While the telephone hacking scandal surrounding Rupert Murdoch's News Corp. has led to advertiser defections in England, alarm bells aren't yet ringing in the U.S., where news of a reported FBI investigation into alleged hacking of 9/11 victims broke Thursday afternoon. News Corp.'s U.S. TV properties appear particularly unscathed - for now.
"I haven't had any clients express concerns," says Andy Donchin, head of national broadcast at media agency Carat.
Another top buyer added that the connection between a British tabloid and broadcast and cable channels here hasn't yet been made: "I realize it's the same company, intellectually I do. But the thought really hasn't crossed my mind yet."
At this point, as long as News Corp.'s Fox Broadcasting has viewers, they've got advertisers, the buyer says, adding, "check with me in a week and we'll see if this thing really blows up."
Fox Broadcasting had no comment about whether any advertisers have contacted the network about the scandal. Sources at the company say they're unaware of any clients expressing concern.
The key issue is when this British scandal becomes an American issue. The FBI is investigating whether News Corp. sought to hack into the phones of 9/11 victims, according to the Associated Press. And in Congress, Rep. Anna Eshoo (D-Calif.) Sen. Jay Rockefeller (D-W. Va.) and Sen. Barbara Boxer (D-Calif.) are among those calling for the government to look into News Corp.'s activities.
"I think people would be hard pressed to pull out," says Jon Mandel, former chief negotiating officer of MediaCom and now a consultant. "You're not going to run in Glee because they did something untoward in England in a newspaper?"
The British advertisers who pulled out of News of the World--including Ford, Mistubishi and Coca-Cola-did so because "you don't want to be party to the bad guy," Mandel says. "But it's such a big world and just because a sister did something, that doesn't mean [the company's] all bad."
Mandel says that while clients can be skittish, in this case they're unlikely to make changes in their primetime ad plans. "You might get skittish about running in news or news on the local stations, in places where you think there might be misbehavior," he says. "There's no misbehavior that happens that an advertiser would get skittish about in producing an entertainment show or a sports show."
If Fox has a national news program, that might have some problems, and as far as Fox News Channel is concerned, its advertisers know what they're getting in terms of slant, Mandel says.
"Let's see how it plays out," he says. "Clients might be less skittish than normal because they were British victims and it was done by a British newspaper to British citizens. Americans will say that's not our problem. If they did it to someone who was American, that's a whole different smoke. But again you're not going to not run in Glee. It's a stretch to get to the point where you get skittish about running in an entertainment program."
One possibility is that some advertisers will try to seek publicity by pulling commercials from Fox, citing the scandal. "It would be a Go Daddy kind of thing to do," Mandel says. Internet hosting company Go Daddy makes news every year by unveiling an "unrated" version of its commercial that's too sexy to run in the Super Bowl.
News Corp. stock fell 2.26% to 15.99 on Thursday, a day when most other media companies dropped as well.