Ofcom could face judicial review over ‘fit and proper’ Sky ruling

Ofcom could face a judicial review of its ruling that Sky would remain a “fit and proper” holder of a UK broadcast licence if 21^st Century Fox’s bid to take control of the pay TV operator is given the green light.

Ofcom CEO Sharon White

Advocacy group Avaaz has hired lawyers Hausfeld to present a ‘letter before claim’ to the UK media regulator – a first step in the judicial review process – highlighting what it claims to be “fatal flaws” in Ofcom’s reasoning that Sky would remain a ‘fit and proper’ holder of a licence.

Ofcom concluded in its June review 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, it would not be fit and proper to hold broadcast licences.”

The regulator separately said that the acquisition did raise media plurality concerns, leading culture secretary of state Karen Bradley to announce that she was “minded” to refer the bid to competition watchdog the CMA on this basis.

In its letter of Ofcom CEO Sharon White, Avaaz alleged that the regualtor’s ‘fit and proper’ finding was “fatally flawed by material errors of law, fact and reasoning”. It said that Ofcom “used an irrational standard, ignored significant and relevant evidence, made basic factual errors and used Fox executive assurances – despite a long history of false statements by Fox representatives to regulators – as evidence of likely compliance with important ruls that protect the public interest in a fair and free media”.

According to Avaaz, Ofcom made four key errors in its assessment of whether Sky and 21^st Century Fox met broadcast standards.

First, it “failed to act based on exaggerated fears of the consequences of doing so”, setting too high a threshold for finding the Murdochs unfit and improper to hold a broadcasting licence.

James Murdoch

Second, it based its assessment of Fox’s compliance with the UK broadcasting code only on the number of complaints it had received from Fox’s existing small audience base in the UK, rather than assessing evidence of “gross distortions and blatant inaccuracies”. Avaaz also alleges that Ofcom accepted a hastily thrown together broadcasting standards policy when it emerged that Fox did not have one, which was breached immediately.

Third, says Avaaz, Ofcom got basic facts wrong and drew the wrong conclusions about the sexual harassment cases enveloping Fox in the US, accepting Fox’s claim that “almost all” of the misconduct occurred berfore 2012, and that the board was not aware of the conduct, despite evidence that measures introduced by the Fox board at that time should have made them aware of what was going on.

Fourth, according to the advocacy group, Ofcom ignored the role Fox CEO James Murdoch would play in the event of a takeover of Sky, despite being asked by Bradley to report on the implications of his position on the bid.

Ofcom has 14 days to respond to the letter, after which formal judicial review proceedings can begin.

Avaaz’s move adds to the pressure on Ofcom after Bradley asked the regulator to take a fresh look at whether a Fox-owned Sky would adhere to broadcasting standards in the light of “new evidence”. That move followed calls from opposition politicians and others for a reopening of the investigation and came after revelations concerning a subsequently discredited story run by Fox News in the US concerning the hacking of Democratic National Convention emails and the death of a DNC campaigner.