Murdoch returns to News Corp. worries in US
Jul-21-2011

Emerging relatively unscathed from a British parliamentary hearing on the phone hacking scandal, Rupert Murdoch returned to the United States on Wednesday, where his company faces a host of financial and legal challenges.
As the scandal runs its course in the U.K., Murdoch's News Corp. must confront at least two U.S.-based shareholder lawsuits, a possible Standard & Poor's credit downgrade, and the beginnings of a federal investigation.
The conglomerate Murdoch controls through a family trust owns a movie studio, a broadcast network, pay TV channels and newspapers around the globe. It made $33 billion in revenue last year and generates about $2 billion in cash every year. The company has the financial capacity to withstand fines or most other corporate calamities.
Even so, News Corp. could face further damage to its standing. Standard & Poor's put the company on notice that it may cut its investment-grade "BBB+" credit rating in the next 90 days. The move could affect nearly $15.5 billion in debt and raise the company's costs when it obtains loans in the future.
"We see increased business and reputation risks associated with the broadening legal inquiries going on," said Michael Altberg, the S&P; analyst who issued the notice on Monday. Even after what some said was a good performance by Murdoch at Tuesday's hearing, those risks remain, Altberg said.
"There are reputational risks, which definitely could lead to the alienation of current and potential clients such as advertisers," he said.

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