Will News Corp.'s Scandal Spread To The U.S.?

Originally published on July 14, 2011 6:56 am
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MARY LOUISE KELLY, Host:

All right. Well, as we've been hearing there, the phone-hacking scandal has been a British scandal so far. But the tentacles of Murdoch's empire, of course, extend far beyond Britain.

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LOUISE KELLY: We are (unintelligible)...

LOUISE KELLY: Hi, I'm Bill O'Reilly. Thanks for watching us tonight.

LOUISE KELLY: Good morning, Ken.

LOUISE KELLY: Good morning.

LOUISE KELLY: So let's tick through our list here. We just heard some of the Murdoch empire's holdings. But when you're talking about the empire, you were talking about a dozen film studios; all the Fox TV channels; the book publisher HarperCollins; of course, lots of newspapers. And I'm sure I'm leaving a lot out.

LOUISE KELLY: You are. You're also leaving out not only Fox Television Network and Fox News but cable networks they own. They own sports networks. They own 150 newspapers. They own outdoor billboards, satellite TV that covers much of Europe and much of Asia. They are a colossus.

LOUISE KELLY: Talk to us about how this all started. When did News Corp. start making its mark in the U.S.?

LOUISE KELLY: Well, it moved into the U.S. in the mid-'70s. First, it acquired this newspaper in - San Antonio Bee, in San Antonio. Then it acquired the New York Post, which had been a liberal newspaper, and Murdoch converted it to a more conservative newspaper. And then he acquired New York Magazine and the Village Voice, which he subsequently sold, but he acquired those in 1977. And then that's it for newspapers until he acquired, in 2007, the Wall Street Journal after, in effect, a hostile takeover.

LOUISE KELLY: It has been interesting, as a result of the scandal unfolding - mostly in Britain, so far - to see how much political influence Rupert Murdoch has enjoyed there. Does he enjoy the same amount of influence here in the States?

LOUISE KELLY: In the U.S., he has enormous influence. I mean, just think of the Fox Network, which has more viewers in the evening than CNN and MSNBC, its two competitors, combined. So if you think about the impact of Fox News on elevating the Tea Party and its profile in the United States, it had enormous impact. So presidential candidates, senatorial candidates and gubernatorial candidates court Rupert Murdoch. And they court him not just because they want his editorial support, but because they don't want him to oppose them. He's a very powerful foe.

LOUISE KELLY: Talk to me a little bit about how News Corp. is doing from a business point of view here in the States. How profitable have his holdings here been?

LOUISE KELLY: They make a nice profit. And the profit mixes; it comes from different places. This year or last year, the largest piece of profit came from the film studios. But you know, you think about "American Idol," which is a Fox show. It's a widely popular and profitable show - or "Glee," which is another Fox show.

LOUISE KELLY: And sports. Their sports coverage, sure.

LOUISE KELLY: And sports and cable. Or you think about Fox News Network. That makes a ton of money, over a billion dollars of profit. So this is not a troubled company, though its stock price has been hammered in the last week and actually has not been, as most traditional media companies have not been, their stock has been relatively flat.

LOUISE KELLY: What signs should we be watching for, Ken Auletta, signs that fallout from the scandal may be spreading here to the U.S.?

LOUISE KELLY: Well, I mean you've already seen some shareholder lawsuits have been filed in the U.S. People who are shareholders of News Corp. are claiming that because of these scandals, he's harmed their stock value. So he's got lawsuits to contend with here. But he's got other things to think about here. If his sense of invulnerability is gone, people who regulate his holdings in the United States may look with a more jaundiced eye on what he's doing here. And also, you have to think, if in fact the News of the World or The Sun or some of his newspapers were hacking into the voicemail and maybe the email of celebrities in England, might they have done it here, too?

LOUISE KELLY: Thank you very much.

LOUISE KELLY: My pleasure.

LOUISE KELLY: That's New Yorker writer Ken Auletta. Transcript provided by NPR, Copyright NPR.