British Sky Broadcasting Group, the pay-TV broadcaster in which News Corporation owns 39 per cent, has said its Sky News channel twice approved the hacking of emails.
BSkyB shares dropped 3.4 per cent yesterday.
Regulators are already investigating whether News Corporation and its deputy chief operating officer James Murdoch are “fit and proper” to own a stake in BSkyB as other parts of the company’s British business illegally accessed voice mails and paid police for stories.
The scandal prompted Murdoch, son of chief executive officer Rupert Murdoch, to step down as chairman of BSkyB this week.
Executives of Sky News cleared a reporter to access emails as part of his investigations into criminal activity, including the 2008 case of a British couple who faked the husband’s death in a canoe accident to collect life and mortgage insurance, the channel said in a statement. Sky News said the email hacking was in the public interest.
“The announcement adds to concerns over whether News Corp will be found to be fit and proper, making a renewed bid for BSkyB, in our view, unlikely,” Bernstein analyst Claudio Aspesi said. “Greater scrutiny is also likely to distract management at an important time.”
The phone-hacking scandal, which involves reporters of News Corp’s News International publishing unit illegally listening to voicemail messages of politicians and celebrities, prompted the company in July to drop its £7.8 billion offer to buy all of BSkyB and close its most popular title, the News of the World.
BSkyB fell 22.50 pence to 635.50 pence in London trading; the stock had declined 13 per cent this year. Sky News head John Ryley said the hacking was “editorially justified and in the public interest” and that the channel provided the emails to police to assist in the couple’s prosecution.
Alex de Groote, an analyst at Panmure Gordon, said: “Anything that undermines the regulatory or legal basis on which Sky exists as a broadcaster is going to be a cause for concern. Without a licence, the company has no value.” – (Bloomberg)
