News Corp.'s Phone Hacking Scandal In a Nut Shell

Its been about a month since the world of Rupert Murdoch came a sudden halt due to the phone hacking scandal (although the story feels likes its been going for a lot longer than that). The business and reputation of both Rupert Murdoch and News Corp. have suffered some very serious damage, which in a nut shell can be summarized as follows:

• In 2007, a reporter and private investigator who worked for the News Corp.-owned News of the World tabloid, were both convicted of phone-hacking. The company at the time claimed that the incident was limited to those rogue individuals.

• Investigations in 2009 suggested that phone-hacking was a more widely used tool at News of the World than initially thought. The story continued to remain in the backwaters of major news events, until a report by UK’s Guardian newspaper a month ago alleged that other victims included the families of British troops killed in combat and murdered schoolgirl Milly Dowler. The public outrage immediately catapulted the story to front page status, and sent News Corp. into full blown crisis mode.

• The dramatic fallout, loss of advertisers and public anger forced Rupert Murdoch to shut down the 168 year old newspaper, which once held the title of being the biggest selling English language newspaper in the world. The paper’s former executive editor, Neil Wallis and former editor, Rebekah Brooks have both arrested in relation to on-going investigations.

• Members of both the UK government and parliamentary opposition called for News Corp to abandon its $12 billion bid to buy the 61% of satellite broadcaster BSkyB that it did not already own. The company initially resisted the move, however on July 13th they finally relegated and withdrew their bid.

• The company has continued in its attempts to contain the public fallout, including publishing public apologies in a number of British newspapers on July 16 and 17. The apologies provide further details on what steps the company is taking to address its systematic abuses of privacy laws.

• Though the phone hacking allegations have to date been primarily limited to the UK, the company is starting to see effects on its worldwide business. The ratings agency, Standard & Poor's, placed News Corp.'s BBB+ rating on a negative watch stating that its credit rating could be cut as the snowballing British phone hacking scandal threatened to claim more victims, and lasting damage is done to its business franchise.

• To date, no senior management company executives have been implicated in the scandal.