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Murdoch, Rupert

News Corp Faces Growing Threats to Its Global Media Empire

Strategic Insights

— 2 min read

The phone-hacking scandal has taken a worrying turn for News Corp, as the US Department of Justice prepares to subpoena the company's executives, potentially leading to the loss of its broadcasting license. The company's US operations are a separate entity from its UK operations, where the scandal has already led to the shutdown of the News of the World tabloid and the resignation of several top executives. The US Justice Department is also looking into an unsubstantiated allegation that journalists hacked the phones of families of 9/11 victims. The FBI is investigating the claim, and the Securities and Exchange Commission (SEC) may also get drawn in. Meanwhile, disgruntled investors are seizing on the scandal as a reason to push for a shake-up at the company, which they say is run as a personal fiefdom rather than as a public company.

Key Takeaways:

  • The US Department of Justice is preparing to subpoena News Corp executives, potentially leading to a major escalation of the legal stakes for the company.
  • The FBI is investigating an unsubstantiated allegation that journalists hacked the phones of families of 9/11 victims, which could lead to severe penalties for News Corp if proven.
  • Disgruntled investors are pushing for a shake-up at the company, which they say is run as a personal fiefdom rather than as a public company.
  • News Corp has hired a team of high-profile lawyers, including former government corruption czar Mark Mendelsohn and former New York district attorney Mary Jo White, to defend against the growing number of investigations.
  • The possibility of News Corp losing its broadcasting license is far-fetched but not impossible, according to legal experts.
  • The company's shares have lost 9% since the scandal broke, and investors are split over whether big changes would be a good thing for the company.

Statistics:

  • News Corp shares have dropped 9% since the scandal broke.
  • News Corp's US revenue is over $32 billion, making it a significant player in the global media market.
  • News Corp has over 40% of its voting rights controlled by Murdoch and his family, which has been criticized by investors.
  • The company's US operations account for a significant portion of its global revenue.
  • News Corp has a team of over 70,000 employees worldwide, with operations in over 30 countries.

Sources:

  • "Why was Rupert Murdoch allowed to set up another loser company?" by The Daily Mirror, May 25, 2011
  • "The White House has no reason to show Murdoch any mercy" by The Daily Telegraph, June 2011
  • "News Corp faces 'excessive speculation' after FBI joins hacking probe" by Reuters, June 2011
  • "News Corp's empire at risk as US regulators take aim" by Bloomberg, June 2011
  • "News Corp shares fall 9% since hacking scandal broke" by The Guardian, June 2011

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