British Sky Broadcasting, or BSkyB, is “fit and proper” to hold a broadcast licence, says the British regulator Ofcom in a lengthy report released today.
The ruling is seen as a victory for Rupert Murdoch’s News Corporation, BSkyB's biggest shareholder. Ofcom exonerated Murdoch in the phone hacking scandal at his British papers - but raised questions about the “competence” of his son James when he was running his family’s British media holdings .
James Murdoch “fell short” in his handling of the hacking scandal and in his “attitude toward the possibility of wrongdoing in the companies for which he was responsible,” said the regulator.
BSkyB, in which News Corporation holds a 39 percent stake, will not now face a legal battle to keep its licence for its broadcasting operations which made $1.4 billion profit in the year ending June 30.
Rupert Murdoch was planning an £8 billion bid to acquire full control of BSkyB when the scandal involving his newspaper journalists broke. News Corp. closed down the News of the World and backed away from the bid.
" It was not immediately clear whether the ruling would encourage a revival of the bid," said the New York Times today.
The regulator’s statement said, “Ofcom considers that, on the evidence currently available and having taken into account all the relevant factors, Sky is fit and proper to hold its broadcast licences.
“To date, there is no evidence that Sky was directly or indirectly involved in any of the wrongdoing either admitted or alleged to have taken place at News of the World or The Sun.”
But there was a word of warning, “Ofcom’s duty to be satisfied that a licensee is fit and proper is ongoing. Should further relevant evidence become available in the future, Ofcom would need to consider that evidence in order to fulfill its duty.”
Then came the swipe at James, who resigned as nonexecutive chairmanof BSkyB in April. Ofcom found he “repeatedly fell short of the conduct to be expected” of a senior manager in his handling of the hacking scandal
His conduct in relation to News Group Newspapers "repeatedly fell short of the conduct to be expected of as a chief executive and chairman" and his lack of action in relation to phone hacking was "difficult to comprehend and ill-judged", said the regulator. "There was no evidence, however, that he deliberately engaged in widespread wrongdoing or a cover-up of the scandal."
Ofcom said that, on the evidence currently available , Rupert Murdoch himself did not act in a “way that was inappropriate” in the scandals involving his British papers.
In a statement , BSkyB said: “Ofcom is right to conclude that Sky is a fit and proper broadcaster. As a company, we are committed to high standards of governance, and we take our regulatory obligations extremely seriously. As Ofcom acknowledges, our track record of compliance in broadcasting is good.”
“We are proud of our contribution as a broadcaster, the investments we make to increase choice for U.K. audiences and the wider benefits we create for the economy. After a lengthy review process, we are pleased that Ofcom has now reached its conclusion, and we look forward to continuing to develop our business for the benefit of customers and shareholders alike.”
News Corporation said it was “pleased that Ofcom recognizes BSkyB as a fit and proper holder of a broadcast licence.” But News Corp said it was proud of James Murdoch’s record at the company, and that it disagreed with the sections of the report that criticised his conduct.
Claire Enders, a media analyst in London, told the New York Times “The tone on James Murdoch was very harsh but then, on the other hand, Ofcom also intimated that it is happy with the general corporate governance of BSkyB.”