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Ofcom: BSkyB 'Fit And Proper' Licence Holder

(c) Sky News 2012

The media regulator has ruled BSkyB (LSE: BSY.L - news) , the owner of Sky News, is a fit and proper holder of broadcast licences.

Ofcom had said it was examining the company in the wake of the phone hacking controversy at News International (NI), owned by News Corporation (NasdaqGS: NWS - news) which has a 39.1% shareholding in the satellite broadcaster.

Its (Euronext: ALITS.NX - news) statement said: "In July 2011, in light of the public debate about phone hacking and other allegations, Ofcom confirmed that it had a duty to consider whether Sky was fit and proper to continue to hold its broadcast licences.

"Ofcom considers that, on the evidence currently available and having taken into account all the relevant factors, Sky is fit and proper to hold its broadcast licences.

"Ofcom's duty to be satisfied that a licensee is fit and proper is ongoing. Should further relevant evidence become available in the future, Ofcom would need to consider that evidence in order to fulfil its duty."

Commenting on the announcement, a Sky spokesperson welcomed the decision.

"Ofcom is right to conclude that Sky is a fit and proper broadcaster. As a company, we are committed to high standards of governance and we take our regulatory obligations extremely seriously.

"As Ofcom acknowledges, our track record of compliance in broadcasting is good.

"We are proud of our contribution as a broadcaster, the investments we make to increase choice for UK audiences and the wider benefits we create for the economy.

"After a lengthy review process, we are pleased that Ofcom has now reached its conclusion and we look forward to continuing to develop our business for the benefit of customers and shareholders alike."

Despite Ofcom's clearance, its statement also concluded that BSkyB's former chairman James Murdoch's conduct as chief executive officer and chairman of NI repeatedly fell short of the standards expected relating to the company's failure to uncover wrongdoing.

However, it said there was no evidence that he knew of wrongdoing or that he was complicit in a cover-up.

Mr Murdoch was a key figure in the decision, in July 2011, to close the News Of The World tabloid as the hacking allegations gathered pace, resulting in a number of continuing police inquiries.

He later resigned as BSkyB chairman saying he did not want the broadcaster to be undermined by "matters outside this company".

News Corp responded to Ofcom's criticism with a statement that it remained "proud of both News Corporation's and James Murdoch's distinguished record in facilitating the transformation of Sky into Britain's leading pay television and home communications provider.

"We disagree, however, with certain of the report's statements about James Murdoch's prior actions as an executive and director, which are not at all substantiated by evidence."

Labour's response called for Mr Murdoch to be removed from his position as a non-executive director on the BSkyB board.

Shadow Culture, Media (Frankfurt: 725292 - news) and Sport Secretary, Harriet Harman, said: "While Ofcom has found Sky is fit and proper to hold a broadcasting licence, its criticisms of James Murdoch are damning.

"His continued presence on Sky's board casts a shadow over one of our most important national broadcasters."