News Corp. says it will close its 168-year-old U.K. tabloid News of the World, a dramatic bid to cap a scandal centered on the paper's controversial reporting tactics in pursuit of racy scoops. 
 
 News Of The World was known for years of hard-hitting investigations, exposure of wrongdoing, campaigning - and a hefty dose of celebrity gossip. Video courtesy of Sky News. 
 
 The paper, which appears on Sundays, is accused of improperly intercepting voice mails of everyday people, including a 13-year-old murder victim, as well as those of celebrities. 
 
 James Murdoch, News Corp.'s deputy chief operating officer, told staff Thursday that News Corp. had decided to close the tabloid because the allegations—if true—were "inhuman" and had no place in the company. He said the paper's reputation had been "sullied by behavior that was wrong." 
 
 The paper is one of Britain's sauciest and most storied tabloids, and was a key building block in the global media empire created by News Corp. Chairman and Chief Executive Rupert Murdoch, who purchased it in 1969. News Corp. also owns The Wall Street Journal. 
 
 News of the World became the U.K.'s best-selling Sunday paper with a righteous, no-holds-barred approach to taking down the rich and famous, from politicians to soccer stars. That style both appealed to the U.K.'s working class and titillated sophisticates who bought it as a guilty pleasure. 
 
 View Slideshow Agence France-Presse/Getty Images Chief executive of News International, Rebekah Brooks. 
 
 The paper has been under immense pressure for five years amid investigations into the use of private detectives to break into the mobile-phone voice mail of celebrities and political leaders. 
 
 The public rebuke reached a new level this week with the allegation that, in 2002, the paper accessed the voice mail of an abducted 13-year-old girl who, it turned out, had been murdered. Other allegations then surfaced of hacking into phones tied to other child-murder victims, as well as the families of war dead and of victims of 2005 terrorist attacks in London. 
 
 A person familiar with the matter said James Murdoch proposed the closure to his father earlier this week, and the idea was pursued immediately. 
 
 "The News of the World is in the business of holding others to account," the younger Mr. Murdoch said. "But it failed when it came to itself." He said the final News of the World would be published Sunday. 
 
 The controversy thrusts the younger Mr. Murdoch, believed to be a contender to eventually run News Corp., to the front and center of crisis management. 
 
 A sense that the paper had betrayed its readership was evident in London on Thursday night. Kandice Kameka, an office manager who works near the paper's offices, said she bought the paper "depending on what was on the front page—how good the gossip was." But she added: "When I found out about the tapping with the murder victim I was just gobsmacked—I didn't want anything to do with it after that....They just have no respect for people." 
 
 News of the World, Through the Years View Slideshow Getty Images A printer studied a front page proof in 1953. View Graphics Read All About It Key dates in the paper's past View Graphics 
 
 The recent uproar has threatened one of the most important business transactions on News Corp.'s plate, its proposed buyout of the 60.9% of British Sky Broadcasting Group PLC that it doesn't already own. 
 
 Before this week, the company was poised to finally receive regulatory approval for that proposal after an arduous 13-month effort; now that approval may be delayed, and it is unclear whether the deal itself will wind up as collateral damage in the News of the World scandal. 
 
 Analysts said the closure of News of the World would have a trivial impact on News Corp.'s finances. The paper accounts for significantly less than half of News Corp.'s U.K. publishing operations, which are valued at about $1.3 billion, or 2.8% of News Corp.'s current market cap, according to a person familiar with the matter. News Corp. shares rose almost 2% on the Nasdaq Stock Market Thursday before finishing at $17.43, down four cents. 
 
 Closing the paper by no means will shut down the scandal that has engulfed News Corp.'s U.K. newspaper operations. The company still faces a thicket of criminal investigations, civil lawsuits and new government and police probes that could take years to run their course. 
 
 News Corp. said it would close its News of the World weekly tabloid after a phone-hacking scandal, with this coming Sunday's edition the newspaper's last. 
 
 Executives of News Corp. believe more arrests are likely, according to people familiar with the matter. On Thursday night, the Guardian newspaper said Andy Coulson—a former News of the World editor who later became an aide to Prime Minister David Cameron—was told by police to present himself for arrest on Friday on suspicion of offenses related to phone hacking during his time as editor. Mr. Coulson didn't respond to a request for comment. 
 
 The situation has led to calls for the resignation of Rebekah Brooks, the chief executive of News International, News Corp.'s U.K. newspaper unit, who so far has received the backing of the elder Mr. Murdoch as well as his son. 
 
 Ms. Brooks was News of the World's editor until 2003, during the time of the alleged hacking of the murdered girl's phone. Since then, she has become one of the elder Mr. Murdoch's top lieutenants. 
 
 The latest revelations unleashed a political storm that prompted Mr. Cameron—a friend of Ms. Brooks—to call for new investigations into the paper's reporting tactics, the failures of the police and British media practices in general. Late Thursday, Downing Street officials were quick to say Mr. Cameron had nothing to do with the move to shut the paper. 
 
 Ed Miliband, the leader of the opposition Labour Party, said that Ms. Brooks should still step down. "I don't think News International can hope to start moving on and deal with these issues while she remains in place," he said. 
 
 Ms. Brooks declined to comment through a spokeswoman. 
 
 News Corp.'s move to close News of the World—which has an average circulation of 2.7 million, according to tracking organization ABC—brought sharp criticism from the U.K.'s National Union of Journalists. It is one of News Corp.'s four major U.K. newspaper titles, the others being the Sun, the Times and Sunday Times, but its circulation has been declining in recent years. 
 
 Michelle Stanistreet, the union's deputy general secretary, said a handful of staffers from the tabloid's sister paper, the Sun, left work in solidarity with their News of the World colleagues on Thursday, but that no strikes were planned. She said the closure was an attempt to divert attention, and the younger Mr. Murdoch should have fired Ms. Brooks instead. 
 
 News International said Thursday that some of the paper's 200 staff members may be laid off. But some may be transferred to other titles. 
 
 News Corp. may not be without a Sunday tabloid in the U.K. for long: people familiar with the matter said it has considered adding a Sunday edition to the six-days-a-week Sun, which attracts a similar audience as News of the World. The company could also simply launch a new paper with a different name. 
 
 "We don't know if this is anything more than a bit of PR management," said Tamsin Allen, a partner at law firm Bindmans LLP representing alleged phone-hack victims. "It's not really until we see heads rolling that we can be convinced that the company is taking this sufficiently seriously." 
 
 The phone-hacking scandal dates back to 2005, when Prince William's staff first alerted authorities to the possibility that the News of the World had hacked phones connected to the prince, sparking a police inquiry. 
 
 An initial police investigation into the newspaper resulted in two successful prosecutions that led to prison terms for the paper's royal-family correspondent, Clive Goodman, and Glenn Mulcaire, a private investigator hired by the tabloid. 
 
 Mr. Coulson, News of the World's editor at the time, resigned from his post in 2007, saying he took responsibility for the hacking that occurred on his watch but stating that he didn't know about it. The scandal reignited after new information surfaced in civil suits and the police reopened their criminal investigation. 
 
 —Alistair MacDonald, Natalia Rachlin and Jessica E. Vascellaro contributed to this article. 
 
 Write to Paul Sonne at paul.sonne@wsj.com, Cassell Bryan-Low at cassell.bryan-low@wsj.com and Russell Adams at russell.adams@wsj.com ||||| News Corp. says it will close its 168-year-old U.K. tabloid News of the World, a dramatic bid to cap a scandal centered on the paper's controversial reporting tactics in pursuit of racy scoops. 
 
 The paper, which appears on Sundays, is accused of improperly intercepting voice mails of everyday people, including a 13-year-old murder victim, as well as those of celebrities. 
 
 ...
– Mired in an ever-deepening phone hacking scandal, Rupert Murdoch's 168-year-old News of the World will fold after Sunday's edition, reports the Wall Street Journal. "If recent allegations are true, it was inhuman, and has no place in our company," James Murdoch said in a statement announcing the closure of the vaunted British tabloid. The younger Murdoch said that the paper had now "voluntarily given evidence to police" of widespread wrongdoing, and that "those who acted wrongly will have to face the consequences."