News Corp-BSkyB: ‘Fit & Proper’ Role Called Into Question On E-Mail Charge

On the surface, News Corp (NSDQ: NWS) appears to remain hopeful that its intended acquisition of the 61 percent of UK TV provider BSkyB (NYSE: BSY) it does not already own will have a smooth ride through the standard regulatory course. Today the company issued a letter stating its “priority is to continue to cooperate with the Secretary of State for Culture, Olympics, Media and Sport and the existing regulatory process.”

But in reality, it looks like an increasingly bumpy road ahead. Just moments ago, the UK regulator Ofcom also issued a statement, in the form of a letter to John Whittingdale, the chairman of the culture, media and sport committee in the House of Commons, which reiterated that the broadcasting regulator was continuing to monitor the situation, specifically as it related to a future owner of BSkyB being a “fit and proper” owner in terms of its conduct.

To be clear, the letter from Ofcom also repeated its point that it does not intend to pass judgement directly on the goings-on at News International, since newspapers are outside of its remit. But if the company is proven to have violated the law, then that will have a direct bearing on whether it is “fit and proper” to be the full owner of the pay-TV and broadcasting behemoth. (It currently owns 39 percent of the company.)

The issue of “fit and proper” may have had another vote against News Corp today, in the form of the newest revelation from the Guardian’s ongoing investigation: police are now investigating allegations that an executive deleted “millions” of emails — comprising a terabyte of data — in order to obstruct Scotland Yard’s investigation into the claims of phone hacking. The deletions were thought to have happened in two stages, with one happening as recently as this past January. News Corp had before claimed that the emails were lost en route to Mumbai.

Shares in BSkyB have dipped as much as eight percent in trading today.

Meanwhile, the public response to the Culture Department regarding the proposed acquisition of BSkyB has been huge: more than 150,000 electronic filings, plus a paper petition with more than 100,000 signatures are among the responses received, according to the BBC.

The story of News Corp’s troubles continues to develop by the minute. Chief executive Rebecca Brooks, who had been editor of News of the World during the alleged hacking scandal, is currently addressing News International staff, with as many people claiming it is her resignation as others claiming it is not. Meanwhile, the company continues to face other commercial backlash. Car company Renault has said that pending further investigations, it intends to boycott advertising from all of NI’s publications — they include The Sun, The Times and The Sunday Times.