(Reuters) - Rupert Murdoch called his News of the World tabloid an "aberration", blaming journalists for hiding a phone-hacking culture from himself, his son James and his protégée Rebekah Brooks, and saying he wished he had shut it down sooner.
Rejecting personal responsibility for a culture that allowed illegality to flourish, Murdoch painted a picture of a rogue culture at the Sunday tabloid, in an echo of his company's now abandoned defense that a single "rogue reporter" was to blame.
"The News of the World, to be quite honest, was an aberration, and it's my fault," the world's most powerful media mogul said in a second day of testimony in Britain's High Court on Thursday. "I'm sorry I didn't close it years before."
Showing frequent flashes of annoyance as the questioning became more pointed, the 81-year-old admitted he had not paid enough attention to the News of the World but did not accept that he had allowed a culture of illegality to flourish.
"I think in newspapers, the reporters do act very much on their own, they do protect their sources, they don't disclose to their colleagues what they are doing," Murdoch told a judicial inquiry into press ethics.
Asked where the culture of cover-up had originated, Murdoch answered: "I think from within the News of the World. There were one or two very strong characters there who I think had been there many, many years and were friends of the journalists."
"The person I'm thinking of was a friend of the journalists and a drinking pal and clever lawyer and forbade them ... to report to Mrs. Brooks or to James," said Murdoch, in a thinly veiled reference to the News of the World's former top lawyer Tom Crone, who has accused James Murdoch of lying.
"Someone took charge of a cover-up, which we were victim to and I regret," he said.
The inquiry's top counsel, Robert Jay, picked up on Murdoch admission of a cover-up, causing consternation among Murdoch's legal team in the courtroom, and forcing Judge Brian Leveson to ask one of the party to sit down before resuming proceedings.
The appearance at the inquiry of a man who has courted prime ministers and presidents for the last 40 years was a defining moment in a scandal that has laid bare collusion between British politicians, police and Murdoch's News Corp.
PANIC
The tone of Thursday's hearing became increasingly hostile after the fairly civil exchanges on Wednesday, as Jay ratcheted up the pressure and described the culture of phone-hacking as a "cancer".
When Jay suggested that the response of News International, the British newspaper arm of News Corp, was a "desire to cover up, not expose," Murdoch snapped back: "Well, to people with minds like yours," before quickly adding "I take that back."
Jay, keeping his cool, assured him: "I'm very thick-skinned Mr. Murdoch. Do not worry one moment."
Murdoch described how the corporate mood had changed after last July's revelation that the News of the World had hacked into the voicemail of missing schoolgirl Milly Dowler, who was later found murdered - a turning point in the scandal.
"You could feel the blast coming in the window," he said, explaining why he had decided to close down the 168-year-old News of the World, for decades Britain's best-selling Sunday tabloid. "I panicked. But I'm glad I did."
The move was seen by angry News of the World journalists as a bid to save Brooks, the editor of the tabloid at the time when much of the phone-hacking occurred, whom Murdoch had promoted to run the whole of News International.
Brooks, known for her distinctive mane of red hair and skilful manipulation of relationships with top politicians, resigned a week later and has since been arrested twice on suspicion of charges related to hacking and bribery.
The scandal also put an end to News Corp's long-cherished ambition to buy the 61 percent of satellite broadcaster BSkyB it did not already own, a $12 billion deal that would have been the company's biggest-ever acquisition.
The company had assiduously cultivated Culture Secretary Jeremy Hunt, who had been trying to steer through the takeover, which was controversial because it would have increased Murdoch's already considerable media ownership in Britain.
On Tuesday, the inquiry was told of hundreds of emails exchanged between News Corp's top London lobbyist and James Murdoch, which boasted of the company's access to Hunt's office and privileged access to sensitive information.
Hunt's aide, Adam Smith, resigned the next day, and opposition politicians are calling for Hunt to quit, in an indication of the consequences the inquiry may have in its new phase of examining relations between the press and politicians.
Rupert Murdoch said he had not got involved in the politics of the BSkyB bid and could not recall being given updates by his son James, who was at the time chairman of News International and of BSkyB.
"I don't remember any conversation, to be honest with you, but I'm assuming that he kept me up to date to some extent. I delegated the situation to him, I left it to him," he said.
DIPSTICKS
Prime Minister David Cameron appointed Leveson last year to examine Britain's press standards after News of the World journalists admitted hacking into phones on a massive scale to generate scoops and salacious front page stories.
The admission last year, and the revelation that journalists had hacked into the phones of ordinary people and crime victims, prompted questions of whether the police declined to properly investigate the scandal because of Murdoch's influence.
While most British newspapers splashed Murdoch's appearance at the inquiry on their front page, his own Sun newspaper reserved the news for page 10 on Thursday.
The Sun also printed an excoriating editorial about the government under the headline "Dipsticks", a play on the fact that new data had just shown that Britain's economy may have fallen into a double-dip recession.
"The Tory leadership are adrift," the Sun said. "They muddle on, hoping something might turn up."
"And indeed it might. If there were an election tomorrow, who could say (Labour Party leader) Ed Miliband might not win it?"
The rival, left-leaning Daily Mirror tabloid pictured Murdoch with former prime ministers Margaret Thatcher and Tony Blair and with Cameron in his pocket, under a headline "Empire of the Sun".
