Sky/21st Century Fox: Merger

Lord Watson of Wyre Forest Excerpts

Thursday 16th March 2017 Commons Chamber

[Mr Tom Watson (West Bromwich East) (Lab)]

I thank the Secretary of State for advance notice of her statement. She says that she will go ahead with what she indicated she was going to do last week. That might not sound like a big deal, but it is more than the Chancellor and the Prime Minister managed yesterday.

Labour Members welcome the fact that the Secretary of State is intervening. She will have noticed that 21st Century Fox is happy, too. In a letter to her last week, it said:

“We welcome a thorough and thoughtful review”.

I have no doubt that that welcome is sincere, and that 21st Century Fox is thrilled by her decision. On that basis, I hope that it will seek not to challenge or impede any element of Ofcom’s investigation. If it does, I trust that she will make a new referral to put it beyond doubt that Ofcom can investigate what it needs to investigate.

Can the Secretary of State confirm that the “broadcasting standards” ground of her referral gives Ofcom the power to investigate any corporate governance issues affecting 21st Century Fox, including the phone hacking scandal, any cover-up of illegality at News International, the rehiring of people responsible for governance failures, and ongoing sexual harassment claims in the United States? Is it her view that Ofcom should examine those issues?

The Secretary of State referred to representations made by me, my right hon. Friend the Member for Doncaster North (Edward Miliband) and others about adding “fit and proper” as a new public interest consideration, but she has regrettably chosen to reject them. I welcome Ofcom’s announcement that it will conduct a fit and proper assessment at the same time as considering the public interest test she has specified today, but I have two concerns about this. First, Ofcom has only 40 days to conduct the fit and proper assessment. Is the Secretary of State confident that it can get to the bottom of all these issues in such a short time? Secondly, the 2012 Ofcom report on James Murdoch, which found that his conduct

“repeatedly fell short of the conduct to be expected of him as a chief executive officer and chairman”,

contained this important caveat:

“The evidence available to date does not provide a reasonable basis to find that”

he

“knew of widespread wrongdoing or criminality at”

News of the World. The reason for that lack of evidence was that Ofcom did not have the power to gather the evidence it needed.

Just a few years ago, News Corporation, 21st Century Fox’s predecessor company, was involved in one of the biggest corporate scandals and one of the biggest corporate governance failures of modern times. Many of the questions about the failure of corporate governance failure within 21st Century Fox’s predecessor company, and much of the evidence of the role of James Murdoch within those failures, can be answered only by going ahead with part 2 of the Leveson inquiry. Ofcom does not have the power to obtain documents and compel witnesses to appear before it. Is not the easiest way of getting to the bottom of the corporate governance questions that we all want answered to hold an inquiry in public, using powers under the Inquiries Act 2005, with terms of reference that have already been announced by a Conservative Prime Minister as a promise to the victims of phone hacking—namely Leveson part 2?

[Karen Bradley]

I thank the hon. Gentleman for his comments. I will address his final point first—the issue of Leveson—as I did last time I was at the Dispatch Box on this matter. As he will know, the consultation we launched, which closed in January, is subject to judicial review. I am therefore unable to comment on the consultation, or any aspects of it, with regard to the Leveson inquiry. I hope he will understand that I cannot make further comment about that.

I am pleased that the hon. Gentleman welcomes the decision to refer this merger, but it is important that I make a couple of points in relation to his questions. He asked whether the “broadcasting standards” element could include looking at corporate governance. I was clear in my original “minded to” letter and in the statement I made to the House on 6 March that corporate governance was one of the issues on which I was referring the matter to Ofcom, and therefore I would expect it to look at that. Clearly, however, Ofcom is an independent regulator. I have made the decision to refer to Ofcom, but it is for Ofcom to decide what evidence it wants to look at. It is open to look at whatever evidence it feels is appropriate to enable it to make its decision.

The hon. Gentleman talked about the fit and proper test. I very carefully considered the representations that were made, but it is important that it is the independent regulator that looks at fit and proper and the Government who have grounds on which to intervene under the Enterprise Act. Those two things have to be kept separate. The Government should not step into the area where, quite rightly, the regulator should sit.

The hon. Gentleman asked whether Ofcom has the time, resources and ability to gather the evidence that it needs. I have been assured by Ofcom that it has the time to do this and the ability to gather the evidence it needs, and I now look forward to letting it get on with the job.