News Corp.’s U.K. Woes Unlikely to Put Pressure on U.S. Broadcast Licenses

News Corp. (NWSA) is unlikely to face a push by U.S. regulators to revoke any of its 27 U.S. broadcast television licenses as a result of a U.K. law-enforcement probe of alleged phone-hacking by a London newspaper.

The Federal Communications Commission won’t involve itself in the U.K. probe of allegations that journalists at the now- defunct News of the World newspaper tapped phones and paid police for stories, FCC chairman Julius Genachowski said yesterday in Washington.

“Obviously there is a process going on in the U.K., and that is a U.K. process, and I don’t expect we will be involved with that,” Genachowski told reporters after an unrelated FCC meeting. Neil Grace, an agency spokesman, said the FCC wouldn’t comment on the licensing question.

U.S. Senator John Kerry, chairman of the subcommittee that oversees communications policy, doesn’t plan to take any action in response to the hacking allegations, according to a spokeswoman for the Massachusetts Democrat.

“We’re keeping an eye on the situation, but are not planning on officially looking into it at this time,” Jodi Seth, the Kerry spokeswoman, said in an e-mail yesterday. “For now, all that is certain is that there was hacking in Britain, which is outside of our jurisdiction.”

Allegations that News of the World staff tapped phones and listened to messages including those of a 13-year-old murder victim led U.K. politicians from all parties to urge Murdoch to withdraw a bid to take full control of British Sky Broadcasting Group Plc. (BSY)

Privacy Questions

The incident “raises serious questions” about whether News Corp. has broken U.S. law, Senator Jay Rockefeller, a West Virginia Democrat, said in a statement late yesterday, calling the alleged hacking “offensive and a serious breach of journalism ethics.”

“I encourage the appropriate agencies to investigate to ensure that Americans have not had their privacy violated,” Rockefeller said in the statement, which did not mention News Corp.’s broadcast licenses.

The company’s licenses to operate 27 U.S. broadcast television stations probably aren’t at risk from the U.K. scandal, said Rebecca Arbogast, a Washington-based analyst with Stifel Nicolaus & Co. The FCC has a high standard for revoking such licenses, Arbogast said in a July 11 note.

A U.S. law requiring broadcast licensees to be of “good character” is rarely used by the FCC to revoke licenses, Arbogast said. Typically, licensees are judged to have violated the standard when they have been convicted of a felony or of lying to the government, she said.

Photographer: Brendan Hoffman/Bloomberg

Julius Genachowski, chairman of the U.S. Federal Communications Commission (FCC). Close

Julius Genachowski, chairman of the U.S. Federal Communications Commission (FCC).

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Photographer: Brendan Hoffman/Bloomberg

Julius Genachowski, chairman of the U.S. Federal Communications Commission (FCC).

‘Not in Jeopardy’

“We are not aware of any precedent for a foreign conviction to be the basis of an FCC decision to revoke a license, and we’re not aware of any allegations of phone hacking or serious misrepresentation against News Corp. in the United States,” Arbogast said. “So at this point, we do not expect the fire to spread to the U.S., though questions could always be raised.”

“Based on what we know right now, the licenses are not in jeopardy,” Andrew Jay Schwartzman, policy director of Media Access Project, a Washington-based law firm, said yesterday in an e-mail.

News Corp., Rupert Murdoch’s New York-based media company, lost $7 billion in market value since July 4 amid investor concern that a U.K. investigation into possible hacking into individuals’ voicemail messages left on cell phones may affect the company more broadly.

15 Percent Drop

News Corp. declined 13 cents, or less than 1 percent, to $15.35 in Nasdaq Stock Market trading yesterday. The shares have dropped 15 percent since the first reports on July 4 that News of the World employees in 2002 hacked the voicemail messages of a missing teen who was later found murdered.

Murdoch, his son James and News International Chief Executive Officer Rebekah Brooks were summoned yesterday to appear before U.K. lawmakers to answer questions about the company paying police for stories.

It would be unusual for the FCC, under Genachowski’s leadership, to take any action as a result of the U.K. investigation, said Art Brodsky, communications director for Public Knowledge, a Washington-based advocacy group.

“They’re very reticent to do much of anything that’s even in their bailiwick, so going far afield to do something like this would be totally out of character,” Brodsky said in an interview.

To contact the reporter on this story: Molly Peterson in Washington at mpeterson9@bloomberg.net

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net

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