British Regulator Finds News Corp. 'Fit and Proper'

Keeps BSkyB license in wake of phone hacking scandal

By Jon Lafayette -- Broadcasting & Cable, 9/20/2012 10:21:42 AM

In the wake of the News Corp. cellphone hacking scandal, British communications industry regulator Ofcom has ruled that the owners of British Sky Broadcasting, including News Corp., are "fit and proper" to hold broadcast licenses.

However, the Ofcom report was critical of James Murdoch's role in the scandal.

While finding that the evidence presented does not provide a "reasonable basis" to find that James Murdoch knew of widespread wrongdoing at the News of the World newspaper, his "conduct, including his failure to initiate action on his own account on a number of occasions, to be both difficult to comprehend and ill-judged. In respect of the matters set out above, in our view, James Murdoch's conduct in relation to events at NGN repeatedly fell short of the exercise of responsibility to be expected of him as CEO and chairman."

Ofcom added the situation raises "questions regarding James Murdoch's competence in the handling of these matters, and his attitude towards the possibility of wrongdoing in the companies for which he was responsible."

The phone hacking scandal led to the closure of News of the World, the departure and arrest of some News Corp. executives and resulted in large charges against the company's earnings last year.

In a statement, News Corp. said it was pleased to be recognized as a fit and proper holder of a broadcast licenses.

The company added that: "We are also pleased that Ofcom determined that the evidence related to phone hacking, concealment and corruption does not provide any basis to conclude that News Corporation and Rupert Murdoch acted in a way that was inappropriate, and that there is similarly no evidence that James Murdoch deliberately engaged in any wrongdoing."

But the company also said, "We disagree, however, with certain of the report's statements about James Murdoch's prior actions as an executive and Director, which are not at all substantiated by evidence. As Ofcom itself acknowledged, James deserves credit for his role as Chief Executive, then Chairman and now non-executive Director, in leading Sky to an outstanding record as a broadcaster, including its excellent compliance record.  We look forward to Sky's continuing to execute on its mission to provide viewers with the best television experience imaginable, and are honored to play a role in the many contributions it makes to Britain, its people, and its economy."