Wednesday, January 26, 2011

Scandals threaten to upset Murdoch's bid for BSkyB

ANALYSIS: Rupert Murdoch’s multibillion bid to take full control of BSkyB is becoming bogged down in allegations of widespread phone-tapping by the News of the World, writes MARK HENNESSY 
WHEN TROUBLES come, they come together.

 The sacking yesterday of Sky Sports commentator Andy Gray after he made sexist comments about a female match official has capped a torrid time for Rupert Murdoch in the United Kingdom.

In other times, Gray, despite his antediluvian attitudes to women, might have prayed that he could have kept his £1.7 million-a-year job if he grovelled sufficiently, but these are not normal times for Murdoch’s operations.

Being embroiled in a controversy about sexism in football is the last thing Murdoch needs, given the danger that the News of the World phone-tapping scandal could engulf his stable of British papers and the opposition to a full takeover by him of BSkyB.

For several years the News of the World insisted the illegal interception of voicemail messages that led to the jailing of one of its reporters and a private detective in 2007 had been a “rogue” event.

Late on Monday, however, the tabloid said a new internal investigation into the affair was nearly complete, promising to compensate anyone who had been affected by it with generous out-of-court settlements.

The sudden change in its attitude to the crisis is easily explained, given Murdoch’s fears that questions about standards could stop his £7 billion effort to take over the outstanding 61 per cent of BSkyB that his company, News Corp, does not already own.

The News of the World ’s attempts to corral the phone-tapping allegations around former royal correspondent Clive Goodman and investigator Glenn Mulcaire were successful for nearly 2½ years.

However, it began to fall apart from July 2009 after the Guardian revealed that the News of the World ’s parent company, News International, had paid £700,000 to settle a court action taken by Gordon Taylor, chief executive of the Professional Footballers’ Association.

In February 2010, it reached a £1 million out-of-court settlement with publicist Max Clifford.

Late last year, lawyers acting for actor Sienna Miller, who is taking a civil action against the tabloid, found senior News of the World executive Ian Edmundson’s name on records kept by Mulcaire.

Edmundson, who denies wrongdoing, was suspended in December, but news of this did not emerge until January 5th. In its wake, however, the list of those considering following Miller’s court route has grown and grown.

Murdoch’s executives are now fearful that bad past practices – and they are in the past – will scupper the BSkyB bid, which is strongly opposed by other UK media companies who are concerned that News Corp will become the dominant beast in the jungle.

The affair entered the heart of No 10 Downing Street on Friday after former News of the World editor Andy Coulson stood down as prime minister David Cameron’s communications director, saying the controversy was deflecting from his duties.

Though Coulson is gone, Downing Street still has reason to fret.

 The Conservatives have traditionally had strong ties with Murdoch; Cameron is friendly with Murdoch’s son, James, enjoying a Christmas dinner with him at the home of News International chief executive Rebekah Wade.

Yesterday the secretary of state for culture, Jeremy Hunt, played cautiously, deciding to give News Corp more time to show that a full BSkyB takeover would not hurt media plurality in the UK before making a final decision on whether to refer the deal to the Competition Commission.

Media regulator Ofcom is firmly against the takeover, saying that it “would result in a reduction in the number of persons with control of media enterprises and that Sky would cease to be a distinct media enterprise”.

News Corp is desperate to avoid a Competition Commission referral and/or a referral to the European Commission, since these would delay the deal by a minimum of six months and leave open the possibility that it might never take place at all.

In a bid to head off such an outcome, Murdoch’s executives are reported to have told the culture secretary that they are prepared to separate Sky News, guaranteeing its editorial independence after a full takeover but retaining ownership of it.

The prospect that Sky News could be turned into a British-style version of Murdoch’s rabidly right-wing US operation, Fox News, deeply concerns many in the House of Commons – and not all of them are on the Labour benches.

The Conservatives, meanwhile, fear that a refusal would offend Murdoch and threaten the favourable coverage they receive from his newspapers, along with leaving open to the danger that News Corp could sue for an unfair blockage of its BSkyB bid.

Meanwhile, the rest of Britain’s national print media – bar the Guardian and the Independent – continues to treat the News of the World phone-tapping allegations with kid gloves, says media academic and former editor Roy Greenslade.

And well they might.

 In 2006, the British Information Commissioner said it knew of 30 newspapers and magazines that had paid for personal confidential information, including non-Murdoch-controlled organs.

Sins can be laid at many doors.