By JILL LAWLESS, Associated Press
LONDON (AP) — Not fit to run a major company. It is a damning judgment on Rupert Murdoch, a threat to his British assets — and a headache for Britain's government.
The majority verdict by a divided committee of British lawmakers brings more scrutiny of Murdoch's holding in British Sky Broadcasting — already under investigation by the U.K.'s broadcast regulator — and could increase calls for the breakup of his British media empire.
"How much more humiliation can Rupert Murdoch take?" asked commentator Roy Greenslade in Wednesday's Evening Standard newspaper.
And if Murdoch is unfit, what does that say about Prime Minister David Cameron and other politicians who courted the media baron for his newspapers' election-swinging power and, until revelations of tabloid phone hacking exploded, were poised to let Murdoch have full control of one of the country's most powerful broadcasters?
BSkyB, in which Murdoch's News Corp. owns a controlling 39 percent share, insisted Wednesday that it was a "fit and proper license holder" with a "strong record of regulatory compliance and high standards of governance."
The company was forced to defend itself after Parliament's Culture, Media and Sport Committee, which scrutinizes press standards, issued a report Tuesday on phone hacking that was sharply critical of Murdoch and his lieutenants.
It concluded that Murdoch's company had covered up widespread wrongdoing at the News of the World; that three senior executives misled lawmakers about what they knew; and that Murdoch himself had "exhibited willful blindness to what was going on in his companies."
And, in a divided opinion that split the committee along party lines, it said Murdoch was "not a fit person to exercise the stewardship of a major international company."
The term "not a fit person" — backed by five Labour lawmakers and one Liberal Democrat but rejected by four Conservatives on the committee — deliberately evokes the "fit and proper" test, a vague yet powerful standard that Britain applies to owners of television stations.
British and American media are in some ways mirror images. The U.S. has largely sober newspapers and lively, partisan broadcasters, including Murdoch's Fox News.
In Britain, newspapers are wild and woolly, while broadcasters — from the state-funded BBC to private ITV and Sky — are expected to remain composed and impartial.
So while British newspaper chiefs come from a variety of colorful backgrounds — the current owners of national dailies include a Russian oligarch and a former pornography publisher — TV proprietors are more carefully scrutinized. And the regulator, Ofcom, can revoke a TV license from anyone who fails the test. It last did so in 2010, from a porn broadcaster.
Ofcom began investigating BSkyB after evidence emerged last year that Murdoch's News of the World had systematically hacked the cell phone voice mails of politicians, celebrities and even crime victims in a search for scoops.
Murdoch shut down the 168-year-old tabloid after the revelation that it had eavesdropped on the phone of a murdered teenager while police were investigating her disappearance.
The scandal has been both costly and embarrassing: Police investigating hacking and bribery allegations have arrested two dozen of his past and present staff, Murdoch has paid out millions to settle dozens of lawsuits from hacking victims, and the once-haughty mogul has repeatedly declared himself humbled and contrite.
He could yet face more humbling. If the regulator were to determine that News Corp. does not meet the "fit and proper" test, it could be forced to divest part of its stake in BSkyB, depriving it of a controlling interest.
British law offers no legal definition of "fit and proper," meaning that Ofcom must use its judgment in deciding whether executives should be trusted to hold a broadcasting license. Ofcom said it would consider the parliamentary committee's report as part of its deliberations.
If shareholders are worried, they didn't show it Wednesday. BSkyB shares rose, up more than 2 percent at 706 pence in London afternoon trading, as the company reported a 19 percent increase in nine-month profits.