Murdoch empire survives Ofcom report – but James is major casualty

The Murdoch empire managed to retain its 39.9% stake in BSkyB this morning, but only after a savage attack on James Murdoch.

Today's long-awaited Ofcom report found BSkyB is a "fit and proper" owner of a broadcast licence but relentlessly criticised the actions of Rupert Murdoch's son, James, over his handling of the phone-hacking crisis.

"We consider James Murdoch's conduct, including his failure to initiate action on his own account on a number of occasions, to be both difficult to comprehend and ill-judged," the media watchdog found.

He "repeatedly fell short of the exercise of responsibility to be expected of him as CEO and chairman", it continued, before concluding there are "questions regarding James Murdoch's competence in the handling of these matters, and his attitude towards the possibility of wrongdoing in the companies for which he was responsible".

If James Murdoch had not already stepped down as BSkyB chairman the report would have forced his hand, but he has already relinquished control of the UK business while remaining deputy chief operating officer for News Corp.

The watchdog accepted he was unaware of "widespread wrongdoing or criminality" at News of the World and denied he was "complicit in a cover up".

Rupert Murdoch is given a far easier ride, with the watchdog concluding he did not act in a way which was "inappropriate in relation to phone hacking, concealment or corruption by employees of NGN or News International".

Even when accepting the right for Sky to hold a broadcast licence, the watchdog still hedged its bets. It gave a clear warning to the company that it would re-open the investigation if new evidence came to light, presumably from the ongoing criminal investigations into phone-hacking, computer-hacking and police bribery.

"Ofcom considers that, on the evidence currently available and having taken into account all the relevant factors, Sky is fit and proper to hold its broadcast licences," the report said.

"Ofcom's duty to be satisfied that a licensee is fit and proper is ongoing. Should further relevant evidence become available in the future, Ofcom would need to consider that evidence in order to fulfil its duty."

Shadow media secretary Harriet Harman said: "While Ofcom has found Sky is fit and proper to hold a broadcasting licence, its criticisms of James Murdoch are damning. His continued presence on Sky's board casts a shadow over one of our most important national broadcasters."

A Sky spokesperson commented: "Ofcom is right to conclude that Sky is a fit and proper broadcaster. As a company, we are committed to high standards of governance and we take our regulatory obligations extremely seriously.

"We are proud of our contribution as a broadcaster, the investments we make to increase choice for UK audiences and the wider benefits we create for the economy."