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Will the News Corp. Hacking Scandal Cause Problems in the US?

By Cynthia Hsu, Esq. on July 19, 2011 | Last updated on March 21, 2019

The hacking scandal has already claimed News of the World, one of Rupert Murdoch's News Corporation's biggest tabloids. What's next for News Corp.? A U.S. investigation into the media giant?

Apparently so. Members of Congress are now clamoring for an investigation into the U.S. operations of News Corp., even though for the most part the hacking scandal originated from the same land where News of the World circulates: the United Kingdom.

It's an unfortunate reality for companies that actions abroad may have dire consequences back in the U.S. It's also a lesson that News Corp. may have to learn the hard way.

Congressmen are now asking whether News Corp. may have violated U.S. law through actions, including buying information off police officers, by one of its subsidiaries, News International, reports The New York Times.

The allegations are that News Corp. may have violated the Foreign Corrupt Practices Act. Since News Corp. is based stateside, the company might be bound to follow the Act even though its actions may have occurred abroad, The New York Times reports.

To add to News Corp.'s woes, shareholders have now sued the corporation over allegations of failure of governance. The shareholder lawsuit was filed last week, reports USA Today.

The Federal Communications Commission may also take aim at the beleaguered company. News Corp. owns 20th Century Fox, Fox News channel, and various newspapers including the Wall Street Journal and the New York Post. FCC licenses have a "character" requirement that could result in a revocation of broadcast licenses. "Character" violations would include misrepresentations or lies made to the FCC or any other branch of government, the Los Angeles Times reports.

And, what exactly spurred on this heightened scrutiny? News Corp.'s U.S. investigations seemed emerge right after news broke about the News of the World phone hacking scandal. It seems what happens in the U.K. does not stay in the U.K., and News Corp. may be facing tough new challenges back in the States for actions taken across the pond.

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