Tuesday, June 22, 2021

NEWS CORP AGREES: HACKERGATE SCANDAL COULD HURT

August 15, 2011 by · Leave a Comment 

In their regulatory filings with the Securities and Exchange Commission, companies tend to make far more conservative comments about their projected growth than they do when they cannot be held to account for them. And nowhere did that disparity seem more glaring than in News Corp’s annual report, filed with the SEC today (Monday), in which it addressed the potential impact on its income from the various investigations of its voicemail hacking activity in the U.K. “It is possible that these proceedings could damage our reputation and might impair our ability to conduct our business,” the statement said. How much would the scandal cost shareholders? The company said that it could not predict the costs. “Violations of law may result in civil, administrative or criminal fines or penalties” and that they “could affect the company’s results of operations and financial condition.” The statement appeared to be at odds with Chairman Rupert Murdoch’s assurances during a conference call last week that the scandal has had “no material impact” on the company except for the closure of its News of the World tabloid, which represented “one small corner” of the company’s overall operations. Meanwhile, the FBI is reportedly looking into claims made at a 2009 trial by New Jersey-based Floorgraphics, a company that developed a way to place temporary advertisements on the floors of supermarkets, that after it refused to sell out to News Corp’s U.S. subsidiary News America, it discovered that its computers had been hacked 11 times in four months by someone with an IP address registered to News America. The trial ended when News America bought Floorgraphics for a reported $29.5 million in return for Floorgraphics’ agreement to drop the case.