20110718 rupert murdoch 54
News Corp. Chairman Rupert Murdoch looks down as he leaves the One Aldwych Hotel to speak with reporters after meeting with the family of murdered school girl Milly Dowler. - 

JEREMY HOBSON: Shares in Rupert Murdoch's News Corporation dropped to a two year low in Australia today. That's because the phone hacking scandal in the U.K. could end up derailing a deal to purchase a TV channel down under.

Marketplace's Stephen Beard has the latest on the scandal from London.

STEPHEN BEARD: Everyday brings more bad news for the Murdoch empire. Yesterday, one of his most trusted left-tenants, the former head of his British company, Rebekah Brooks, was arrested and questioned for 10 hours by British police. And Britain's most senior police officer resigned. He had close links with a former Murdoch executive. The pressure on News Corp. is intensifying.

Former Cabinet Minister Tom Watson, himself a phone-hacking victim, has called on the body that investigates financial crime in Britain to launch a full-inquiry into News Corp.

TOM WATSON: I'm pretty certain that after the statement last week, the Serious Fraud Office will be looking at this, but just to make sure I've written to them and asked them to make sure that there hasn't been a gross mi-management of shareholder money.

News Corp. shares have shed 20 percent of their value since the crisis escalated two weeks ago.

In London, I'm Stephen Beard for Makretplace.