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How is the British phone-hacking scandal going to affect Rupert Murdoch's US businesses?

By Asif Ismail

WASHINGTON: Ever since the phone-hacking scandal involving News Corp. exploded in Britain on July 4, dealing a big blow to the company's business interests in that country and diminishing the political influence ofRupert Murdoch there, the mogul's adopted nation has been abuzz with questions about its impact here. Few believe that any of Murdoch's media businesses on this side of the Atlantic have practiced the news gathering methods-involving illegal wiretapping and phone hacking- that the now-defunct News of the World was accused of resorting to. Yet, in the United States, the media giant is already facing a potential Federal Bureau of Investigation probe, at least two shareholder lawsuits, and a possible downgrade by a rating agency.

Whether the scandal will snowball into the American shores with the same ferocity as it did in Britain, and, if that happens, what consequences will it have for the world's second largest media and entertainment company remain to be seen.

Even though Britain was where Murdoch's reputation and political ascendancy began to grow, it is in America where he makes most money. Fifty-four percent of News Corp.'s overall revenue is generated in North America. Some of the most prestigious and profitableNews Corp brands are in the United States. Its US subsidiaries include the highly profitable network and cable television brands such as Fox Broadcasting Company, Fox News Channel-the most influential news television channel in America today-the National Geographic Channels, the FX Network, and a series of lucrative sports channels. It also owns the Los Angles-based film studio 20th Century Fox. In the publishing arena, the company owns the Wall Street Journal, the largest US newspaper in circulation, the tabloid New York Post and the book publishing company HarperCollins.

For now, the News Corp's biggest potential legal trouble in America stems from the alleged bribery of British cops by News of the World, which was shut down earlier this month after the eruption of the scandal , to obtain information. Under the Foreign Corrupt Practices Act, it is illegal for a subsidiary of News Corps, a US-based company, to pay foreign officials.

An aide to California Sen. Barbara Boxer, who was one of the three senators that have called for an investigation into News Corp, said on Thursday that the Democrat is "concerned that News Corp may have potentially violated the Foreign Corrupt Practices Act." The Federal Bureau of Investigation is also probing whether News of the World or any other News Corp-owned publication has hacked into voicemails of Sept. 11 victims. Boxer, two of her Senate Democratic colleagues-John Rockefeller of West Virginia and New Jersey's Frank Lautenberg-and Republican Rep. Peter King, had called for an FBI investigation into the charges.

On Thursday, the Murdoch-owned Journal reported that the U.S. Justice Department was preparing subpoenas as part of a preliminary investigation of News Corp. over the two allegations. The predominant thinking here is, of the two charges, it is the hacking of the 9/11 victims' phone - if proved - that would damage News Corp. in a significant way in the United States.

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