Ofcom must investigate Murdoch's Sky takeover bid, says Tom Watson

Rowena Mason Deputy political editor
Rupert Murdoch Photograph: Josh Reynolds/AP

Rupert Murdoch’s attempted takeover of Sky must be thoroughly investigated by Ofcom in light of corporate governance failures surrounding the phone-hacking scandal, Tom Watson, the shadow culture secretary, has said.

During a debate in the House of Commons on Monday, Watson pressed the culture secretary, Karen Bradley, to refer the deal to the regulator on grounds that allow it to properly examine the corporate governance record at Murdoch’s media empire.

“The company names may have changed since the previous bid for Sky was withdrawn in 2011, but we are still dealing with media plurality, misconduct and the Murdochs,” he said. “[The culture secretary] has said she is minded to intervene, first, on media plurality grounds. The bid would put an even greater amount of media power in the UK in the hands of the Murdoch family.

“It makes the Murdoch empire even bigger. We might call it Empire 2.0. Ofcom should look at the whole group of Murdoch-owned and controlled companies in assessing whether the Sky takeover would threaten media plurality.”

Turning to corporate governance, he asked if a full “fit and proper person” test would be conducted by Ofcom before approval of the merger was completed and listed convictions linked to phone-hacking involving News International employees, and police and public officials.

Watson referred to allegations being made in open court that James Murdoch, who is chief executive of Fox and chairman of Sky, was involved in the “email deletion programme at News International, which has made it more difficult to get to the truth”.

In response, Bradley assured Watson that Ofcom would have wide powers to examine all the issues he raised.

“Can I assure you Ofcom will not be doing any work with one hand tied behind its back, as you have suggested,” she said. “Ofcom has sufficient powers and can investigate anything they think is appropriate. I thank you for the points you have raised and I’m sure they will be part of what Ofcom does consider.

“Ofcom does have a fit and proper test for broadcasting licences, that is a different test to the one which will be considered on this merger but the same evidence may be relevant to both.”

Bradley earlier reiterated no final decision had been made on whether to intervene over the merger bid, after saying last week she was “minded to” refer the proposed takeover by Murdoch’s 21st Century Fox to Ofcom.

The inquiry would be able to look into issues of media plurality and whether Fox would maintain broadcasting standards at the pay-TV company, including potentially examining the history of phone hacking at Murdoch’s now-defunct newspaper, the News of the World.

An Ofcom investigation found in 2012 that Sky remained a “fit and proper” owner of a broadcast licence despite the phone-hacking affair that embroiled its then parent company. However, it published a scathing assessment of James Murdoch – then the chief executive of his father’s UK newspaper group and chairman of Sky – finding that his conduct repeatedly fell short of the standards expected.

Watson wrote to Bradley on Monday outlining his concern that the possible grounds for referral must look thoroughly into wide corporate governance concerns, including “many of the failings identified by the report of part one of the Leveson inquiry and which have come to light since then”.

The Labour MP also raised worries that the grounds for referral were “not a sufficient legal basis for Ofcom to fully explore what needs to be covered in relation to the conduct of the Murdochs because it ultimately judges matters considered under this ground only against a genuine commitment to broadcasting standards”.

Watson, who campaigned against phone hacking, said he was asking for Bradley to “publish – or failing that, share with me in confidence – the legal advice which you have sought and received on any and all of these points from external sources or from government lawyers, and respond to the concerns”.

Last week, Bradley said Fox and Sky had until 5pm on Wednesday to make representations about the deal to the Department for Culture, Media and Sport, with her final decision being delivered in the week commencing 13 March.

Bradley said she was minded to intervene on the basis of two public interest grounds specified in the Enterprise Act. The first was whether Fox’s takeover would raise issues of UK media plurality and concentration in Murdoch’s control. The second was on whether Fox iwas committed to the required editorial standards, such as accuracy and impartial news coverage.

If asked, Ofcom would carry out a public interest test on the deal, reporting back within 40 days. If there are no concerns, Bradley must clear the bid.

If Ofcom raises concerns, however, she must decide whether to accept an undertaking from Fox to address them. In 2011, Murdoch’s bid for Sky resulted in a deal to spin off Sky News to quell media plurality issues before the takeover was abandoned.

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