News Corp scandal could cost Murdoch his US broadcast empire
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Rupert Murdoch is hoping that what happens in London stays in England. On Friday, Murdoch referred to the News of the World hacking scandal as "the serious issue in London." If Murdoch can contain the business damage to London, he should be a very happy man (forget the reputation issue — that one is toast).
On this side of the pond, the FBI is now investigating whether sleazy News Corporation "journalists" hacked cell phone voice-mail accounts of 9/11 victims. The U.S. FBI investigation must be sending a frigid chill up and down Murdoch's business spine. Here's why: Should the FBI find that laws were broken in the United States, Murdoch could stand to lose much of his broadcast media empire.
A corporate felony conviction is cause for the Federal Communications Commission to revoke any broadcast license. News Corporation has FCC licenses for 27 broadcast stations in 18 U.S. markets. It is the lifeline of the Fox Network.
The last great corporate broadcast breakup through the loss of FCC licenses was over a much less serious issue than what Murdoch faces today. General Tire, owner of the RKO General broadcast group, lost its radio and television licenses over anti-competitive issues in the 1970s and 1980s.
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General Tire agreed to a settlement with the Securities and Exchange Commission and admitted to corporate misconduct that included, among other things, maintaining a slush fund that fueled political bribery in the United States and abroad. In the end, the FCC unraveled the massive RKO General network of television and radio stations after ruling the company "lacked the requisite character to be the stations' licensee."
RKO General was stripped of its broadcast licenses over character.
Curiously enough, one of the first licenses to be stripped from RKO General was WWOR-TV in New York, which today is owned by none other than News Corporation Chairman and CEO Rupert Murdoch.
Fox Television Stations Inc.'s licenses (Including WWOR-TV) are up for renewal next year. By then, the FBI should have figured out whether hacking occurred in the United States. But the truth is, we don't need an FBI investigation to determine whether Murdoch qualifies to hold a government-issued broadcast license for the public airwaves. Rupert Murdoch's admission of wrongdoing, via this week's apology and Tuesday's hearing, is proof of bad "character." Now it's time to see if the FCC has the guts to hold News Corp and Fox up to the same standard as General Tire and RKO.
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Patrick Milan is a former journalist who now monitors current events and consumer trends in his role as executive vice president and creative director for Tunheim, a branding, marketing and public affairs agency based in Minneapolis. He also hosts a morning news and music program on www.qrockradio.com.
