Ofcom has said that the Murdochs do not fail the “fit and proper test” to be a suitable owner for Sky despite their involvement in the News of the World hacking scandal.
The broadcast regulator said it was also unable to verify claims that Murdoch’s News UK titles “engage in a pattern of reprisal against individuals to secure political ends”.
But, Ofcom recommended that Rupert Murdoch’s £12bn bid to take full control of Sky should be investigated by the Competition and Markets Authority on plurality grounds because it could give the US-based billionaire too much control over the UK news market.
Culture Secretary Karen Bradley said she was minded to make such a referral and has given Murdoch-owned 21st Century Fox until 14 July to give her its response. She will then make a final decision on whether to refer the deal.
Ofcom said in its “fit and proper” report: “It has been put to us that News UK newspapers are used to engage in a pattern of reprisal against individuals to secure political ends and to punish those who do not act in the interests of News Corporation or the Murdoch family.
“Submissions have been made to us by individuals who say they are aware of senior politicians and public servants who are so cowed that they would not give evidence to Ofcom for fear of retaliation.
“On the evidence we have seen, Ofcom can reach no view on whether the second-hand reports of what other individuals rightly or wrongly are said to have believed are true.”
But, it said: “No one has suggested that Sky, while under Fox’s partial control, has been used for reprisal. We cannot reasonably conclude that Sky would be used to that end if the transaction were to proceed.”
The Murdoch Family Trust owns 39 per cent of 21st Century Fox and 39 per cent of News Corporation. Fox already owns 39 per cent of Sky and is seeking to buy the remaining 61 per cent.
Ofcom also heard submissions about News UK journalists’ involvement in phone-hacking and making payments to public officials. It considered the fact that ongoing civil litigation alleges phone-hacking took place at The Sun, in addition to the News of the World.
The regulator said: “Campaigners against phone hacking argue that the corporate response to misconduct was to cover it up. They invite us to draw inferences about the attitude and expectations of senior executives towards misconduct.
“In particular, they say we should draw adverse inferences from the reemployment of Rebekah Brooks as chief executive officer of News UK following her acquittal on various charges related to the scandal.
“During her trial, Brooks admitted that as chief executive of News International between September 2009 and December 2010 she did nothing to investigate phone hacking except where forced to by external pressure.”
Ofcom said it has seen no new evidence to overturn its previously stated view that while the conduct of News Corp executives James and Rupert Murdoch in relation to the hacking scandal fell short of that to be expected, Sky remained a fit and proper company to hold a broadcasting licence.
On the issue of News UK chief executive Rebekah Brooks, it noted that News Corp has new arrangements in place to ensure that heads business units cannot deal unsupervised in future with matters involving possible systematic illegality.
On the issue of plurality, Ofcom noted that Fox/Sky and News Corp would reach 31 per cent of all UK adults. This is less than the BBC’s 77 per cent and ITN’s 39 per cent but much higher than DMGT’s 17 per cent, which would be the next biggest newspaper publisher.
Fox/Sky and News Corp would account for 10 per cent of UK news across all platforms, compared with the BBC on 42 per cent and ITN on 11 per cent.
Ofcom said: “The transaction raises public interest concerns as a result of the risk of increased influence by members of the Murdoch Family Trust over the UK news agenda and the political process, with its unique presence on radio, television, in print and online.
“We consider that these concerns may justify a reference by the Secretary of State to the Competition and Markets Authority.”
On the issue of broadcasting standards, Ofcom said that undertakings offered by Fox to maintain the editorial independence of Sky News mitigated concerns.
Fox has proposed appointing an independent Sky News Editorial Board and undertaken to continue investing in Sky News at the current level for at least five years.
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