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UK regulator monitoring BSkyB's license
UK regulator monitoring BSkyB's license in light of problems at Murdoch newspapers
By The Associated Press

LONDON (AP) ' Britain's communications regulator said Friday it is continuing to monitor allegations of phone hacking and bribery at Rupert Murdoch's London newspapers to be sure that British Sky Broadcasting is a fit and proper holder of a broadcasting license.

Murdoch's News Corp. is the largest shareholder in BSkyB with a 39 percent stake, and his son James Murdoch is BSkyB's chairman.

The fit and proper test looks at the conduct of individuals who control and manage the company.

The issues potentially affect James Murdoch's position as BSkyB chairman, and the regulator could force News Corp. to reduce its stake in BSkyB.

The continuing interest by regulator OFCOM was first reported in Friday's edition of the Financial Times, which obtained minutes of meetings through a freedom of information request. The minutes disclosed that BSkyB was discussed in January and February as the subject of a monitoring project codenamed "Apple."

"OFCOM has a duty under the Broadcasting Acts 1990 and 1996 to be satisfied that any person holding a broadcasting license is, and remains, fit and proper to do so," the agency said.

"In relation to the hacking and corruption allegations, new evidence is still emerging from the various enquiries. OFCOM is continuing to assess the evidence ' including the new and emerging evidence ' that may assist it in discharging these duties."

Justice Brian Leveson is leading an inquiry into practices of the British press, concentrating on phone hacking at the defunct Sunday tabloid News of the World, and on allegations of corrupt payments to public officials for information.

Last week, the police officer leading the corruption investigation said there appeared to be a culture of making illegal payments to corrupt public officials in return for stories at The Sun, Murdoch's market-leading daily tabloid. The Sun launched a Sunday edition a couple of weeks ago, with Rupert Murdoch hoping to recoup at least some of the revenues shed by the loss of the News of the World.

Earlier this week James Murdoch resigned as chairman of News International, the News Corp. subsidiary which publishes The Sun, The Times and The Sunday Times.

OFCOM first announced its interest in whether BSkyB was fit and proper to hold a broadcast license last July, but said it was not conducting its own investigation of allegations. It also said it could make a decision on BSkyB's fitness before the conclusion of any criminal proceedings.

"In considering whether any licensee remains a 'fit and proper person' to hold broadcasting licenses OFCOM will consider any relevant conduct of those who manage and control such a license," the agency said last year in a letter to the chairman of the House of Commons Culture, Media and Sport Committee.

James Murdoch has denied that he had been told that phone hacking at the News of the World involved far more employees than the one reporter and an investigator who were jailed in 2007. Murdoch's denials have been challenged by former executives of the paper.

In November, 19 percent of BSkyB shareholders who voted at the annual general meeting opposed James Murdoch's re-election to the board. At News Corp.'s annual meeting in October, 35 percent of shareholders opposed his re-election as a director.

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