Saturday, July 16, 2011

Rupert Murdoch phone hacking scandal becomes U.S. political issue

Rupert Murdoch, copies of the last edition of News of the World and Barack Obama are shown. | AP Photos

The spiraling crisis at News Corp.’s London tabloids, which on Friday claimed its first American scalp, is threatening increasingly to spill over into American politics.

The scandal has handed talking points to Democrats and a political cudgel to President Barack Obama’s re-election campaign, which is bracing for what’s become the usual battle with Fox News, whose evening lineup features some of the most powerful voices of conservative opposition, but whose corporate cousin is now being investigated by the Obama administration.

For News Corp., Friday seemed to mark a watershed moment in its position as a dominant - and often intimidating - media conglomerate.

Attorney General Eric Holder confirmed the “ongoing investigation” into allegations that reporters for its defunct News of the World hacked into the telephone of September 11 victims in the United States. And a day after chairman Rupert Murdoch downplayed the scandal in an interview with his own newspaper, the Wall Street Journal, two of his top lieutenants, Rebekah Brooks and Les Hinton – the paper’s publisher and a naturalized American citizen — were forced to resign, as the company pivoted from defiance to contrition.

Mainstream American politicians of both parties have generally avoided open combat with Murdoch, with Bill and then Hillary Clinton famously seeking to court him and reach an accommodation. Even Obama, who has warred openly with Fox at times, has more recently pulled back, even after seven-figure contributions to groups tied to the Republican Party were reported last year.

But Murdoch, wounded, suddenly appears mortal, and his enemies are emboldened.

Fox News chairman and CEO Roger Ailes “is going to be hamstrung,” said Murdoch biographer and AdWeek editor Michael Wolff. Ailes “operates independently, but in this context he will not be able to operate independently: This is going to be in the hands of lawyers and higher PR officials, and it will not be about what’s good for Fox, it’ll be what’s good for News Corp. and for an ultimate settlement.”

A Fox spokesperson dismissed Wolff as a “gadfly” and didn’t respond to a question about the News Corp.’s scandal’s impact on the network. A New York Post spokesman referred questions to a News Corp. spokeswoman, who didn’t respond to an inquiry on the topic.

But some other observers said they doubted that any management would tinker with the lucrative cable network that continues to dominate the television ratings. None of the American outlets have in any way been implicated in the illegal reporting that brought down News of the World.

“Even a change at the top of the house would not want to fix Fox because it ain’t broken,” said Lou Colasuonno, a former New York Post editor who worked for Murdoch there in the 1980s.

News Corp.’s newspapers are widely viewed as facing more serious uncertainty, and could reportedly be spun off into a new company to insulate more valuable assets from further damage. Those shareholders might not look kindly on the money-losing Post.

A senior executive at one rival media company said Friday that there is renewed interest in the possibility that the Wall Street Journal – whose editorial page is a central conservative voice — could again become a tempting acquisition target.

“The newspapers will leave the building when Rupert leaves the building,” predicted Colasuonno.

Post a Comment