fiction.

The founder and the appointed heir to the world's most famous media empire will take centre stage in the next act of the hacking saga.

Rupert and James Murdoch will sit before a panel of MPs and face questions that the company over which they preside was involved in phone hacking on an "industrial scale", made illegal payments to police officers and sought to corrupt the democratic process by "owning" politicians. In their answers, for which they have been carefully drilled by a team of lawyers and media trainers, the pair will attempt to rescue a tarnished reputation and distance themselves from serious criminality.

They will do so under intense pressure from their own shareholders, who have seen the value of their stock fall by almost a fifth – 17.9 per cent – since it emerged that the murdered schoolgirl Millie Dowler had been among victims of the company's journalists. The answers of the Murdochs will also be analysed by a number of investigating bodies, including the media regulator Ofcom which is gathering evidence on whether News Corp is "fit and proper" to own a broadcasting licence in the UK, and the Serious Fraud Office.

The pair's evidence will be followed by that of Rebekah Brooks, who resigned her post as their chief executive at News International last week, before being arrested on Sunday by police investigating the hacking and illicit payments made to officers. Yesterday Brooks fought back. Her lawyer, Stephen Parkinson, hinted that his client would take steps to redress damage to her reputation. "Despite arresting her yesterday and conducting an interview process lasting nine hours, [the Metropolitan Police] put no allegations to her and showed her no documents connecting her with any crime. They will in due course have to give an account of their actions and in particular their decision to arrest her with the enormous reputational damage that this has involved."

For James Murdoch the appearance before MPs will be a screen test like no other. As he prepared to take his seat in front of the House of Commons Culture, Media & Sport committee today, he was facing criticism from those who doubt that he possesses the abilities to run the News Corp empire founded by his father.

The pressure on him intensified yesterday with a growing clamour for him to relinquish his role as chairman of BSkyB, the satellite broadcaster which he helped to build into a successful business. BSkyB's non-executive directors were reported to be unconvinced that Murdoch can cope with the job when he is caught up in the phone hacking affair, and that they would watch his performance today ahead of discussions later this week.

That view was echoed by the satellite broadcaster's first chairman, Andrew Neil, a former editor of the Murdoch-owned Sunday Times. "Non-Murdoch shareholders in BSkyB [are] indicating James's future as Chairman [is] likely determined by his Commons performance," he said last night.

Yesterday the Liberal Democrats asked Ofcom to act now on whether News Corp should be allowed to have even the 39 per cent stake in BSkyB that it possesses. Don Foster, the party's media spokesman, said James should follow the example of senior police officers and his colleague Rebekah Brooks and resign, even if he was not admitting wrong doing. "I think his position is untenable," he said. A poll for ITV News last night showed that two-thirds of the public thought James should quit.

The hearing

Rupert Murdoch, Chairman and Chief Executive, News Corp

What would represent a victory?

He emerges as an honourable tycoon who was kept in the dark about the scale of the scandal. He demonstrates that he had no knowledge of the out-of-court settlements to Gordon Taylor and Max Clifford in 2008; that it was at his insistence that News International co-operated with the police; and that he does not exercise undue influence in the police, media and government. He apologises.

And defeat?

He admits he had knowledge of widespread phone hacking prior to January 2011. Yet it becomes apparent that he failed to take charge of the crisis and ensure News International co-operated fully with police. He comes across as arrogant or mendacious and/or appears to be vague or doddery, casting questions over his ability run a global multimedia giant in the digital age.

And a score draw?

He avoids implicating himself in any direct knowledge of phone hacking prior to January 2011 but seems out of touch and acknowledges that he has made mistakes in handling the affair.

James Murdoch, Chief executive, Europe and Asia, News Corp

What would represent a victory?

MPs are impressed by his grasp of detail and candour. He demonstrates that he was badly advised by lawyers and executives over the 2008 settlements to Taylor and Clifford by naming the executives and detailing their advice. He comes across as an astute and honest executive dealing with a formidable range of business problems, and shows remorse for the scale of wrongdoing at News International.

And defeat?

He comes across as a management-speak dalek devoid of empathy. He admits that he knew wrongdoing extended to beyond a single reporter but yet failed to inform the Metropolitan Police. He puts up spurious legal arguments for not giving straight answers to straight questions. He shows his temper.

And a score draw?

He agrees that he was not in complete control of News International but comes across as a decent individual who has been shocked by what has happened.

Rebekah Brooks, Former chief executive, News International

What would represent a victory?

She persuades the committee that she had no role in any wrongdoing and that the fault lies with other executives. She proves that she was on holiday when a private investigator working for the News of the World hacked into the mobile phone of Milly Dowler while she edited the paper. She comes across as decent, vulnerable and hurt by the damage to her reputation. A victim not a perpetrator.

And defeat?

She is defiant, haughty or arrogant and refuses to give straight answers. Fails to explain how she could not have known about phone hacking and payments to police officers on her watch, nor the out-of-court settlements to Gordon Taylor and Max Clifford. Trapped by a skilled inquisition.

And a score draw?

She agrees she failed to grasp the seriousness of wrongdoing at the News of the World, but is able to show that she personally had no role in any wrongdoing.