Murdoch returns to News Corp. worries in US


Murdoch testified during a British parliamentary hearing on the phone hacking scandal that has already shut down one of his newspapers.

A federal investigation has started in the U.S. after allegations that News Corp. employees bribed police officers for information about victims of the Sept. 11 terrorist attacks.

Protecting News Corp.'s U.S. franchise is crucial because it includes the company's crown jewels - the 20th Century Fox movie studio and television holdings that include highly profitable cable networks and 27 broadcast stations. Movies, broadcast television and cable television account for nearly 60 percent of News Corp.'s revenue and an even higher proportion of the company's earnings.

Standard & Poor's has also put News Corp. on notice that its credit rating could be cut in the next 90 days. The move could affect nearly $15.5 billion in debt and raise the company's costs when it obtains loans in the future.

One of the biggest fears among investors is that more bombshells about the U.K. phone hacking scandal will drop in the U.S. and detonate such widespread outrage that advertisers will stop buying TV spots on News Corp.-owned stations. There are worries, too, that moviegoers will boycott theaters showing 20th Century Fox films.

Robin Steinberg, an executive vice president for ad agency MediaVest, said so far, she doesn't foresee any clients pulling out of The Wall Street Journal or New York Post, the other major U.S. newspaper owned by News Corp.

"There is a difference between sensationalized journalism and business journalism, and (papers in the U.S. and U.K. are also) separated by a large pond of water," Steinberg said. "The practices overseas are very different than the practices here. To date I'm not concerned with the practices The Wall Street Journal represents. I'm confident in the credibility of their journalistic approach."

In a sign investor worries may be easing, News Corp.'s shares have rallied in the past two days. The stock price still remains down by 12 percent since the scandal's scope widened at the beginning at the month.

The Associated Press contributed to this report.

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