Sharper Scrutiny Of News Corp Role In BSkyB

Media regulator Ofcom has stepped up its inquiry into whether BSkyB is a "fit and proper" owner of a broadcasting licence in the wake of the phone-hacking scandal.

Ofcom has escalated its investigation into the organisation because News Corp has a controlling share in BSkyB and James Murdoch is its chairman.

A dedicated team operating under the name Project Apple was set up by the watchdog in January following initial investigations carried out last year.

The team was created to look into material emerging from the Leveson Inquiry and the police's investigations into phone hacking and alleged corrupt payments to public officials.

News Corp has been battling to contain a crisis in its UK newspaper arm in the wake of the hacking scandal and, more recently, corruption claims.

The News Of The World was closed last summer and a string of senior journalists from The Sun have been arrested in recent weeks as part of the corruption inquiry.

Ofcom is looking at News Corp, which holds a 39.1% stake in BSkyB, and James Murdoch because it is duty bound to look at individual controlling directors and shareholders as well as the wider licensee.

The regulator said: "Ofcom has a duty under the UK Broadcasting Acts 1990 and 1996 to be satisfied that any person holding a broadcasting licence is, and remains, fit and proper to do so.

"New evidence is still emerging from hacking and corruption allegations. Ofcom is continuing to assess the evidence, including the new and emerging evidence, that may assist it in discharging its duties."

"Ofcom has written to, met and is in dialogue with the various authorities investigating the allegations. This includes the police, the relevant parliamentary committees and British MPs," it added.

BSkyB's status as the holder of a broadcasting licence was addressed in September and December as part of the Ofcom chief executive's report but in January and February, it was referred to under the name Project Apple.

If the watchdog were to rule against either party, it could threaten Mr Murdoch's position or lead to News Corp reducing its stake in BSkyB to a level that would see it lose control of the company.

News Corp was last year aiming to take full control of the broadcaster with a £8.3bn bid, only for it to be ditched in July after the phone-hacking scandal caused a public outcry.

James Murdoch stepped down as executive chairman of News International, the British newspaper arm of News Corp, last month but remains BSkyB chairman, a position he has held since 2007.

He has faced intense scrutiny in the wake of the NOTW hacking scandal, which saw him summoned to give evidence before MPs twice.

Three separate Scotland Yard inquiries are currently under way and the Leveson Inquiry has continued to shine a spotlight on how the press operates.

Deputy Assistant Commissioner Sue Akers claimed when appearing before the probe last month that there was a "culture" of illegal payments to public officials by The Sun journalists.