Murdoch's News Corp. Still In Damage Control Mode

Rupert Murdoch's media company has been under fire for a phone-hacking scandal in Britain. On Wednesday, News Corp. announced it was withdrawing a bid to buy full interest in the British broadcast company BSkyB. Murdoch has suffered a stunning loss of political influence in Britain.

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STEVE INSKEEP, host:

It's MORNING EDITION from NPR News. I'm Steve Inskeep.

MARY LOUISE KELLY, host:

And I'm Mary Louise Kelly in for Renee Montagne.

Twice now Rupert Murdoch's media empire has tried to contain the damage of a scandal.

INSKEEP: Last week, Murdoch's News Corporation closed the British tabloid News of the World amid a scandal over phone hacking, and that wasn't enough.

KELLY: So yesterday, News Corp. abandoned its effort to buy provide full ownership in a British TV network. But of course investigations will continue.

INSKEEP: In a moment, we'll ask if the scandal could spread to the United States. We start with NPR's David Folkenflik. He's been covering the story from London.

David, hi.

DAVID FOLKENFLIK: Good morning, Steve.

INSKEEP: People will be wondering, you just marvel at how such an influential company and a politically savvy company could be taking so many hits.

FOLKENFLIK: Well, you got to think back just eight days. You know, the Murdochs oversee two of the most popular newspapers in Great Britain and there's a reason for that. The papers serve up a lot of gossip, a lot of dish. But the way they came by it, it turns out, may have involved, as we now know, widespread phone-hacking and widespread illegal payments bribes, really - to police. A terrible public outcry as some of the targets of that, it turned out to be, you know, crime victims, victims of terror attacks, other things. Politicians have scrambled to contain the damage. It turns out police may well have fumbled early investigations. And so there was a wall of opposition, as you suggested, to the Murdochs particularly taking over this major broadcaster, BSkyB.

INSKEEP: And even though it was News Corporation that announced it was dropping the bid, it seems that that was going to be inevitable, that they were going to have to. All three major political parties in Britain were preparing to vote against, vote in opposition to that bid.

FOLKENFLIK: That's right, a solid wall of opposition.

INSKEEP: So what's next?

FOLKENFLIK: Well, the prime minister yesterday also announced two inquiries, and these are broad-ranging under a very senior judge. The first is into the culture of the press, the way in which the presses operate, its coziness with politicians, the way in which it's self-regulated, and the question of whether or not there needs to be stiffer regulation of how the press operates, something that would raise eyebrows in our country.

The second is perhaps going to be more immediate of concern for people who work for the News of the World and for News Corp. in the U.K. And that's the question of whether anything that occurred was actually criminal -investigation of phone-hacking, investigation of bribes to police for information. And as the prime minister yesterday, David Cameron, indicated in parliament, you know, if there are allegations that prove credible in other newspapers, investigators have been encouraged to look at those as well. There are parliamentary hearings. There are demands for Rupert Murdoch, the driving force behind News Corp., his son James, a very senior executive, and for Rebekah Brooks to appear before a parliamentary inquiry.

Only Rebekah Brooks, who is the chief executive of British newspapers for News Corp. here in the U.K., can be compelled to testify. She's a British citizen. Rupert and James Murdoch are American citizens. But you know, that's gaining some force here as well.

INSKEEP: Wow(ph), just listening to you talk, David Folkenflik, about this giant company News Corporation, it's had to dropped a newspaper that was a big part of the corporation's past. It's had to drop a TV deal and TV is a big part of the company's present and seen as a big part of its future. And you've named not just Rupert Murdoch but his son James, which raises questions about succession and control of the company. Everything is involved here.

FOLKENFLIK: Well, I think everything is at stake in terms of figuring out how they move forward. It's about the future of the company. As you say, News of the World was very much important to the success of the British newspaper empire, which led to his expansion into television and into the American markets. But they're not the future. The money is in television. You know, BSkyB, if they had taken full control of the company - News Corp. has about 39 percent of it now - it would've added a lot to the bottom line. And will shareholders really ultimately accept this as a dynastic company with a guy like James Murdoch at the head, given all that's happened?

INSKEEP: Because Murdoch, James Murdoch, could be tainted by this, is what you're saying.

FOLKENFLIK: Oh, he's seen as overseeing a very problematic chapter in the company's history.

INSKEEP: David, thanks very much.

FOLKENFLIK: You bet.

INSKEEP: NPR's David Folkenflik is in London, where investigations continue into Rupert Murdoch's News Corporation.

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