Rt Hon ED MILIBAND MP Member of Parliament for Doncaster North HOUSE OF COMMONS LONDON SWIA 0AA February 9 2017 Sharon White, Chief Executive, Ofcom Riverside House, 2a Southwark Bridge Road London SE1 9HA Fit and Proper Person test: British Sky Broadcasting Limited We are writing to you regarding your ongoing duty in respect of broadcasters being fit and proper to hold a license, under Sections 3(3) of the Broadcasting Acts 1990 and 1996, in light of recent developments, including the bid for full ownership of BSkyB by 21° Century Fox. You will recall that in September 2012, Ofcom reported! on its duty in relation to British Sky Broadcasting Limited following the revelations of suspected criminality at newspapers owned by News International. Your report contained damning criticism of James Murdoch including that his conduct was “difficult to comprehend and ill-judged” and that it “fell short of the exercise of responsibility to be expected of him as CEO and Chairman” (paragraph 34). It went on to conclude that the events documented “raise questions regarding James Murdoch's competence in the handling of these matters, and his attitude towards the possibility of wrongdoing in the companies for which he was responsible” (paragraph 35). The report stopped short of concluding that BSkyB was not fit and proper to hold a license on the basis of two factors. First, that BSkyB was only minority owned by the Murdochs: “While we consider that any director or large minority shareholder will count as exerting influence for these purposes [of fitness and propriety], his or her ‘ https://www.ofcom.org.uk/__data/assets/pdf_file/0022/32485/bskyb-final. pdf Constituency Office Telephone Number: 01302 875462 Email: ed.miliband.mp@ parliamentukinfluence may be limited, or may be moderated by other directors or shareholders, in such a way that conduct on the part of that individual is not in fact sufficient to render the company as a whole unfit or improper (emphasis added)” (paragraph 43) The second factor was that James Murdoch had stepped back from an executive role at BSkyB: “While we consider that James Murdoch's conduct in various instances fell short of the standard to be expected of the chief executive officer and chairman, we do not find that James Murdoch’s retention as a non-executive director (emphasis added) of Sky means that Sky is not fit and proper to hold broadcast licenses” (paragraph 46). Ofcom ended its September 2012 report with the following words: “Ofcom considers that the findings of the Leveson Inquiry and the results of pending criminal proceedings (including evidence given in such proceedings) could be relevant to the performance of its duty under Section 3(3)” (paragraph 47) Since your report of September 2012, there has been an extraordinary pattern of criminality and wrongdoing revealed at News International: * Six? senior employees of News International have been convicted of phone- hacking (Operation Weeting) and a senior employee of News International has been convicted of perverting the course of justice’; * Asignificant number of police and public officials have been convicted of accepting corrupt payments from employees of that organisation, payments which were approved at high level by that organisation’. + A.News International journalist was convicted of handling stolen property, namely an MP’s mobile phone (Operation Tuleta)> © Aneditor and the head of legal affairs at the Newspaper were found by Parliament to have lied to a select committee during its investigation into phone-hacking and were held in contempt of Parliament as a result® 2 andy Coulson (Editor), Greg Miskiw (News Editor), James Weatherup (News Editor), lan Edmondson (News Editor), Neville Thurlbeck (Chief Reporter), Jules Stenson (Features Editor) > Mazher Mahmood: 'Fake Sheikh’ jailed for 15 months: https://www.theguardian.com/media/2016/oct/2.1/fake-sheikh-mazher-mahmood-ialled- for-15-months * http://news.met. police.uk/news/operation-elveden-completed-152789 © Three month suspended sentence for Sun's Nick Parker after conviction for handling MP's stolen mobile phone: http://www.pressgazette.co.uk/suns-nick-parker-cleared-over- payments-public-officials-convicted-handling-mps-stolen-mobile-phone/ & Privileges Committee Report ~ Conduct of witnesses before a Select Committee: https://www.publications.parliament.uk/pa/cm201617/cmselect/cmprivi/662/66202.htm¢ News International has admitted phone hacking at the News of the World (Operations Pinetree and Weeting) in several hundred phone-hacking claims and has made payments to victims and lawyers in relation to these cases amounting to over $500m’. In addition to the above, the outcome of a significant number of civil claims outstanding against the newspapers owned by News International are awaited and there have been new allegations in open court in that litigation about the role and intentions of James Murdoch in the email deletion programme at news International.® We still await the findings of Leveson Part 2 which is tasked? with inquiring, among other things, into “the extent of unlawful or improper conduct within News International...{and] the extent of corporate governance and management failures at News International...” Even in advance of such an inquiry, Ofcom's extremely adverse conclusions about the conduct of Mr James Murdoch and his corporate stewardship in September 2012 have been vindicated and significantly strengthened by events since. There have been two other significant developments. As you will be aware, 21st century Fox is now bidding for 100% ownership of Sky. The bid is likely to be formally notified to the European Commission in the coming months. In addition, James Murdoch has been re-appointed as Chairman of Sky and is now the Chief Executive of 21% Century Fox!2, As you are aware, the responsibilities around fitness and propriety are, under the Acts, an ongoing duty of Ofcom. This duty is independent of any decisions the Secretary of State might well and indeed, in our view, justifiably make to refer the bid to you on public interest grounds around, for example, plurality, once formal notification is made. 7 News Corp hacking scandal costs total $7m for last three months of 2015, up 40 per cent on previous quarter: http://www.pressgazette.co.uk/news-corp-hacking-scandal-costs-rise- 512m, ® James Murdoch involved in News International email deletion, court told: https://www.theguardian.com/media/2016/dec/05/iames-murdoch-involved-news- intemnational-email-deletion-high-court-phone-hacking 3 http://webarchive.nationalarchives.gov.uk/20140122145147/http://www.levesoninquiry.or g.uk/about/terms-of-reference/ 1° https://www.theguardian.com/media/2016/jan/29/james-murdoch-sky-chairman-rupert- murdoch 1 nttps://www.theguardian.com/media/2015/jun/16/james-murdoch-21st-century-fox- chief-executiveEach development since 2012 -— the criminal convictions, the executive role of James Murdoch, the bid for full ownership--- on its own would represent a material change in circumstances and should prompt a thorough repetition of your 2012 Inquiry. Together, we believe they provide an unanswerable case that Ofcom should conduct once again a section 3(3) Inquiry. Furthermore, in the light of the real prospect of full ownership of BSkyB by the Murdochs, there is also an urgency about these inquiries beginning straight away. Clearly the bid would not be allowed to proceed by the shareholders if you were to rule that 100% ownership by the Murdochs would make BSkyB unfit and improper to hold a licence. It is imperative therefore that your inquiries are completed in time to inform any conclusions being reached by Government, in relation to other public interest concerns. Our reasons for writing therefore are two-fold: 1) Can you confirm that Ofcom is indeed planning to conduct a new Inquiry under section 3(3)?; 2) Could you, in the public interest, provide guidance about the timescale and nature of the investigations you plan to undertake and how you will gather evidence from interested parties on this issue? As you will appreciate, given the history of this issue and your very important 2012 report, this is a defining test of Ofcom and its capacity and strength as a regulator. We know you will want to proceed in a way that is fair to all parties and act without fear or favour. We look forward to your reply Ed Miliband MP Sir Vince Cable Baroness Warsi Baroness O'Neill of Bengarve Lord Falconer of Thoroton