City Law School LogoLorna Woods, Professor and Associate Dean of Research at City Law School, City University London, points out that as the Leveson Inquiry investigates the behaviour of News International and others in the print press, we should also consider the implications for broadcasting and whether the ‘fit and proper person’ test is adequate.

The Leveson Enquiry is focussing, understandably enough, on the regulation on the press, but there are more general issues which at some point will need to be addressed. One of these is the question of whether Sky, as part of the Murdoch media empire, is a ‘fit and proper person’ for the purposes of the Broadcasting Act (News Corporation holds 39.14% of the shares in BSkyB). Section 3 of the Broadcasting Act 1990 and s. 3 of the Broadcasting Act 1996 impose a duty on Ofcom to ensure that broadcasting licences (whether radio or television) are held by fit and proper persons. This duty is ongoing and does not apply just at the time of the grant of the licence. It is therefore possible that a licence may be removed from a person if that person ceases – in Ofcom’s opinion – to be fit and proper. The person in question is the holder of the licence – so the person may be a corporate body. Ofcom will take into account the actions of controlling directors and shareholders, as well as the actions of the licence-holder itself and any determination could affect all licences held by that body.

While this much is clear from the Acts, the scope of ‘fit and proper’ is much less clear-cut, at least in the broadcasting context (other regulators have come up with their own definitions). Here, note that it is not defined in the Broadcasting Acts although presumably the categories of persons prohibited from holding a broadcasting licence do not trigger the fit and proper test. In general, it would seem to be a question for Ofcom – in satisfying itself that the requirements of both s. 3s are fulfilled – that will determine the question. Of course, Ofcom cannot just go off on a frolic of its own; it should base its approach within the Broadcasting Acts and the duties imposed on it. The Broadcasting Acts imposed a whole range of public interest considerations and Ofcom’s duties are further delineated in the Communications Act 2003 – the extent to which ‘fit and proper’ must be understood in the light of those obligations, such as the desirability of preventing crime and disorder, is an open question. Of course, other duties imposed on Ofcom include that of ensuring a wide range of content being available; revoking licences would mean losing all Sky channels, thus limiting content available in the UK.

We can get some sense of what how Ofcom has understood ‘fit and proper’ by looking at the current licensing regime. We can start by looking at the form that must be filled in when there is a change in control of a licence-holder. The form inquires whether any director or shareholder of the broadcaster has ever received a criminal conviction or civil penalty. It is unclear what the consequences of such a declaration would be. Ofcom says that someone with a criminal record “…will not necessarily be prevented from holding a licence.” Presumably what will be relevant is the seriousness of the offence in question. Presumably offences under the Regulation of Investigatory Powers Act(RIPA) would merit investigation – though note Ofcom has made it clear that a prior criminal conviction is not a pre-cursor for Ofcom to act.

Some more guidance can be drawn from one case in which Ofcom determined that a company repeatedly showing hard core porn was not a fit and proper person. This occurred in relation to Bang Media and related to serious and repeated breaches of broadcasting licence conditions, indicating in Ofcom’s view a disregard not only for the terms of the licence but for the regulatory regime as a whole. This sensitivity to the perceived approach of the management towards regulatory compliance can be seen also in the information required from an applicant for a satellite licence.

In general terms, it seems that Ofcom are looking for a pre-disposition on the part of the licence-holder towards respecting law and regulation – and not just broadcasting law. Thus, News International’s approach towards the criminal law will be significant but also, and this seems not to have been picked up so much – towards other forms of regulation, perhaps including the PCC itself. Of course, taking the step to remove Sky’s licences would, should Ofcom choose to do so, be a big step and one, as the cliché goes, into uncharted territory. It would almost certainly bring Ofcom and News International into another court room battle and result in much uncertainty in the media market at a range of points in the delivery chain. It is perhaps understandable that Ofcom is choosing to review the matter thoroughly before coming to any firm conclusions on this matter. The one thing that seems certain is, that whatever Ofcom decides to do, it will be criticised – whether for infringing the independence of the media or for failing to ensure adequate standards. With the focus on the protagonists, it is easy to lose sight of the issue that perhaps the underlying problem is a lack of statutory guidance in the Acts themselves: is this because of the difficulty of the broadcasting environment or could something be done? One for the next Communications Act, perhaps?

This post first appeared on the City Legal Research blog of City Law School, City University London, on 22 November 2011. A debate on the adequacy of the ‘fit and proper person’ test will be held at City Law School on Wednesday 23 November at 18:30