New Arrest in Murdoch Scandal
PHILLIPS: He's considered one of the most influential men in modern media. And now, Rupert Murdoch is becoming a larger figure in the U.K.'s phone hacking scandal. CNN's senior correspondent Allan Chernoff has on this self-made billionaire -- Allan.</s>ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Kyra, absolutely stunning developments in Britain. Rupert Murdoch, in the matter of days, has gone from being the ultimate power broker to a pariah in Britain. This is a man who is widely considered to be an absolutely brilliant and ruthless businessman and he's achieved much of his success by pushing his media properties, especially newspapers, to find and feature sensationalistic stories.</s>CHERNOFF (voice-over): Rupert Murdoch's great love has always been the newspaper business, say those who know him. He demands dramatic stories, telling reporters, we will never be boring, and frequently checks in with his top editors, one of whom used to be Lou Colasuonno.</s>LOU COLASUONNO, SR. MANAGING DIR., FINANCIAL DYNAMIC: He's passionate about his newspapers. And along with that passion comes an involvement in the day to day operations of his papers, particularly his biggest ones.</s>CHERNOFF: Murdoch's ambitions began in his native Australia, inheriting his father's newspaper business. Murdoch added media properties across the country, even started "The Australian," a nationwide paper. And aggressively used them to support politicians he favored. Overseas, Murdoch's first purchase was a British tabloid "News of the World," followed by "The Sun," both of which he pushed to a new label of sensationalism.</s>MARTIN DUNN, FMR. DEP. EDITOR, THE SUN & THE NEWS OF THE WORLD: Topless girls on page three of "The Sun" was a room for innovation.</s>CHERNOFF: Murdoch became the central figure in Britain's competitive newspaper market known as Fleet Street. Former deputy editor Martin Dunn says he was as tough as his headlines.</s>DUNN: He was the man who tamed the print unions so that newspapers became incredibly profitable.</s>CHERNOFF: Checkbook journalism, paying for stories, was a regular practice that paid dividends with higher newspaper sales. Some detractors referred to Murdoch as the dirty digger.</s>COLASUONNO: He ran close to what maybe considered journalistic ethics. I'm not saying he broke the law. I'm not saying he did anything illegal, but I will say that he's aggressive in getting stories.</s>CHERNOFF: Murdoch also used his paper as a power base. With his editorial support, Margaret Thatcher, John Major, Tony Blair, and David Cameron all rose to prime minister.</s>ALEX BEN BLOCK, AUTHOR, "OUTFOXED": He, more than anybody I've ever seen in my lifetime of the media, understood how you can use the power of the media to shape the political views of the country, and in doing so, to affect elections.</s>CHERNOFF: And to assist his business ambition. Murdoch did the same in the</s>U.S. RUPERT MURDOCH, CEO, NEWS CORPORATION: Now, we are moving very fast at News Corporation to have a worldwide platform.</s>CHERNOFF: Newspapers, Internet, television, film, all together have expanded his political influence. His decades of brilliant business and political success make this week's collapse all more the shocking. Murdoch has achieved the impossible, said one of the observers. Britain's normally divisive political parties are now all united against him.</s>DUNN: I think it's terribly devastating. He doesn't understand the word defeat.</s>CHERNOFF: Rupert Murdoch is definitely used to winning. He once told "Vanity Fair," I love competition and I want to win. Kyra, a very, very rare defeat for a man who even last week we could have called the most powerful media baron on the planet.</s>CHERNOFF: Allan Chernoff out of New York -- Allan, thanks. And now, two U.S. lawmakers want to investigate Murdoch's empire. CNN's Brian Todd is on that for us. Stories cross country now: In California, the fed deals a critical blow from the Mexican mafia's operation in Orange County. Ninety-nine alleged gang members rounded up and charged with crimes, including murder, extortion and drug-trafficking. Operation Black Flag also seized weapons, everything as you can see here from handguns to assault rifles. And take a look at these pioneering Afghan women in San Antonio, Texas. They are trained to be the first female pilots in the Afghan air force. They're going to spend up to eight months studying English before they learn how to fly helicopters. And we never get tired of seeing this. Jacksonville, Florida. Navy pilot Brad Hoyts (ph) surprising his son at preschool. Hoyts has been serving overseas and he hasn't seen his son in six months. He'll deploy again in less than a year. As Congress works to hammer out a deal on the debt ceiling, some of the top rating agencies in the Wall Street are issuing some pretty dire warnings. Alison Kosik has more from the New York Stock Exchange -- Alison.</s>ALISON KOSIK, CNN BUSINESS CORRESPONDENT: And, Kyra, the newest warning coming from Moody's, it's one of the three major ratings agencies here on Wall Street. You know what it says, that it's going to review the government bond rating for a possible downgrade if the debt ceiling isn't raised in time. Translation: it means it's on the verge of cutting our nation's credit score. And guess what kind of message it would send to the world? It would say that investing in the U.S. is not as safe as it once was. Right now, the U.S. rating is as high as it can get. And Moody's actually, though, believes that Congress is going to wind out hammering out a deal and the government will be able to pay its bills. But, you know what? Concern is growing and Moody's is, you know, adding on to the list of Fitch and Standard and Poor's. They've also fired warning shots as well, telling Washington you've got to get your act together -- Kyra.</s>PHILLIPS: So, what does this mean for the economy and how investors are responding to the warning today?</s>KOSIK: You know, Fed Chairman Ben Bernanke talked about the consequence of yesterday. He used words like catastrophic, dire, and crisis. And, you know what? We can't help but agree with him there when you look at the possible effects of a lower rating and a default. You know, we could see federal borrowing rates rise. We could see stocks drop. It could disrupt global financial markets, credit cards. And other consumer rates would go up, too. And I'll tell you what? We don't want to go there. Who could forget what happened a couple of years ago when the economy didn't get what it needed. The Dow plunged 777 points when Congress didn't pass the first $700 billion stimulus. That could look like a drop in the bucket if we wind up defaulting -- Kyra.</s>PHILLIPS: All right. Alison Kosik from the New York Stock Exchange -- we're following it closely. Thanks, Alison. Well, this year's Emmy nomination for primetime are out. Kareen Wynter live in Los Angeles to break it all down for us.