Miliband calls for new limits on media ownership

Ed Miliband, the leader of Britain's opposition Labour Party, arrives to give evidence to the Leveson Inquiry at the Royal Courts of Justice in central London, June11, 2012.

LONDON (Reuters) - Labour leader Ed Miliband leader told a judicial hearing on Tuesday the government should move to cap the market share of news organisations, saying Rupert Murdoch's News International media empire had become too powerful and arrogant.

Speaking at an inquiry into a phone-hacking scandal that erupted a year ago over Murdoch's British tabloids, Labour leader Ed Miliband said the tycoon's near 40 percent share of national newspaper readership gave him too much power.

"Part of News International's power and lack of accountability and arrogance came from its share of the newspaper market," Miliband told the inquiry.

Shedding light on legislation that Labour might pursue should it return to power, Miliband said laws should be reformed to limit companies' market share to about 20 percent.

"I don't believe that one person should continue to control 37 percent ... of the newspaper market," he said. "It's good for democracy to have plurality."

"There is a question of where the limits should be set," he said. "We should have no worries about someone owning 20 percent of the newspaper market".

Miliband was elected Labour leader after former prime minister Gordon Brown lost the 2010 parliamentary election, bringing the coalition government to power and sending Labour into the opposition.

Labour has since regrouped, seizing on the Murdoch scandal as well as deepening economic hardship to expand attacks on the ruling Conservatives. Labour now leads in opinion polls but elections are not due until 2015.

Allegations that reporters at one of Murdoch's newspapers hacked into the voicemail of thousands of people, from child murder victims to the families of Britain's war dead, have outraged newspaper readers in Britain and blocked Murdoch's bid to expand his hold over the British media market.

The Leveson inquiry was set up in the wake of the phone-hacking scandal to look into the ethics of the British press.

Cameron, due to appear at the inquiry on Thursday, has been particularly under fire over its handling of a $12 billion bid by Murdoch's News Corp to buy the rest of the lucrative pay-TV group BSkyB that it did not already own.

Buying the stake would have significantly expanded Murdoch's grip over the industry but News Corp dropped the bid after the phone-hacking scandal erupted last year.

As more back-room insight emerged during a week of high-profile witnesses, former Prime Minister John Major told Leveson earlier in the day Murdoch had tried to persuade him to change his policy on Europe in return for support from his newspapers.

"Just before the 1997 election it was suggested to me to try to get closer to the Murdoch press and I agreed that I would invite Mr. Murdoch to dinner and we did have dinner in February 1997," said Major, who was prime minister between 1990 and 1997.

"It became apparent in discussion that Mr. Murdoch said that he didn't like our European policies and wished me to change our European policies. If we couldn't change those policies he could not and would not support the government".

He added: "It is not often someone sits in front of a prime minister and says to a prime minister: 'I would like you to change your policy or my organisation cannot support you'."

(Additional reporting by Philip Baillie; Editing by Roger Atwood)