News Corp’s UK static could yet hit U.S. airwaves

July 20, 2011

By Reynolds Holding
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

NEW YORK — News Corp’s UK static could yet hit U.S. airwaves. Phone-hacking and bribery charges already threaten Rupert Murdoch’s stake in pay-TV firm British Sky Broadcasting. But his ownership of 27 Fox Broadcasting stations in America, home to hit shows like “The Simpsons” and “American Idol,” could also be in jeopardy if the accusations prove true.

The scarcity value of broadcast frequencies is a big reason the U.S. Federal Communications Commission keeps close watch over them. The regulator allows their use by people of good “character” who will serve “the public interest” and speak with “candor,” and it approved Murdoch’s foray into the business 25 years ago.

But the FCC also has at times seen fit to reverse course. In 1969, commissioners revoked the license of WLBT in Mississippi because of its racist policies. In 1987, they pulled RKO’s radio and broadcast licenses because its parent company lied and bribed foreign officials. In 2003, the FCC pushed out owners of radio station WMGA in Georgia because they lacked “basic character qualifications.”

Murdoch’s Fox stations aren’t accused of any such misconduct. But the allegations of wrongdoing at other parts of the News Corp empire have been enough for Britain’s broadcasting regulator, Ofcom, to probe whether the company is a “fit and proper” owner of BskyB. And, at least theoretically, it’s enough for the FCC to scrutinize Fox.

In practice, though, aside from Democratic commissioner Michael Copps, the five-member FCC — three Democrats and two Republicans — has shied from enforcing the character test. And “bad character” now generally requires a criminal conviction or other findings of wrongdoing. The stiffer test is designed to encourage companies to invest in stations without fearing their licenses will be arbitrarily yanked.

Actions abroad also rarely prompt the FCC to question American licensees, and the commission typically holds only a station’s direct owners accountable. If, however, alleged wrongdoing leads far enough up the News Corp chain of command, the FCC may have enough to question the company’s fitness to own Fox channels. The law is certainly broad enough. The chances may look remote, but a few weeks ago, so did the idea of Murdoch getting hit with a pie in the face while sitting before Parliament.

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