British regulator Ofcom is facing a High Court battle over its ruling that Sky would remain “fit and proper” to hold a UK broadcasting licence if snapped up by Rupert Murdoch’s 21st Century Fox.
Activist group Avaaz has won the right for a judicial review of the decision to be heard before June 30.
Avaaz has accused Ofcom of failing to investigate Fox News content and take into account alleged corporate governance failures at Mr Murdoch’s media empire before reaching its decision.
In granting the group’s application, Mr Justice Morris said “the case is arguable and may raise some important points of principle”.
It is the latest potential road block to threaten Mr Murdoch’s £11.7 billion (€13.16 billion) bid for Sky after Britain’s competition watchdog found 21st Century Fox’s attempt to seize the 61% of the broadcaster it does not already own was “not in the public interest”.
Ricken Patel, chief executive of Avaaz, said Ofcom’s conclusions had put its “licensing standards in the gutter”. He said: “If the Murdoch empire is fit and proper to hold broadcasting licences after massive hacking, harassment and hush money, then virtually anyone is.
“(Ofcom) got down there by steadily shifting the goalposts to ensure the Murdochs passed the test. The Murdochs may believe they are above the law but the court has made it clear Ofcom is not.” Avaaz, which is funded by small donations and has 46.6 million members worldwide, called into question Ofcom’s “fit and proper” decision on four grounds.
It claims the watchdog had swept aside evidence that Fox News broadcasts biased content and fake news, and created an “artificially high threshold” for finding the enlarged company “unfit” to hold a broadcasting licence.
It also alleged that Ofcom had “made factual errors in assessing the sexual and racial harassment scandals at Fox” and had not explained why it was happy with James Murdoch to become chief executive of Fox/Sky despite criticising his conduct in the past.
An Ofcom spokesman said: “We will defend our ‘fit and proper’ assessment, which was independent, expert and based on the evidence.” The latest twist comes after Fox announced on Monday that it would attempt to shield Sky News from Mr Murdoch’s influence and ensure its future for five years in an attempt to push through its takeover of Sky.
The Competition and Markets Authority (CMA) had already suggested ways to address its concerns, including spinning off Sky News, or “behavioural” changes to protect Sky News from direct influence from the Murdoch Family Trust.
An ongoing tussle over the deal has the potential to complicate Walt Disney’s $66 billion (€53 million) takeover of Fox’s entertainment assets, which include Sky. The CMA has until May 1 before sending its final report on the bid to Culture Secretary Matt Hancock, who will then have 30 working days to make a final decision.
Shares in Sky were up just shy of 2% in afternoon trading on the London Stock Exchange.