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As Murdoch’s crisis deepens, it’s time for a ‘fit and proper’ discussion

It’s time to investigate the consequences of concentrated media ownership in Australia. AAP

As international outrage increases with each new revelation in the News International phone hacking scandal, serious questions are being raised about whether Rupert Murdoch’s empire can be considered a “fit and proper” media proprietor.

This will no doubt be of great concern for News Ltd, which is currently bidding for the government contract to run Australia’s Asia-Pacific television network.

In the UK, Liberal Democrat Minister Chris Huhne has suggested there is a possibility of Rupert Murdoch’s media empire being broken up as News Corp was facing a “very dangerous situation if it is found by the UK media regulator Ofcom not to be ‘fit and proper’ to hold a broadcasting licence in Britain.”

Facing an onslaught of opposition from the general public, advertisers, rival media, and an unprecedented unanimous vote against it from the British parliament, News International dropped its controversial bid to seize complete control of BSkyB.

Now Ofcom has stated that it is “monitoring the situation closely” whether News International is fit and proper to retain its 39% stake in BSkyB.

Though Rupert Murdoch has publicly said “sorry” for the cruel transgressions committed by the corporation, apologies will not excuse criminality – which according to former UK Prime Minster Gordon Brown was exercised on an “industrial scale”.

The appearance of Murdoch and his son James Murdoch – along with former News International chief Rebekah Brooks – before the House of Commons Select Committee on Tuesday might well prove only the beginning of a protracted process of legal redress.

Defining ‘fit and proper’

In Australia, serious questions are being asked about the implications for standards of journalism and media concentration here, and more immediately, the fate of News Ltd’s bid for the Australia Network tender.

When challenged on this, a spokesperson for Communications Minister Stephen Conroy made the curious response that there was no “fit and proper person” test in the Australia Network tender, though the new criteria sought to identify the steps a bidder would take to ensure Australia’s national interests were served.

It is a little amiss that a “fit and proper person” clause has not been included in this $232 million tender, since the use of this safeguard is now widespread in public policy and corporate regulation.

In the UK, the 1993 Broadcasting Act established that Ofcom “shall not grant a licence to any person unless they are satisfied that he is a fit and proper person to hold it… [and] shall do all that they can to secure that, if they cease to be so satisfied in the case of any person holding a licence, that person does not remain the holder of the licence.”

The phrase “fit and proper person” applies not just to individuals but to corporations. The UK law offers little elaboration on how a “fit and proper” person may be defined, however in Australia the use of the phrase has gathered extensive interpretations.

For example, Australian Prudential Regulation Authority standard GPS 220 defines “fit and proper” as: “that a person has not been convicted of one of a range of specified offences related to dishonesty and dealings with financial sector institutions; that a person has never been bankrupt, and has no relevant conflicts of interest; and that a person is not of bad repute within the business and financial community.”

Each of these criteria might usefully be adapted as an appropriate test for media ownership – that the person (or corporation) has not been convicted of a serious criminal offence, does not have conflicts of interest, and is of good reputation.

In the UK, the legislation has only been used in breaches of the licence conditions, largely involving revoking of the licences of pornography channels.

In Australia, there were a series of actions concerning whether Alan Bond was a “fit and proper person” for media ownership in the late 1980s, and a judgement to this effect by the Australian Broadcasting Tribunal was subject to a series of appeals to the Federal and High Court.

The consequent collapse of the Bond Media share price provoked the sale of Nine Network back to Kerry Packer at a third of the price he had sold the network to Alan Bond.

Whether a similar disintegration of the Murdoch media empire occurs will depend firstly on shareholders’ responses to the increasingly wayward behaviour of News International under Murdoch’s fading control, as an array of senior News executives appointed by him are forced into resignation.

Future under review

The survival of News International will depend on the outcomes of inquiries now enveloping the company in a number of countries.

These include a series of police inquiries into the extent of the phone hacking practices of News International in the UK and a judge-led independent inquiry into ethical standards in UK newspapers.

There will be reverberations in the US concerning whether the UK’s Foreign and Corrupt Practices Act has been breached by a US corporation (News Corporation) in the alleged bribing of police in the UK – along with FBI questions on whether any hacking of 9/11 victims took place.

In Australia, News Ltd is no doubt preparing for the upcoming media convergence review and the increasing calls for an inquiry into media concentration.

The media convergence inquiry will examine the implications of convergence of the broadcasting, radiocommunications and telecommunications industries with the internet.

This inquiry should include print media, which remains critical to News Ltd’s control of media content. According to the convergence inquiry’s emerging issues paper, the key guiding principles in the objects of existing legislation is that Australians should have access to and opportunities for participation in a diverse mix of services, voices, views and information.

A key regulatory policy in the Australian Broadcasting Services Act is “the degree of influence principle” and underpins the categories of broadcast licences, licence allocation, ownership and control, including cross-media ownership, and program standards.

It provides that the level of regulation applying to a service should be in proportion to the level of influence the service has in shaping community views.

However, this principle is fatally undermined when a media conglomerate such as News Corp has integrated immense media influence across a wide range of media.

Australia’s cross-media ownership regulation simply is not working to achieve the principles of media access, freedom and diversity that it is supposed to protect.

How to regain pluralism, diversity and professionalism in the media is an urgent task to be considered. The objective should be how to free the media from the present monopolistic concentration and proprietorial dominance.

News journalism is a wondrous craft and we should never lose sight of the brilliance of its capacity for almost instant communication and interpretation of complex issues, and for its courage in confronting the powerful. Remember it was the journalists of the Guardian newspaper who prevailed in releasing the full implications of the News of the World’s phone hacking, when politicians, lawyers and police quailed.

To fulfil this role journalism requires resourcing, editorial independence, and integrity. News Corporation provided the resourcing in abundance, but is widely perceived to have persistently eroded editorial independence and integrity in a way that has seriously debased the profession.

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