Rupert Murdoch’s BSkyB Bid Faces Further Delays Due to Hacking Scandal

 Brendan Hoffman/Bloomberg/Getty Images

LONDON - Just days before it was expected to be cleared by the British government, Rupert Murdoch's bid to take full control of BSkyB will now likely face an extended delay or even total derailment in the wake of the public outrage over the way parts of his media organization has behaved.

British Prime Minister David Cameron on Wednesday told the House of Commons that News Corp. would have to face a test of its "fit and proper" eligibility to hold a broadcast license before the deal could be cleared, a process that will have to wait an unspecified time until a series of police and public enquiries conclude.

Meanwhile, major brands including Ford Motors, Renault, Vauxhall Motors, The Halifax, The Co-Operative, Virgin Holidays and Aldi supermarkets have announced that they are pulling their advertising from the News of The World newspaper, while Vodafone, Thompson/FirstChoice Holidays and NPower are considering their position.

Cameron told MPs at Prime Minister's Question Time Wednesday afternoon that the deal could not be cleared without a sign-off from media regulator Ofcom - the first time such a key disclosure has been mooted.

Ofcom has not yet formally announced an inquiry but has indicated it has the power to step in an intervene in the deal even if its cleared on media plurality and competition grounds by Culture secretary Jeremy Hunt. Shares in both News Corp. and BSkyB fell marginally on the news.

"Ofcom has a duty to make a recommendation about [whether the takeover is being made by a] fit and proper person," the Prime Minister said.

Cameron was responding to aggressive questioning from Opposition Labour party leader Ed Milliband, who said that "the public will react with disbelief" if the multibillion takeover was allowed to go ahead.

Although Cameron pointed out that Culture Secretary Jeremy Hunt had followed the quasi-judicial regulatory process about the deal "to the letter," he nonetheless came under fire from Millband, who accused him of relying on "technicalities" to allow the deal to clear.

In a separate exchange, Labor MP Tom Watson called for an investigation into James Murdoch's role in the matter. Murdoch's youngest son was in charge of News Corp.'s British newspaper interests during the early stages in the phone-hacking inquiry, where the company routinely said there was little case to answer.

Ofcom is now expected to wait to find out if any News International executives face criminal acts relating to authorizing the hacking of the phone belonging to murdered 13-year-old school girl Milly Dowler - which could amount to interfering with a police investigation - or whether charges are brought because of payments made to police officers. A slew of investigations into hacking is also continuing, including an inquiry into whether the parents of murdered 10-year-olds Holly Wells and Jessica Chapman and the families of victims who died in a 2007 terrorist attack had their phones illegally hacked.

"In the light of the current public debate about phone hacking and other allegations, Ofcom confirms that it has a duty to be satisfied on an ongoing basis that the holder of a broadcasting licence is 'fit and proper'," the regulator said in a statement.

"It is clearly not for Ofcom to investigate matters which properly lie in the hands of the police and the courts, however we are closely monitoring the situation and in particular the investigations by the relevant authorities into the alleged unlawful activities."

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