This is a RUSH transcript from "The O'Reilly Factor," May 18, 2010. This copy may not be in its final form and may be updated.

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BILL O'REILLY, HOST: In the "Stossel Matters" segment tonight: Our pal John has a big special on freedom of speech coming this Thursday on the Fox Business Channel. And in New Hampshire, five teenagers are facing criminal charges for bullying a 16-year-old girl, verbally assaulting her. The girl had to be hospitalized. This comes on the heels of a Massachusetts teenager who hung herself after being bullied.

Here now, John Stossel. So this New Hampshire deal, these arrested, these five. This is basically speech crime. That's what it is.

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JOHN STOSSEL, FOX NEWS BUSINESS ANCHOR: You can call it that. It's criminal harassment, but it's based on speech.

O'REILLY: Right.

STOSSEL: But the Supreme Court has said with kids, you need extra protections and you can't harass people in school. That's the crime.

O'REILLY: So now we have to define how bad does it have to get before you call the police? Because you know kids always have rank-out sessions, and — that's what they used to call them when I was a kid.

STOSSEL: Rank? I hadn't heard that.

O'REILLY: No, you're much older than I am. Back when you were a kid it was probably, what was it? Swords. Swords, you were dueling. But rank-out sessions in New York were basically you would insult somebody. Come back. Your mother wears combat boots. You know what I'm talking about. Playground garbage. Now, is that bullying? It can be. If there's five kids yelling at one kid. But it is what happens in kid world.

STOSSEL: And it's what happens in adult world, especially in New York. I moved to Portland, Oregon, where I insulted everybody with my sarcastic humor that I've learned in New York. We have different standards around the country. It's part of our humor here and part of an education is for me to be able to say, "O'Reilly, I hate you. You are a bully. You are a lawnmower mowing over people here." This is part of the discussion that free speech in America. It's one of our best parts.

O'REILLY: OK. So you say that if it's an adult world, you can't — unless it's a threat, I'm going to kill you.

STOSSEL: Kids should be able to say, "I hate you." Shouldn't be able to call him up at 3 in the morning and say, "I hate you." That's harassment.

O'REILLY: I'm coming at this from a former teacher, and in my class there were always children who were defenseless. They were overweight. They had a bad complexion. They were defenseless. And when I saw four or five or six kids surround one kid who was defenseless and verbally beat them, I put an end to it, but I don't think that should be legal. I don't think that should be legal because that kid, it was just like a physical beating. Just like a physical beating to them. That's how bad it was.

STOSSEL: But how do you define the "it" as to where it's legal and when the other is just criticism.

O'REILLY: I think — I think you have to compile evidence, like you would in any case, have testimony from a teacher like me, that these kids went out of their way to be cruel on a consistent basis. They didn't do it just once but 15 times. Followed the kid around campus. They made the kid's life miserable, and now the kid's in the hospital.

STOSSEL: That's stalking.

O'REILLY: So you're with me on that?

STOSSEL: I'm with you on that. But Louisiana is considering a law that would punish any online communication with the intent to cause emotional distress.

O'REILLY: That's a little too broad.

STOSSEL: Seventeen-year-old who sends an e-mail to her boyfriend, "How could you cheat on me? I hate you"...

O'REILLY: Right.

STOSSEL: ...could be prosecuted.

O'REILLY: OK. So it has to be narrowly defined, but it has to be with intent to injure. I think you start there. Malice, you have to have, and a consistent basis. But it's got to stop, John. This bullying is — it's 10 times worse than it was when I were a kid, 20 times than when you were a kid, because of the machines. You can do it on the machines now. And you don't have to do it face to face anymore.

STOSSEL: A lot of it went on when we were kids…

O'REILLY: A lot of it did.

STOSSEL: …we didn't know about.

O'REILLY: It damaged people back then.

STOSSEL: It damages people now. And I thought with the publicity, that kids would wise up, that they wouldn't be that cruel.

O'REILLY: Well, I want to tell every kid who's watching tonight, if this happens to you, you go to your parents. You're not a snitch. You're not a squealer. You're an American.

STOSSEL: Or teachers.

O'REILLY: You go to teachers, but I'd go to your parents first, OK? Your parents are your main protectors. You're an American. You have a right to live a life where you are not verbally assaulted on a daily basis. You have a right. That is a right in this country.

All right, Stossel, we'll be checking your freedom of speech special out on Thursday. Thanks for coming in.

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