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UK politicians call for Ofcom ‘fit and proper’ enquiry on Murdoch

James Murdoch

James Murdoch

A group of UK cross-party politicians has called for Ofcom to launch a review into 21st Century Fox CEO James Murdoch’s suitability to hold a UK broadcasting licence. The move comes in the wake of Fox’s proposed £11.7 billion (€13.7 billion) bid for the 61% of international pay TV group Sky that it does not already own.

The group, led by former Labour leader Ed Miliband, has written a letter to Ofcom CEO Sharon White calling for the regulator to carry out a test of whether Murdoch is a ‘fit and proper’ person to hold a broadcast licence.

Ofcom carried out a test of whether Sky should hold a broadcast licence in 2011 at the height of the phone-hacking scandal that scuppered the bid by News Corp to take control of BSkyB, as the pay TV operator then was.

While Sky was cleared, the regulator criticised Murdoch. However, it fell short of stating that he was not a fit and proper person to hold a broadcast licence.

Murdoch resigned as chairman of the newspaper publishing arm of News Corp, but retained his responsibility for global television, including the 39% stake in BSkyB, at the time.

The letter to Ofcom has been signed by Vince Cable, business secretary at the time of News Corp’s bid, Conservative peer Sayeeda Warsi, Labour peer Charles Falconer and cross-bench peer Onora O’Neill as well as Miliband. It argues that Murdoch’s involvement as chairman of Sky amounts to a “material change in circumstances” that warrant an investigation.

The letter comes as Fox moves forward to make a formal notification of its bid to take over Sky to the European Commission. Once the EC is notified, UK culture secretary Karen Bradley mush decide whether to separately refer the bid to the country’s competition regulator and Ofcom on the grounds of whether it impacts media plurality.

The letter follows speculation about whether Ofcom would launch a ‘fit and proper’ enquiry following Fox’s announcement that it was bidding to take full control of Sky, which is now a much larger operation spanning Germany and Italy as well as the UK.

In December investment bank Berenberg noted that the Murdoch family still controlled Fox despite splitting its businesses down entertainment and publishing lines in the wake of the phone-hacking scandal.

In a note recommending investors hold on Sky, Berenberg speculated that the British government may seek to assess the Murdoch family’s suitability to own all of Sky through a ‘fit and proper test’, and noted Fox CEO James Murdoch – who was reappointed as Sky chairman in October triggering separate shareholder backlash – was highly criticised in the Leveson public inquiry into UK media.

Fox’s proposed deal values Sky at £18.5 billion in total. The US media company expects expects the deal to close before the end of 2017

Earlier this week film director and Labour peer David Puttnam proposed amendments to the Digital Economy bill that would mean all media acquisitions pass a fit and proper test to hold a broadcasting licence. Puttnam proposed that the test would look at any past criminal activity and failure of corporate governance in assessing deals.