Rupert Murdoch's American media empire will soon unravel: Obama ally

Rupert Murdoch's American media empire is starting to "explode" and "unravel" because of the telephone hacking scandal, one of President Barack Obama's leading allies has said.

Remarks by John Podesta, who oversaw Mr Obama's transition to the presidency after his 2008 victory, reflected a growing hope among Democrats that Mr Murdoch could finally face his comeuppance in the US - where he makes most of his profits - after years of bashing liberals, principally through his right-wing Fox News cable channel.

"This is not one rogue editor," said Mr Podesta of the misconduct that led to the closure of the News of the World.

"This is an empire that was built on a set of journalistic ethics that's beginning to explode and unravel," he told The Globe and Mail in Canada.

"They were routinely bribing public officials. We've called attention to the fact that this story is going to go on for a while, this is not a two-week story, I don't think."

Mr Podesta founded the Centre for American Progress, a think tank which is one of several Left-leaning organisations that has petitioned for a federal investigation into News Corp under the Foreign Corrupt Practices Act, which forbids bribery of foreign officials by any US company or its overseas subsidiaries.

Eric Holder, the attorney general, became the first senior administration official to comment publicly on the issue yesterday when he confirmed that the US government was investigating News Corp.

"There have been serious allegations raised in that regard in Great Britain, there is an ongoing investigation," he said in Sydney, where he was attending a meeting of his counterparts from Britain, Australia, New Zealand and Canada.

"There have been members of Congress in the United States who have asked us to investigate those same allegations. And we are progressing in the regard using the appropriate federal agencies."

Earlier, the FBI confirmed that it was looking into claims that a Murdoch tabloid attempted to access phone records of Sept 11 victims, an allegation that prompted fury from victims' families.

Though the White House has kept its distance from the crisis, emails released under a freedom of information request yesterday strongly suggested that its press office had excluded Fox from interviewing senior administration officials. In one email a senior press officer referred to a Fox presenter as a "lunatic".

The president's team have had an ongoing dispute with Fox, only granting an interview with the president months after other networks.

Other White House allies apart from Mr Podesta have sensed an opportunity in Mr Murdoch's problems, asking if his US media operations, which also include The Wall Street Journal and the tabloid New York Post, could be guilty of telephone hacking and eavesdropping.

With the November 2012 elections for president and Congress already gearing up, the Democratic Senate Campaign Committee has launched a petition and online advertisement calling on supporters to "Stand With Democrats & Demand that Murdoch Come Clean on Spying".

"Murdoch's empire often unfairly targets Democrats and progressives, but this recent scandal goes so much further and is only growing by the day," it said.

"It's time for Rupert Murdoch to come clean and immediately tell the American people whether his company targeted any Americans here at home. Sign our petition to demand the truth."

Senator Barbara Boxer of California, a leading liberal, has questioned whether Mr Murdoch's media licences could be revoked under regulations requiring licence-holders to be of "good character".

Though such an outcome is currently regarded as unlikely by industry experts, once Mr Murdoch returns to America he could face a summons to appear before a congressional hearing, a spectacle that could further weaken his reputation as well as his companies' prowess.