Fox CEO Murdoch Defends Scandal-Hit Fox News Ahead of Probe (1)

Sep 14, 2017 11:22 am ET

(Bloomberg) -- Facing fresh scrutiny of 21st Century Fox Inc.’s bid for Sky Plc., James Murdoch defended his handling of scandal-hit Fox News, saying his organization isn’t perfect, but acted swiftly to tackle wrongdoing at the channel.

“At any large organization, there are always things that are going to go wrong,” the Fox chief executive officer and son of billionaire Rupert Murdoch told an audience of broadcast industry leaders Thursday. Fox’s response to harassment claims was to react “quickly and loudly so that everyone can understand certain things are intolerable,” he said.

Murdoch’s defense of his company came just hours after Britain’s government referred the 11.7 billion-pound ($15.5 billion) bid for Sky to a wider probe by the country’s competition authority. The deal has been overshadowed by a steady drumbeat of sexual and racial harassment allegations at Fox News.

Murdoch also played to concerns about the post-Brexit U.K. economy in advocating for the deal, saying it would constitute an important investment for Britain’s creative industries.

“If the U.K. is truly open for business post-Brexit, we look forward to moving through the regulatory review process,” Murdoch said onstage at the Royal Television Society conference in Cambridge, England.

The extra review adds more delay and costs to New York-based Fox’s purchase of the 61 percent of Sky it doesn’t already own, Rupert Murdoch’s second attempt at the broadcaster he founded after a phone-hacking scandal at his newspapers derailed a 2010 bid.

While James Murdoch, 44, wouldn’t comment on any concessions Fox would make to gain approval, he said he was confident the deal would go through. The company expects the transaction to be completed by mid-2018, barring further delays.

The keynote address gave James Murdoch the chance to distance the troubles at Fox News in the U.S. from Sky News in the U.K., which he praised for its broadcasting standards. He specifically defended the handling of sexual-harassment claims at the U.S. channel centered around Roger Ailes, the now-deceased former co-founder, CEO and chairman who built the company with Rupert Murdoch. Firing Ailes was “not a hard decision,” he said.

James Murdoch also defended the editorial content of Fox News, saying it’s designed for a U.S. audience and is part of a competitive environment of political opinion that is different from that found in the U.K.

“A diversity of views can be a really healthy thing and I’m proud of being at a company that can accomplish that diversity,’’ Murdoch said.

Murdoch’s comments highlight generational change at his father’s media empire, even as the 86-year-old maintains a grip on power as co-chairman of 21st Century Fox and Fox News chairman. Opponents of the deal have cast a spotlight on the harassment allegations at Fox News as well as the past handling of the phone-hacking scandal at News Corp., which is now separate from the U.S. film-and-television operation.

Culture Secretary Karen Bradley, speaking in Parliament Thursday before traveling to Cambridge for the conference, said she would direct the Competition and Markets Authority to investigate Fox’s commitment to broadcasting standards and whether its takeover of London-based Sky would give the Murdoch family too much sway in the country’s media.

In referring on broadcast standards, Bradley went against the recommendations of communications regulator Ofcom. At the Cambridge event, the head of the authority, Sharon White, said Ofcom “took the utmost care” in its review and its advice was clear that a referral on broadcast standards wasn’t needed.

For more on the activists who have slowed the pursuit of Sky, click here

Speaking in Cambridge, Bradley said it’s important for public confidence that a full CMA review is conducted.

“The threshold for reference that I have to take is lower than the threshold maybe for the fit-and-proper test that Ofcom do,” she said. “Let’s let the CMA do the work. They are technical experts in competition and markets. I want them to look at the concerns that have been raised.”

Sky shares were down 0.3 percent, trading at 929 pence as of 4:19 p.m. in London, a 14 percent discount to the offer price. While the investigation opens the deal to more uncertainty, some analysts see it as a necessary step toward probable approval.

“It’s very much making sure every base is covered, but it’s unlikely to make a big difference” as the deal will probably be approved, said Ian Whittaker, an analyst at Liberum Capital Ltd. in London. Asking for a deeper probe of both broadcasting standards and media plurality helps Bradley diffuse any political tension and weaken potential legal appeals from opponents, he said.

(Updates with comments from Murdoch from second paragraph.)

--With assistance from David Hellier

©2017 Bloomberg L.P.