The Trouble with Fox: O'Reilly Scandal Threatens Murdoch's Deal for Sky

CNN/ Newswire | 4/11/2017, 8:21 a.m.
Five years have passed since a scandal forced Rupert Murdoch to abandon his purchase of a media industry crown jewel: ...
Rupert Murdoch

By Ivana Kottasova

LONDON (CNNMoney) -- Five years have passed since a scandal forced Rupert Murdoch to abandon his purchase of a media industry crown jewel: the British pay TV provider Sky.

The problem then was outrage over phone hacking at Murdoch newspapers. Now, with a second takeover bid underway, accusations of sexual harassment and verbal abuse by Fox News star Bill O'Reilly are threatening to deny Murdoch his prize once again.

European anti-trust regulators have given their blessing to a £18.5 billion ($22.9 billion) deal struck in December that would give 21st Century Fox full control over Sky.

But a more comprehensive review by U.K. media regulator Ofcom is pending, with a decision due by May 16.

The U.K. regulator could block the deal if it determines that Fox's ownership of Sky would reduce the mix of viewpoints available in British media. Murdoch already owns three of Britain's biggest newspapers: The Sun, The Times and The Sunday Times.

Ofcom could also kill the deal if it decides that Murdoch and 21st Century Fox do not meet the standard of "fit and proper" owners. The criteria for the designation are broad: Ofcom says it considers "any relevant misconduct" when administering its "fit and proper" test.

The New York Times reported earlier this month that five women have been paid a total of $13 million by either O'Reilly, Fox News or parent company 21st Century Fox. In exchange, the women agreed not to pursue litigation or go public with their accusations, according to the newspaper.

21st Century Fox said Sunday that it is investigating the claims.

Alice Enders, head of research at Enders Analysis, said accusations of sexual harassment at Fox are unlikely to sink the Sky deal. But Ofcom will examine whether Fox executives erred in not telling investors about the claims.

"The test is there to make sure that a person who is a criminal doesn't get to run a broadcaster in the U.K.," she said. "In this case, the focus would be on the failure to disclose the sexual harassment settlements to shareholders, rather than the sexual harassment itself."

21st Century Fox said it takes its regulatory and compliance obligations "very seriously."

"We are confident that our proposed transaction to acquire the outstanding shares of Sky that we don't already own will be approved following a thorough review by regulators," it said in a statement emailed to CNNMoney.

Sky did not respond to requests for comment.

The Murdoch family's attempt to purchase the 60% of Sky that it doesn't already own has become a major political football in Britain, where Rupert Murdoch and his son James remain divisive figures.

James Murdoch served as chairman of Sky from 2007 to 2012, but he was forced to step down after being implicated in the phone hacking scandal. He returned to the job last year, and his fitness as a corporate leader is likely to be assessed as part of the Ofcom review.