The ongoing furore over the News Corporation-owned News of the
World "phone hacking" scandal has led to debate about whether
BSkyB, 39 per cent owned by News Corporation, is a "fit and proper"
person to hold a broadcast licence and has, accordingly, brought
into the limelight Ofcom's role of ensuring that this requirement
Ofcom is responsible for licensing all UK commercial television
services, and in particular, has an ongoing duty to ensure that
broadcast licence holders are, and remain, fit and proper to hold
The difficulty in practice is that Ofcom has not published
substantive formal guidance on the precise interpretation of this
"fit and proper" test, and legal precedent on the application of
the "fit and proper" test in the broadcasting context is scarce
(Ofcom does not publish rejected applications for broadcasting
licences and there is only one previous case of an existing licence
being revoked under the application of the test).
Applying the test
Ofcom has recently noted that "in considering whether any
licensee is fit and proper Ofcom will take into account any
relevant misconduct of those who manage and control the
licence."(2) Whilst this rather vague statement does not
provide much greater insight into the "fit and proper" test, some
guidance can be drawn from Ofcom's licence application forms, which
include sections on the "Fit and Proper Criteria". These sections
note that Ofcom will use all of the information provided in the
application form in order to determine whether the applicant is a
"fit and proper" person, in particular that highlighted in the box
below may be of relevance.
Key broadcast licence application
- Directors and/or substantial shareholders who have ever
received any criminal convictions or civil penalties.
- The applicant's other broadcasting licences, in particular,
information on investigations or sanctions in respect of
In relation to criminal convictions, in its licence application
forms Ofcom further clarifies its position by saying "a
director or shareholder who has a criminal record will not
necessarily be refused a licence." The implication is that
Ofcom will consider the seriousness of any crime when determining
whether to grant or revoke a licence. In addition, in its recent
pronouncements on the application of the "fit and proper" test to
BSkyB, Ofcom has also made it clear that it is "not precluded
from acting by the ongoing police investigation" and that "Ofcom's process is not dependent upon a criminal conviction
being secured by the police".(3)
In relation to the applicant's broadcasting experience, Ofcom
appears to be concerned about regulatory compliance, i.e. whether a
broadcaster is willing and able to comply with UK broadcasting
rules. This is consistent with the only precedent for revocation of
a broadcasting licence. It was on the basis of repeated breaches of
the broadcasting rules and regulations that Ofcom revoked the
licence of Bang Channels Limited in 2010. That licence holder had
breached Ofcom's Broadcasting Code more than 60 times over an
18-month period and had not paid a fine of £157,250. Ofcom stated
that the licence was revoked on the basis that it "no longer
considered that the Licensees were fit and proper persons to hold a
licence" as a result of "serious and repeated breaches of
the Ofcom Broadcasting Code."
Where does this leave BSkyB?
Ofcom has announced that it is considering whether BSkyBs is "fit
and proper" to hold a broadcast licence and that it has asked to be
kept abreast of developments in the investigation by the
Metropolitan Police. However, detail on its investigation,
including timing and process, is not currently available.
Further, Ofcom has noted that the "fit and proper" test applies to
both licence holders and their controlling shareholders and
directors, and, in this context, that Ofcom "must take account
of News Corporation's conduct in assessing whether BSkyB is a fit
and proper person".(4)
Accordingly, the conduct of News Corporation (including its News of
the World subsidiary) will continue to be relevant to an assessment
of BSkyB's compliance with the "fit and proper" test
notwithstanding that News Corporation has shelved its plans to
increase its shareholding in BSkyB.(5)
BSkyB is unlikely to have its licence revoked on the basis of
non-compliance with regulatory conditions (in the way that Ofcom
revoked the licences of Bang Channels Limited based on its
persistent and flagrant breaches of regulatory conditions and its
unwillingness to change its behaviour or pay fines imposed by
If Ofcom were to revoke any of BSkyB's broadcasting licences as a
result of News Corporation's conduct in relation to the hacking
scandal, it would be sailing in uncharted waters (and almost
certainly straight into another legal battle with BSkyB). Further,
Ofcom would also need to consider whether such unprecedented action
would be consistent with Ofcom's general Communications Act 2003
duties, in particular, whether the revocation of its licences would
be consistent with Ofcom's duty to ensure a diverse and high
quality broadcasting landscape in the UK.
(1) Section 3(3) of the
Broadcasting Act 1990.
(2) Ofcom's paper "Frequently asked Questions 'Fit and
Proper' in relation to broadcast licensees" of 18 July 2011 (Ofcom
(3) Ofcom's letter to Rt Hon Simon Hughes MP, Rt Hon Don
Foster MP and Tim Farron MP of 22 July 2001 (Ofcom letter).
(4) The Ofcom paper.
(5) Ofcom's open letter to Jon Whittingdale Esq OBE MP of 8
July 2011, the Ofcom letter and the Ofcom paper.
Please click on the links below for the other articles in
the October 2011 Communications newsletter
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This newsletter is not intended to be a comprehensive review of
all developments in the law and practice, or to cover all aspects
of those referred to. Readers should take legal advice before
applying the information contained in this publication to specific
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