The Commons culture, media and sport select committee also said Murdoch showed “wilful ignorance” of the extent of phone hacking in 2009 and 2010.
The committee also said Rupert and James Murdoch should take “ultimate responsibility” for the scandal.
MPs were split on party lines over the verdict – the six Labour MPs and the sole Liberal Democrat voted together against the five Conservatives on the panel to include the criticisms of Rupert Murdoch and his son.
The Tory members refused to endorse the report, branding it “partisan”.
Conservative Louise Mensch said it was “a real great shame” that the report’s credibility had potentially been “damaged” as a result of only Labour and Lib Dem members backing it.
But the MPs were united in their criticism of other former employees of News International, saying Les Hinton, the former executive chairman was “complicit” in a cover-up.
They added that Colin Myler, former editor of the News of the World, and the paper’s former legal head, Tom Crone, purposefully withheld crucial information and answered questions falsely.
The committee accused the three men of misleading parliament.
Rupert Murdoch “did not take steps to become fully informed about phone hacking” and “turned a blind eye and exhibited wilful blindness to what was going on in his companies and publications”, according to the document.