Could it Get any Worse for Murdoch? Yes, if 9/11 Allegations Prove...

Could it Get any Worse for Murdoch? Yes, if 9/11 Allegations Prove True

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Just when you think that it couldn’t get any worse for Rupert Murdoch and News Corp. come questions about the memory and truthfulness of his son, a pie in the face in the halls of Parliament, the unraveling of a major business deal, and deepening suspicions about the company’s activities here in the United States.

The nightmare of journalism-run-amok began with revelations of outrageous, and possibly criminal, behavior by the staff of the notorious News of the World involving hacking into the voice mail of British citizens.

Murdoch shut down the News of the World, a profitable gossip tabloid with a massive circulation of almost 3 million readers, earlier this month in an attempt to pinch off the scandal. It didn’t work.

Now comes speculation that the News of the World staff had attempted to get the voice mail and phone records of victims of the September 11, 2001, terrorist attacks in New York.

Whether those allegations have merit is not known. The only source publicly known is a story in the Daily Mirror, another British tabloid and a competitor with News Corp.’s surviving gossip sheets. The Daily Mirror names no names but claimed a detective known for doing dirty work for journalists had talked to someone about it.

That’s not much, but apparently it is enough to get the U.S. Justice Department involved. The FBI is investigating.

This is troubling news for Murdoch and News Corp. While the company got its start in Australia, where Murdoch was born and raised, and rose to fame and glory with its transformation of Britain’s newspaper business, it is now based in the United States and has significant properties here.

In addition to the financial information company Dow Jones and the Wall Street Journal, News Corp. owns the New York Post tabloid, the Fox News cable network, Fox Sports and more than two dozen Fox TV stations throughout the nation, as well as other business enterprises, such as book publishing and advertising.

The Wall Street Journal reported Friday that the Justice Department is preparing subpoenas not only in the investigation of possible 9/11 voice mail hackings but in another investigation as well, regarding allegations that the American corporation engaged in foreign bribery — that is, whether News of the World editors had paid off British police.

In addition, Bloomberg News has reported that in a 2009 lawsuit a marketing company in New Jersey accused a News Corp. subsidiary of hacking into its computers while both companies were competing for a lucrative contract.  MSNBC reported the Justice Department is reviewing those allegations and has contacted a lawyer who represented the company.

If the FBI confirms the thin lead of 9/11 voice-mail hacking, then Murdoch and his company have something quite serious on their hands.

What it could mean to News Corp. and its assets, though, is uncertain.

Last week, analysts who had considered the ramifications of the company’s British entanglements said those problems were unlikely to pose a threat to the American subsidiaries.

“If alleged bribery and phone tapping are confined to the U.K., we believe the likelihood of U.S. broadcast licenses being revoked or not renewed is very low,” wrote two analysts, Rebecca Arbogast and David Kaut, in a message to clients, according to POLITICO.

The primary concern for News Corp. is protecting those broadcast licenses, and their status is an issue for the Federal Communications Commission.  Some of the licenses are due for renewal soon.  The FCC, as a regulatory board, sits on a large body of rules and regulations that guides its decisions and limits its authority. Stripping away a broadcast license is an action rarely taken.

News Corp. hopes such a possibility is never considered, and it says the 9/11 allegations are nothing more than rumor.

“We have not seen any evidence to suggest there was any hacking of 9/11 victim’s phones, nor has anybody corroborated what are clearly very serious allegations,” an unnamed News Corp. spokeswoman told the Wall Street Journal. “The story arose when an unidentified person speculated to the Daily Mirror about whether it happened. That paper printed the anonymous speculation, which has since mushroomed in the broader media with no substantiation.”

For now, the FCC is taking the position that the company’s problems are British, not American. “I think we’ll have to wait and see this unfold,” Commissioner Michael Copps told POLITICO. “The action is over the pond.”

If it remains as such, News Corp.’s worries here will be how to resurrect a tarnished reputation. If it becomes more, and the 9/11 allegations lead to criminal charges, then News Corp.’s future in the United States would be at stake, and Congress could feel obligated to inflict punishment.

There are few, if any, precedents. Murdoch and his media company may soon be traveling on new ground — or rather, on thin ice.

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