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Posted at 11:36 AM ET, 07/18/2011

News Corp. scandal sparks questions of U.S. broadcast licenses

As News Corp.’s phone-hacking scandal spreads to the United States, experts say federal scrutiny of the media conglomerate’s practices probably won’t result in the shutdown of the company’s broadcast licenses.

News Corp.’s broadcast TV licenses — including Fox — cover 40 percent of U.S. households, and jittery investors have asked telecom policy experts about how the widening scandal could affect those broadcast businesses, analysts say.

The Federal Communications Commission has the broad statute to revoke broadcast licenses that are not in the public interest.

But doing so would be difficult and the FCC hasn’t shown interest in following the FBI in investigating the phone hacking scandal. On Sunday, Sen. Richard J. Durbin (D-Ill.) said on “Meet the Press” that Congress should investigate Rupert Murdoch's News Corp., saying that the scandal raises questions about violations of the foreign corrupt practices act.

“Even in the unlikely event the FCC were to pursue license revocation, it would likely happen only after years of litigation at the FCC and in federal courts,” said MF Global analyst Paul Gallant.

That said, all eyes are on the FBI’s probe. If law enforcement uncovers significant wrongdoing in the United States, the risks for Fox rise.

“If the FBI investigation uncovers bribery and tapping in the United States, and high-level management is implicated, the risk will seriously increase,” said Rebecca Arbogast, an analyst at Stifel Nicholaus.

The FCC has not indicated that it is nor that it wants to investigate the company’s phone hacking that may have also occurred in the United States. Actor Jude Law filed a lawsuit last week that claims that his phone was hacked by News Corp.’s now-shuttered News of the World tabloid.

In a hearing on privacy last week, FCC Chairman Julius Genachowski said the hacking scandal should be investigated and that appropriate agencies — federal and state — are best situated to probe the company’s practices.

By  |  11:36 AM ET, 07/18/2011

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