News Corp. & James Murdoch's Fitness To Hold BSkyB License Weighed By Regulator

When the phone-hacking scandal blew wide open in the UK last July, Rupert Murdoch abandoned a plan to acquire the 61% of BSkyB that his News Corp did not already own. Now, the scandal could have an even further impact on News Corp, BSkyB and the satellite broadcaster’s chairman, James Murdoch. On Thursday, it emerged that UK communications regulator Ofcom had ramped up a probe into whether James Murdoch and News Corp itself are “fit and proper” persons to own a broadcast license. If they are deemed unfit, speculation is News Corp could be forced to reduce its BSkyB stake to a non-controlling level while James Murdoch could be forced to step down. He left his post as chief of News Corp’s UK press arm, News International, last month, but has remained as chairman of BSkyB.

Based on documents it acquired under a Freedom of Information Act request, The Financial Times reported late Thursday that Ofcom had created “Project Apple” to handle the fit and proper probe. The team is scrutinizing material coming out of the Leveson Inquiry into UK media ethics as well as Scotland Yard’s investigations into phone hacking and alleged payments made to public officials by journalists at newspapers controlled by News International. The documents show that the fit and proper question was discussed in late 2011, but escalated to project level in January. The consideration of whether a licensee is fit and proper takes into account any relevant misconduct of those who manage and control it. An Ofcom spokesperson tells Deadline: “New evidence is still emerging from the various enquiries in relation to the hacking and corruption allegations. Ofcom is continuing to assess the evidence that may assist it in discharging its duties.” A decision is expected once the Leveson Inquiry and the police investigations are at a more advanced stage.