U.K. Labour Seeks Murdoch Phone-Hacking Focus in Fox-Sky Review

(Bloomberg) -- Opposition lawmakers called on the U.K. government to focus on past criminal acts at News International when assessing 21st Century Fox Inc.'s proposed bid to takeover Sky Plc, as political opposition to the merger gathered steam.

Ofcom, the telecommunications regulator, must consider “the gravity of wrongdoing in companies controlled by the Murdoch family” if asked to investigate the proposed 11.7 billion-pound ($14.3 billion) deal, Tom Watson, a vocal critic of the tie-up, said in the House of Commons on Monday. “Ofcom must not do its job with one hand tied behind its back.”

Karen Bradley, the U.K. minister ultimately responsible for clearing the bid, is considering whether to refer Fox's plan to the regulator, with a decision expected by next week. She has raised concerns around how the merger would affect media plurality and on Fox's commitment to broadcasting standards.

Answering Watson's statement in the Commons, Bradley said Ofcom wouldn't be limited in the scope of its investigations.

“I'm not ruling any evidence in or out,” Bradley said. “Ofcom have sufficient powers and they can investigate anything they think is appropriate.”

Media billionaire Rupert Murdoch's previous attempt to acquire Sky was thwarted in 2011 over a phone-hacking scandal at his newspapers. Murdoch's News Corp., which owned News International, has since been split. While Fox has the entertainment business, opponents of its merger with Sky have continuing concerns about Murdoch having too much control over U.K. media.

In a letter to Fox and Sky last week, Bradley's office cited “failures of corporate governance” on the part of James Murdoch, who was executive chairman of News International from 2008 to 2012. The letter cited the 2012 Ofcom review that found his conduct “repeatedly fell short of the exercise of responsibility to be expected of him” during the phone-hacking scandal.

Former News of the World journalists including Clive Goodman and Andy Coulson were among the News International employees found guilty of hacking-related charges. James Murdoch is now chief executive officer of Fox and has returned as chairman of Sky.

The Murdoch family controls about 40 percent of the voting stock of Fox, which in turn owns about 39 percent of Sky.

--With assistance from Tim Ross

To contact the reporter on this story: Joe Mayes in London at jmayes9@bloomberg.net.

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net.