BSkyB’s Ties to Murdoch Still Bind

The scandal over phone hacking at Rupert Murdoch’s is casting a shadow over a far more valuable business than the now-defunct tabloid. When the furor broke, Murdoch was on the verge of winning his long battle to acquire the 61 percent of Britain’s media crown jewel, British Sky Broadcasting Group, that his News Corp. does not already own. The outcry over revelations about the tabloid forced Murdoch to back away from the $12.6 billion deal, which would have required government approval.

Now some regulators and angry politicians are turning their attention to News Corp.’s controlling 39 percent stake in BSkyB. Even before the climax of the phone hacking scandal, they had been voicing concerns about News Corp.’s tight grip on Britain’s lucrative pay-TV market. Now the critics are getting louder. Prime Minister David Cameron and other political leaders are calling for a review of media ownership in the U.K., where the Murdoch family is by far the largest proprietor. The chief executive officer of broadcast regulator Ofcom, Ed Richards, said in a July 22 letter to lawmakers that he was investigating the conduct of BSkyB’s controlling directors and shareholders—including “any relevant conduct of News Corporation”—to determine whether the company should continue to hold its approximately 40 licenses. In Britain, broadcast licenses can be revoked if a company is deemed “not fit and proper” to hold one, though this has happened only once.