By Frank Byrt
Updated at 7:36 p.m. ET, July 14
The Federal Bureau of Investigation is looking into claims that Rupert Murdoch's News Corp. (NWS) might have tried to hack into phones belonging to victims of the Sept. 11 terrorist attacks, according to reports.
It's the latest development in a phone-hacking scandal that began last week, when the News of the World tabloid was
accused of accessing the voicemail accounts of celebrities, politicians and a slain schoolgirl. The newspaper was shuttered, but the move failed to contain the damage.
The U.K.'s Daily Mirror reported on Monday that a former New York cop said he was contacted by News of the World reporters who were seeking phone records of people who died in the 2001 terrorist attacks.
There are also reports that police officers allegedly sold details about Britain's royal family and also hacked the medical records of former Prime Minister Gordon Brown's son, who has cystic fibrosis.
News Corp. had tried to stanch the scandal and its influence on its shareholders with some procedural moves in the U.K. and a major stock buyback on Monday, but apparently they haven't worked. News Corp. has said it is increasing its current share-buyback program to $5 billion from $1.8 billion, beginning in August.
Investors don’t appear impressed with News Corp.’s efforts. The company's A shares were down 3% Thursday and have lost 15% over the past week. The uncertainty about the FBI action is likely to put further pressure on the shares.
The FBI announcement comes one day after the company halted its plan to acquire U.K. satellite broadcaster British Sky Broadcasting (BSYBY) because of the phone-hacking scandal. News Corp. said Wednesday it is dropping its bid to acquire the 60% of BSkyB that it doesn't already own. The TV network is seen as a revenue-grower for an organization that is print-heavy with media.
The FBI decision to investigate was made after U.S. Rep. Peter King, R-N.Y., and several other members of Congress wrote FBI Director Robert Mueller demanding an investigation, according to a law enforcement office who spoke with The Associated Press on condition of anonymity.
In an interview with The Wall Street Journal, which News Corp. owns, Murdoch defended his handling of the tabloid newspaper scandal and said any speculation that he may sell off the rest of the company's British newspapers is "pure rubbish." Murdoch made the comments in a story published on the Journal's website Thursday. The 80-year-old executive said he and other top executives had handled the crisis "extremely well in every way possible" with just a few "minor mistakes."
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