The "News of the World" is a UK-based tabloid newspaper, which began in 1843, and is owned (or was owned...) by News International, a UK-based publishing division of News Corporation- the chairman and CEO of which is Rupert Murdoch. The recent phone hacking scandal involving several News of the World journalists has prompted a government inquiry, and has ceased publication of the tabloid indefinitely. But you know all of this already...
During the recent inquiry, Rupert Murdoch used language such "they" and "them", referring to "actions taken by them"...the said "they or them" obviously referring to employees of the newspaper. This language suggests, much to Mr. Murdoch's liking, that he has nothing to do with phone-hacker employees of the very company of which he is Chairman and CEO; in fact, he maintains this exact position throughout his 'testimony' (the use of single quotations is important here, as a testimony is otherwise a solemn attestation as to the truth of a matter).
One can conceive of a situation whereby, for whatever length of time imaginable since Mr. Murdoch took control of the tabloid, (News Ltd. purchased it 1969, although, to his credit, cell phone hacking probably wasn't common until 90s/2000s) he would have no idea that some of the journalists that wrote for the paper were engaged in phone hacking and paying police officers. This fantasy would like likely also include flying pigs, a debt-free USA, and Greece as the strongest global economy.
Even if Mr. Murdoch is telling the truth, and he truly had no idea, or at least made absolute sure that he had no idea in case it ever blew up in his face (ie/ pinning everything on a certain female executive director...wouldn't be the first time men of power did such things), the point is that he is still the chairman and CEO. With the rights, come the responsibilities. If your company boasts a net profit that quarter, you get a bonus- and if a fiasco of unethical conduct concerning many of your own employees is blown out of proportion while other newspaper allegedly do the same thing...wait, what?
The issue isn't about Rupert Murdoch being asked if he will resign as CEO, or him lying about his reasons for not planning to, or the actual events of phone-hacking or paying off the police. The issue is that the practices may be more widespread than previously thought. Yes, what happened was unethical, and there should be serious consequences for the journalists, and News of the World, but there may be bigger fish to fry to here...
Should Rupert Murdoch be forced to resign? Of course not...he's not legally linked to any of the unethical practices himself (strategically or legitimitely), and he hasn't blatently done anything wrong. Whether or not he should for the sake of himself, News of the World, and it's shareholders is another question entirely...is this really the tabloid newspaper he envisioned, the one that will forever be known as the phone-hacking newspaper? Further to this, if he truly cherishes the newspaper and wants it to flourish, maybe he should leave. Finally, the shareholders may be better off if he wasn't in charge after this scandal, if News of the World ever publishes again anyways.
When governments interfere with the management of media companies in other countries, it is usually referred to as communist propaganda, or censorship...the media is the one place where government probably shouldn't have their hands in deciding who runs the show, regardless the country.