LONDON (Reuters) - News International said on Friday it had agreed to pay the family of murdered British schoolgirl Milly Dowler two million pounds ($3.17 million) over phone hacking claims.
Rupert Murdoch, chief executive of parent company News Corp, will personally donate another million pounds to charities chosen by the Dowler family.
The announcement came ahead of Friday's annual meeting of News Corp in Los Angeles at which the issue of hacking by its now defunct UK newspaper the News of the World is expected to fuel demands by some investors for Murdoch's ousting.
The settlement is the biggest payout made by News International the British newspaper arm of News Corp, in the phone-hacking scandal.
Dowler was abducted in 2002 and found murdered six months later. A former nightclub doorman was jailed for life earlier this year for murdering her.
News this year that the tabloid had hacked into her phone after she disappeared caused widespread revulsion in Britain and elevated the hacking issue into a national scandal.
In a joint statement with News International, the Dowler family said: "Nothing that has been agreed will ever bring back Milly or undo the traumas of her disappearance and the horrendous murder trial earlier this year.
"The only way that a fitting tribute could be agreed was to ensure that a very substantial donation to charity was made in Milly's memory. We hope that projects will be undertaken so that some good can come from this."
In the same statement, Rupert Murdoch said the behavior that the News of the World had shown the Dowlers was "abhorrent."
"I hope this donation underscores my regret for the company's role in this awful event. I also hope that through the personal donation something positive can be done in memory of their daughter."
The depth of the furor over the Dowler affair prompted Murdoch to apologize personally to the family during an arranged meeting in a London hotel in July at which the media tycoon said he had been appalled to learn what had occurred.
(Reporting by Stephen Addison; editing by Keith Weir)