More than a year after a phone hacking crisis in Britain engulfed Rupert Murdoch’s News Corp., the embattled media company received a clean bill of corporate health on Thursday from a critical British regulator.
Britain’s Office of Communications, known as Ofcom, said Thursday that British Sky Broadcasting, 39.1 percent owned by News Corp., was “fit and proper” to hold a broadcast license. The ruling, which was a result of an investigation by the regulators that lasted months, relieves the company from facing an expensive legal fight to maintain its broadcast license.
More important, it helps allay concerns that had spread within the company that an unfavorable Ofcom ruling could have prompted further scrutiny in the U.S. by the Justice Department and the Federal Communications Commission that could have affected News Corp.’s domestic television assets.
There are still many hurdles for News Corp. in Britain: the hacking scandals set off several inquiries into the company’s use of phone hacking and its connections to the police, criminal trials for several senior company executives will begin next year, and 174 new civil claims were filed ahead of a court deadline last Friday.
But the relief over the ruling was palpable at corporate headquarters in New York and London. One company official who spoke on the condition of anonymity to reveal internal conversations said executives should not declare victory just yet.
“Only an idiot would say it was over,” the official said of the scandal. “But it’s not as panicked as it was.”
In a sign that the company feels less restrained by British scrutiny, James Murdoch, Murdoch’s son and News Corp.’s deputy chief operating officer, is expected to take an expanded role within the company.
James Murdoch was in charge of the company’s British holdings when the hacking was revealed, and the Ofcom report was critical of his performance, saying that he “repeatedly fell short” in his response to the illegal activities at the company’s News of the World tabloid. In April, he resigned as head of BSkyB, and his future at News Corp. seemed uncertain.
However, a person close to News Corp. confirmed a Financial Times report that James Murdoch’s job could be expanded to oversee the Fox Networks Group, a Los Angeles-based unit that includes Fox Broadcasting and Fox’s regional sports channels.