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Fox News Scandals, Political Influence Concerns Cast Long Shadow Over Sky Review

Variety logo Variety 6/29/2017 Cynthia Littleton
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The fallout from the sexual harassment scandals that rocked Fox News was probed in detail by U.K. regulators in their consideration of 21st Century Fox’s $15 billion takeover bid for European satcaster Sky. But ultimately it was concerns about the concentration of the Murdochs’ control of media assets influencing “the U.K. news agenda and the political process” that led regulators to refer the deal for further review by government officials.

The lengthy report from U.K. regulator Ofcom illustrates the depth of its review of the circumstances at Fox News in considered whether 21st Century Fox would be a “fit and proper” steward of Sky. The report concludes that there was no indication that such conduct would be tolerated if Fox took over Sky. But it also makes clear that 21st Century Fox executives were grilled by Ofcom officials about the scandals involving former star anchor Bill O’Reilly on April 18, the day before O’Reilly’s departure was hastily announced.

“We have concluded that the behaviours alleged at Fox News amount to significant corporate failure, however, the overall evidence available to date does not provide a reasonable basis to conclude that if Sky were 100% owned and controlled by Fox, they would not be fit and proper to hold broadcast licences,” Ofcom wrote.

Ofcom also reviewed the impact of the 2011-2012 phone-hacking scandal at U.K. newspapers controlled by the Murdoch family. That led to the separation of Murdoch’s empire into the media and entertainment-focused 21st Century Fox and publishing-centric News Corp.

“No concerns have been raised about the corporate culture of Sky. We cannot conclude, therefore, that Sky would fail to tackle effectively issues of misconduct, if 100% owned by Fox. We find that Sky would remain fit and proper in the event of the merger. Fitness and properness is an ongoing duty and we can re-examine our position if new evidence comes to light,” Ofcom wrote.

Regarding Fox News, Ofcom pursued a “what did they know and when did they know it” line of inquiry with Fox brass. The report concludes that Rupert Murdoch and other 21st Century Fox directors were unaware of the misconduct that led to the ouster of Fox News founder Roger Ailes in July 2016. “On that basis, their failure to act cannot be held against them,” Ofcom wrote.

Moreover, the report makes it clear that 21st Century Fox CEO James Murdoch and chairman Lachlan Murdoch were forced to answer to Ofcom for the drama at Fox News.

“James and Lachlan Murdoch personally put to us that no individual working for Fox News could now be under the impression that sexual harassment is acceptable, having seen the sacking of Mr Ailes, Mr O’Reilly and a number of other employees including very senior managers,” Ofcom wrote.

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