Ratings firm Standard & Poors said Monday it placed News Corp.s (NASDAQ:NWSA) shares on CreditWatch with negative implications in the wake of a phone hacking scandal that has rocked the global media giant.
In a statement, S&P said the decision was based on the increased business and reputation risks associated with (News Corp.s) broadening legal inquiries.
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In the past week, the phone hacking scandal has forced the resignations of several top News Corp. executives, and one, Rebecca Brooks, was arrested in Britain on Sunday and interviewed by police.
Chief Executive Rupert Murdoch and his son James, a top company executive in Britain, are scheduled to appear at a parliamentary hearing on Tuesday to answer questions about the scandal.
Reporters at tabloid News of the World have been accused of hacking into the phones of celebrities, politicians and private citizens. Politicians in Britain are alleging a cover up and authorities in the U.S. are also investigating claims of hacking by employees of the New York-based company.
In our opinion this and other recent developments materially increase the reputational, management, litigation, and other risks currently faced by News Corp. and its subsidiaries, Standard & Poor's credit analyst Michael Altberg wrote.
A News Corp. spokesman didnt immediately respond to a request for comment. News Corp. is the parent company of FOX Business. News Corp.s shares closed down 68 cents, or 4.32%, at $14.97. on Monday