London (CNN) -- Rupert Murdoch admitted to a phone-hacking cover-up at one of his tabloid newspapers and apologized Thursday for not paying more attention to a scandal that has convulsed his media empire and rocked the British political establishment.
"I also have to say that I failed," he said before a long pause. "And I am very sorry for it."
Murdoch also admitted to a "cover-up" of phone hacking at his British Sunday tabloid The News of the World, but said his News Corp. had been a victim of it, not the perpetrator.
"Someone took charge of a cover-up, which we were victim to and I regret," he said.
He blamed "one or two very strong individuals" at the paper, but did not name them, saying it was because they could still face criminal charges.
Murdoch was being questioned at the independent British inquiry prompted by illegal eavesdropping by his newspaper.
The scandal forced the company to close the best-selling tabloid and has led to dozens of arrests, two parliamentary investigations and the Leveson Inquiry, before which Murdoch was testifying Thursday.
He suggested key parts of the scandal have been overblown.
"The hacking scandal was not a great national thing until the Milly Dowler disclosure, half of which has been somewhat disowned by the police," Murdoch said.
He was referring to the revelation that people working for him had hacked into the voice mail of a missing 13-year-old who later turned out to have been murdered.
The Guardian newspaper originally reported that the hackers had also deleted some of her voice mails, leading to false hopes that she was still alive and deleting them herself. In fact, the messages may have expired automatically.
Murdoch was also grilled over his media empire's back-channel lobbying to the British government, and said he learned of the existence of one of the key lobbyists only "a few months ago."
Murdoch said he was "surprised" at the extent of his employee Fred Michel's contacts with the British government as it considered a bid by his News Corp. to take full ownership of British Sky Broadcasting.
"You call it lobbying, I call it seeking of information," Murdoch told the Leveson Inquiry. "I didn't see anything wrong with his activities. I was I surprised that it had gone on so long, that there were so many e-mails, yes."
A government aide quit Wednesday over the revelation of the extent of the contacts, and there have been calls for the resignation of Culture Secretary Jeremy Hunt, who is named in the correspondence.
Murdoch spent hours Wednesday downplaying his political influence, even as British Prime Minister David Cameron said politicians had been too close to Murdoch over the years and the government aide, Adam Smith, resigned over communications between the culture ministry and News Corp.
Murdoch insisted Wednesday that he had "never asked a prime minister for anything" as he chronicled his personal relationships with prime ministers going back to Margaret Thatcher in the early 1980s.
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The media baron, who owns the Sun and the Times in London, as well as controlling the Wall Street Journal, New York Post and Fox News, also denied using the power of his press for personal gain.
At the same time, Cameron was saying politicians from across the political spectrum had been too close to Murdoch.
"I think we all, on both sides of this house, did a bit too much cozying up to Mr. Murdoch," he told the House of Commons as his government was battered over testimony Murdoch's son had given the day before.
James Murdoch testified Tuesday that before Cameron became prime minister, he had met the politician over drinks at a pub and told him the company's Sun newspaper would support his Conservative party in the next election.
Leveson Inquiry lawyer Robert Jay also pressed James Murdoch over the extent of his contact with politicians as the company moved to take full ownership of satellite broadcaster BSkyB.
That bid that collapsed because of the phone-hacking scandal.
Evidence published Tuesday suggests that News Corp. was getting inside information from the office of the government minister with the power to approve or block the acquisition, Culture Secretary Jeremy Hunt.
Adam Smith, an aide to Hunt, resigned Wednesday, saying his contacts with Murdoch representatives had gone beyond what the culture secretary had authorized.
But Hunt told the House of Commons he would not quit.
E-mails released by Leveson Inquiry "have been alleged to indicate there was a back channel through which News Corp. were able to influence my decisions. This is categorically not the case," Hunt said.
James Murdoch insisted before the Leveson Inquiry Tuesday that he knew little about the scale of phone hacking by people working for the News of the World, as he continued his fight to limit the damage the scandal does to him and his family's media empire.
The scandal has led to dozens of arrests on suspicion of criminal activity and forced News Corp. to pay hundreds of thousands of pounds in compensation to the victims of phone hacking.
James and Rupert Murdoch have been hammered over the past year about what they knew about phone hacking by people working for them.
The younger Murdoch has already been called twice to testify before British lawmakers and resigned from a number of top management positions at British subsidiaries of his father's media empire.
He and his father have always denied knowing about the scale of phone hacking, which police say could have affected thousands of people, ranging from celebrities and politicians to crime victims and war veterans.
Dozens of people have been arrested in criminal investigations into phone and e-mail hacking and police bribery, and police asked prosecutors last week to charge at least eight people.
The suspects include at least one journalist and a police officer, the Crown Prosecution Service said, declining to name them.
No charges have been filed, and the Crown Prosecution Service said it did not know when a decision would be made about charges.
In addition to the Leveson Inquiry and London's Metropolitan Police, two parliamentary committees also are looking into media conduct.
News Corp. shut down The News of the World, its British Sunday tabloid, last summer after public outrage at the scale of illegal eavesdropping its journalists did in search of stories.