Lachlan Murdoch , Rupert and James Murdoch
Lachlan, Rupert and James Murdoch

After the independent British regulator Ofcom came out pretty hard against the Murdochs, it would have been very difficult for Conservative Culture Minister Karen Bradley to simply wave through 21st Century Fox’s $20 billion takeover bid for Sky PLC.

Instead, the minister, a former chartered accountant with Deloitte and KPMG, last night called for a further review by the competition watchdog on the question of media plurality. MPs and the public have also been given 10 working days to respond to this fascinating 21-page report by Ofcom on the question of whether the Murdochs are “fit and proper” to hold a UK broadcasting licence.

The regulator says yes, but there’s plenty of juicy material and contentious claims about Fox News, sexism and racism in the probity report.

Investors gave their positive view about the prospects of the takeover when Sky shares rose 3.3% overnight to 988p, but deal risk remains substantial given the cash offer is pitched at 1075p. Fox shares, which will carry record debt if the deal goes through, closed fractionally lower this morning and have underperformed since the 2012 demerger.

The Culture Minister delivered her prepared statement to the House of Commons shortly before 9pm AEST last night and then faced a fast-paced 20 minutes of questions from MPs.

The Labour and Liberal Democrat MPs were scathing, with the likes of Ed Miliband, Tom Watson and Chris Bryant urging the minister to block the deal, while Conservative MPs were more supportive, often pointing to internet and social media competition as a reason to tolerate less plurality in the traditional media.

The MPs had not read the Ofcom fit and proper report at the time of the parliamentary debate, but there were plenty of choice quotes in there that will be hotly debated in coming days.

Lachlan and James Murdoch fronted Ofcom, which seemed to buy their arguments that the next generation of Murdochs are less dodgy than dad. Here’s a sample from the report:

“In a separate meeting, James and Lachlan Murdoch personally put to us that no individual working for Fox News could now be under the impression that sexual harassment is acceptable, having seen the sacking of Mr Ailes, Mr O’Reilly and a number of other employees including very senior managers. The racial harassment allegations involving Fox News appear to have been dealt with in a timely fashion by Fox once it had become aware of them. Fox fired the individuals alleged to have been involved and has trained its staff in acceptable workplace behaviour. As above, it has been put to us by James and Lachlan Murdoch that no employee of Fox News could now be under the impression that the conduct alleged was acceptable.”

In relation to Bill O’Reilly, Ofcom concluded that “the alleged conduct is deeply disturbing” but that “James and Lachlan Murdoch have since been responsible for a revision to Fox’s corporate governance arrangements”.

The only problem with all of this is that Rupert Murdoch himself did not front Ofcom. Why not? He controls the company, not his sons.

It is Rupert who is said to have daily phone calls with Donald Trump, not his sons, and it is Rupert who is currently running Fox News, which continues to prop up Trump despite his constantly offensive behaviour.

If the speaker of the House of Commons, John Bercow, can declare that Donald Trump is not welcome to address the British Parliament, due to his sexist and racist attitudes, why isn’t Rupert’s role as propagandist in chief for Trump a key issue for Ofcom and the British Parliament?

Trump’s latest sexist atrocity against MSNBC morning host Mika Brzezinski was unleashed just hours after the Culture Secretary’s statement to the British Parliament and has already been widely condemned by both sides of American politics.

Rupert’s Fox News, as usual, has offered up the mildest criticism. Brzezinski should make a submission to Ofcom and Rupert Murdoch should be called to explain why he backs a pervert like Trump.

And 21st Century Fox has served up a series of undertakings to Ofcom that are designed to preserve the editorial independence of Sky News, but as Tom Watson told the Commons, history shows “they are not worth the newsprint they are written on”.

The Culture Minister has signaled they need to go further and that will be the focus over the coming days. The Murdochs have until July 14 to make further submissions and undertakings, and the public is also able to submit again. A record 51,513 submissions were made during the consultation period, with only 26 in support of Rupert’s biggest cash spend.

Sadly, the unique corporate governance elements of the Murdoch empire have not so far entered the regulatory debate, with the focus instead being on sexism and racism at Fox News, phone hacking, market dominance and undertakings about editorial independence.

Rather than an independent editorial board at Sky, the real solution is a majority of independent boards at 21st Century Fox.

Given his long record of breaking promises, if the 86-year-old controlling shareholder of 21st Century Fox isn’t prepared to personally front Ofcom to warrant for these undertakings, then one of the conditions of the takeover should be his departure as executive chairman, the unwinding of the company’s gerrymander and the appointment of a clear majority of independent directors.

Surely it’s simply not good enough for a couple of Rupert’s children to claim they’ve taken charge when dad is still executive chairman of 21st Century Fox and News Corp and personally controls the votes of the family shares at AGMs, as has been the case since 1953.

Peter Fray

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