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News Corp. Marketing Unit Said to Be Under Scrutiny by U.S.

By David Glovin, Greg Farrell and Tom Schoenberg
September 26, 2011 6:24 PM EDT
News Corp. headquarters in New York.
Photographer: Stephen Yang/Bloomberg
News Corp. headquarters in New York.

News Corp. (NWSA), the subject of probes into voice-mail hacking and bribery at its U.K. newspapers, was asked by U.S. government investigators for documents relating to its highly profitable Wilton, Connecticut-based marketing unit, according to a person familiar with the matter.

The request follows three U.K. police probes, an inquiry by Parliament and an investigation by U.S. prosecutors of whether employees of the company’s U.K. newspaper unit hacked into voice mails of victims of the Sept. 11, 2001, terror attacks.

U.S. investigators are also examining whether employees of the News of the World tabloid, closed by News Corp. after admissions of hacking, paid bribes to U.K. officials in violation of a federal anticorruption law, said a person familiar with a letter sent by investigators to the company.

In the latest development, U.S. investigators last month asked a lawyer at Williams & Connolly LLP for documents used during a 2009 antitrust trial involving News America Marketing Group and rival Floorgraphics Inc., according to the person familiar with the request, who asked not to be identified because it was confidential. The firm represents News Corp.

‘Anticompetitive Schemes’

Prosecutors this month also asked to interview lawyers representing Robert Emmel, a former News America Marketing employee who alleged in court papers that the division violated racketeering laws and engaged in “predatory and anticompetitive schemes.”

Investigations of News Corp.’s illegal conduct initially involved just News of the World, which represented only 1 percent of annual revenue for the New York-based media company, publisher the Wall Street Journal and operator of the Fox television networks. The marketing unit, which promotes products through supermarket coupons, accounted for four times that revenue and about 12 percent of profit for fiscal 2011.

Rivals of News America Marketing have claimed in court papers that it prospered by violating antitrust laws. It also hacked into a Floorgraphics password-protected website, one of its own lawyers told the jury at the 2009 trial.

“There is a pattern of anticompetitive behavior by News Corp.,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, a government watchdog group. “We’ve seen it in Britain, and we’ve seen it in America.”

News Corp. spokeswoman Suzanne Halpin declined to comment on the latest U.S. request.

News Corp., after falling as much as 1.9 percent on news of the probe, closed up 23 cents, or 1.4 percent, at $16.34 in Nasdaq Stock Market trading.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

To contact the reporters on this story: Greg Farrell in New York at gregfarrell@bloomberg.net; David Glovin in New York at dglovin@bloomberg.net; Tom Schoenberg in Washington at tschoenberg@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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