A Murdoch problem in buyout deal that's not Bill O'Reilly

Bill O’Reilly is not the only factor complicating an attempt by Rupert Murdoch and his sons to buy complete control of Sky, the European broadcast titan. British regulators could block the deal in part because of a series of little-known disputes with smaller business rivals that involve charges of hacking, political interference and anti-competitive behavior.

Much of the attention concerning the Murdochs’ 21st Century Fox (FOXA) and its proposed $14.6 billion buyout of London-based Sky centers on the ouster last week of O’Reilly, the former Fox News host who was the target of sexual harassment claims. The O’Reilly problem echoes a similar departure last year of Fox News chief Roger Ailes. 

The British Office of Communications, known as Ofcom, is weighting whether the Murdochs are “fit and proper” owners for Sky. Fox owns 61 percent of Sky and seeks to purchase the rest, which will strengthen their hold over a company that is a huge provider of satellite TV, broadband and phone service throughout much of Europe. .

A report by National Public Radio on Monday outlined what it depicted as bare-knuckled tactics by Murdoch-owned News America Marketing against smaller competitors in the world of newspaper coupon inserts and in-store supermarket ads. News America Marketing controls much of this market. Competitors’ lawsuits led to News America settlements totaling $900 million. 

Fox, which owns Fox News and a movie studio, previously was part of News Corporation (NWS), publisher of the Wall Street Journal and other publications. The two entities, both still under the Murdochs, split in 2013. Today, News America is part of News Corp, as it is known.

Fox would not comment to CBS MoneyWatch about this issue, and the company told NPR it would not respond to its request for a response.

According to NPR, “several consumer groups and anti-Murdoch politicians have pushed British regulators in official submissions to take the Fox scandals into account” when ruling on whether the Murdochs can acquire the remaining 39 percent they want. Nearly six years ago, the Murdochs mounted an ill-fated quest for Sky that foundered on another scandal -- bribery and phone hacking by their London tabloids to dig up dirt on celebrities and others.

Much of the NPR account focuses on the struggles of Floorgraphics, a small outfit that poached the A&P supermarket chain away from News America Marketing. At one point, Floorgraphics contended it had been hacked by News America, after tracing an IP address involved in the incursion to the Murdoch subsidiary. 

The U.S. attorney’s office for New Jersey launched a probe of the Floorgraphics allegations, but then dropped the case. At the time, Republican Chris Christie occupied that office, and Fox News has been a longstanding forum for GOP politicians. Christie, now New Jersey’s governor and a former contender for the party’s presidential nomination, “played no role in the investigation or the decision to decline prosecution,” a spokesman told NPR. CBS MoneyWatch contacted the governor’s office for comment, but heard nothing back.  

Floorgraphics sued the Murdoch company and ended up settling for just under $30 million, and News America went on to buy the smaller rival for an undisclosed amount.

Another small company that competes with News America Marketing, called Valassis, won a richer settlement in 2010, $500 million, and a 10-year shared distribution arrangement. NPR said Valassis recently sued the Murdoch company again, saying there was continued anti-competitive practices. 

  • Larry Light

    Larry Light is a veteran financial editor and reporter who has worked for the Wall Street Journal, Forbes, Business Week, Money, AdviceIQ and Newsday.