BSkyB bid: Ofcom wants 'fit and proper' information
- 8 July 2011
- From the section Business
Ofcom, the media regulator, is to consider whether News Corporation would make a "fit and proper" owner of satellite broadcaster BSkyB.
In a statement, Ofcom's chief executive Ed Richards, emphasised that he would not act while the police and courts carried out their work.
But he has written to the authorities asking to be "kept abreast" of information that would help Ofcom.
It follows allegations of illegal activities at the News of World.
On Friday, former NoW editor Andy Coulson was arrested by police investigating hacking allegations.
News Corp, owner of the NoW, wants to buy the 60.1% of BSkyB that it does not already own.
Ofcom is required to ensure that any company - and its directors - holding a broadcast licence are "fit and proper" to do so.
In a letter to John Whittingdale MP, chairman of the Commons Culture, Media and Sport Committee, Mr Richards said: "We are monitoring the situation closely and in particular the investigations by the relevant authorities into alleged unlawful activities."
He said that Ofcom would not do anything at this moment in time to prejudice investigations by the police.
However, "we are writing to the relevant authorities to highlight our duties in relation to Fit and Proper" and would like to know of "any further information which may assist us in the discharge of our own duties".
Mr Richards added that Ofcom is "very conscious of the level of concern about these matters in Parliament and in the country more widely".
BBC business editor Robert Peston understands that Ofcom is deeply concerned by suggestions the NoW's newsroom was a law unto itself and had put a "big obstacle" in the way of a News Corp takeover.
"[Ofcom] regards evidence that the News of the World's newsroom was out of control for many years as relevant to a judgement on whether News Corporation would be a fit-and-proper owner of BSkyB," our correspondent said.
The regulator's move could further delay News Corp's £10bn-plus bid for BSkyB, as the police investigation could take many months.
Separately, the Office of Fair Trading may also want to review the bid following the NoW affair, our correspondent said.
News Corp has said it will spin off Sky News into a separate company in order to get clearance for a BSkyB takeover. The undertaking is intended to secure Sky News' editorial independence.
However, the OFT is likely to reconsider those undertakings. Our correspondent said: "Undertakings from the board of News Corp are only valuable if the regulators can be confident that the board of News Corp has sufficient control over the organisation for the undertakings to be followed."
In a statement, News Corp said its "priority is to continue to co-operate" with Mr Hunt and the "existing regulatory process".
After Ofcom's statement BSkyB shares extended their falls, and closed down 7.64% amid worries that News Corp's bid could be blocked. On Wall Street, New Corp shares were down by 3.83% at close.
Alex DeGroote, analyst at Panmure Gordon, said in a research note published early on Friday: "Probability of deal collapse much higher now."
Greg Dyke, former director-general of the BBC, said: "I cannot see any way how News International will be allowed to take over the whole of BSkyB.
"It's just a case of how the government can get out of it."
On Friday, Mr Coulson, David Cameron's former communications director, was arrested on allegations of phone hacking and payments to police. He has always denied wrong-doing.
And the NoW's former royal editor, Clive Goodman, is being questioned on suspicion of corruption. He has already served a prison sentence over the phone hacking affair.
Earlier in the day, Culture Secretary Jeremy Hunt indicated that a final decision on the proposed takeover was still some way off.
This followed his department receiving a deluge of last-minute submissions on the bid.
It will "take some time" to assess the "volume of responses", the department said in a statement.
Consultation on plans by Rupert Murdoch's News Corp to buy the 60.9% of BSkyB it does not already own closed at midday on Friday.
Campaigners against the BSkyB takeover believe that more than 200,000 submissions will have been lodged by the deadline.
Mr Hunt, who has previously said he is minded to approve the takeover, will also consider how the closure of the News of the World will affect the deal and UK media plurality.
The European Commission has already cleared the proposed takeover on competition grounds, as broadcasting and newspaper ownership are considered two distinct markets.
However, the UK Competition Commission could consider the deal's impact on the plurality of the media, and whether it reduced the number of independent voices.
Labour leader Ed Miliband has called for the bid to be referred to the Competition Commission.