Does hacking scandal threaten Cameron's future?

Britain's Prime Minister David Cameron during a press conference at 10 Downing Street Friday, July 8, 2011. Cameron promised a full investigation into the phone hacking and police bribery that lead to the collapse of the News of the World tabloid, saying that British politicians had for too long looked the other way at illegal practices. / AP Photo/Peter Macdiarmid

British Prime Minister David Cameron called for new tough rules for the press this morning, after the country's biggest-selling newspaper was shut down over a phone hacking scandal.

CBS News correspondent Elizabeth Palmer reports the scandal involving the Rupert Murdoch tabloid News of the World has been bubbling away for six years now, and it just keeps on spreading. It's now dragged in not only the media and the police, but also the political establishment.

Cameron's ex-press secretary, former News of the World editor Andy Coulson, was arrested in the scandal involving the paper's hacking of mobile phones.

A statement from Scotland Yard said Coulson was arrested "on suspicion of conspiring to intercept communications ... and on suspicion of corruption allegations."

U.K. PM's former aide arrested in hacking scandal

Also arrested this morning on corruption charges was Coulson's former royal editor at NOTW, Clive Goodman, who was jailed in 2007 for phone hacking, Channel 4 News reports.

The News of the World has been a Sunday institution in Britain for 168 years, selling more than 2 million copies a week with a mixture of gossip, girls, and sensational tabloid stings, like one last year where a reporter reported Sarah Ferguson (ex-wife of Prince Andrew) offering to sell access to him for $800,000.

In fact, the News of the World's undoing began with another member of the royal family, Prince William. In 2005 he read details in the paper that could only have come from his personal voice mail. Police tracked the hacking to the Murdoch paper.

That was bad enough, but over the years it turned out celebrities had been hacked, too.

The end came this week after news that the paper had broken into the phone of a murdered teenager and the voice mails of friends and families of British soldiers killed in action.

That was just too much, even in this country that loves its tabloid newspapers.

Lloyd Grove, editor at large for Newsweek and the Daily Beast, told CBS' "The Early Show" this morning that shutting down the paper indicates that "There's probably some stuff that we don't yet know about. This is a cash cow for the Murdoch newspaper empire. You don't just shut down a profitable enterprise unless there's something that perhaps you're hiding - at least people can think that.

"And also, one wonders what the practices of Murdoch papers like the New York Post are in the United States. I mean, if they're doing it over in the U.K., ... that pond is not too big an expanse of water," Grove told "Early Show" anchor Chris Wragge.

Palmer reports that Coulson insists he didn't know about the hacking, and deeply regrets it taking place. Cameron has stuck to a similar line - saying he was never given any "adverse" information about Coulson before hiring him, and that he performed his job as communications director admirably before stepping down six months ago as the hacking scandal grew.

Having entered 10 Downing Street in May 2010 claiming Murdoch's support (and reportedly meeting secretly with the media baron the day after taking office, with Murdoch "sneaking in the back door," according to the Daily Mirror), Cameron must now contend with the Tories' close ties with Murdoch.

As John Burns and Jo Becker write in The New York Times, Cameron's critics suggest that his "embrace" of Murdoch could seriously weaken the Conservatives. But it is also true that Cameron's predecessor in the Prime Ministers' office - Labor's Tony Blair and Gordon Brown - were also closely tied to Murdoch's media empire.

Above: Puppets representing Prime Minister David Cameron (left) and Culture Secretary Jeremy Hunt (right) are held aloft by a demonstrator in a Rupert Murdoch mask, at the launch of the campaign group Hacked off near Parliament, July 6, 2011 in London. (Peter Macdiarmid/Getty Images)

Eleanor Goodman, a former political reporter for Channel 4 News in the U.K., said such a cozy relationship between politicians and the British press is not new. "It's not just him that's had these relationships," she said on "The Early Show." "He employed a former editor of the News of the World, but this relationship between the British media and the tabloid newspapers goes back right to Mrs. Thatcher's time.

"What David Cameron tried to do was put himself at the head of a crusade to clean up the British media, and he announced these two inquiries. But what he couldn't do - and politically he desperately needed to be able to do this - was say that he would intervene to stop Murdoch taking over the rest of the television stations, and he couldn't really answer these questions about his judgment in taking on Andy Colson. He kept coming back to this idea that he had to give him a second chance; the second chance hadn't worked out for him.

"This really is a very dangerous moment for David Cameron," Goodman said. "People are equating it here with the moment when Tony Blair lost the trust of the nation by his handling of the Iraq crisis. Ed Milliband, the Labor leader who's had a really bad time until now, suddenly looks like a man who is more in touch with public opinion than the prime minister."

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