MEDIAMATTERS Gi ee oars June 13, 2017 Sharon White Chief Executive Ofcom, Riverside House 2a Southwark Bridge Road London SE1 9HA Rebecca Taylor Ofcom Riverside House 2A Southwark Bridge Road London SE1 9HA Publicinteresttest2017@ofoom.org.uk fitandproper@ofcom.org.uk RE: Investigation into potential takeover of Sky PLC by 21st Century Fox Dear Ms. White, am writing to follow up on the joint report Media Matters for America submitted with Avaaz on 30 March 2017, titled “Murdoch's Fox Effect: How full ownership of Sky risks undermining British broadcasting standards.”" Since the submission of our report, there have been a number of key developments ~ all of which concern Fox News ~ that are pertinent to Ofcom's investigation into the potential takeover of Sky PLC by Rupert Murdoch's 21st Century Fox (21C Fox), Fox News’ parent company. All of these concerns further underscore that Murdoch and his family fail to satisfy the conditions necessary to acquire Sky in ful: Murdochs have paid only lip service to the company’s toxic culture of sexual harassment, which has prompted a federal investigation and led to ouster of top executives, On 19 April 2017, Fox News host Bill O'Reilly was fired from his prime-time post at the network after it was revealed that he and the network had paid at least $13 million to settle with five ’ Media Matters and Avaaz staff, "Murdoch Takeover Of Sky Would Undermine British Broadcasting Standards, Joint Report Shows," 30 March 2017, https: //ww.mediamattersorg/blog/2017/04/13imurdoch-takeover-sky-would-undermine-brlish-broadcasti 1ng-standards-joint-report-shows/216025, 455 Massachusetts Ave NW, ute 600 | Washington DC 20001 | Tat 202.756.4100 | Fax 202.756.4101 mmediamatters.orgwomen who accused the host of repeated sexual harassment or verbal abuse.’ Those payments included for two lawsuits that came in after the network's former chairman, Roger Ailes, was dismissed amid numerous reports of sexual harassment last summer.’ Just {wo weeks later, Fox co-president Bill Shine also left the network mired in scandal surrounding his role as a driving force behind Fox's toxic culture.‘ Shine was central to efforts to silence, blame, and retaliate against employees who reported misogyny and harassment at the network. Neither O'Reilly nor Shine was fired as a result of improved corporate governance. Instead, the Murdoch family forced both men out over the financial fallout from an advertiser exodus and heightened media scrutiny of Fox News’ future. At the time of O'Reilly's firing, nearly 100 businesses had publicly confirmed they had pulled their advertising from The O'Reilly Factor, leading to an estimated annual revenue loss between $37 and $42 million.” Because OReilly’s show had lost its commercial viability, Fox had no choice but to fire him -- and it was clear that the Murdochs would not have made that decision unless forced. Reports indicated that Rupert Murdoch wanted to keep O'Reilly on at Fox News, but his son James advocated against it. The delay in the Murdochs’ final decision about O'Reilly signaled not only the deep fissures among family members about the future of the network, but also their unwillingness to swifly act when confronted with wrongdoing, It took a major blow to the network's bottom line ~- spurred by the brave women who publicly came forward against O'Reilly, and by advertiser education efforts led by Media Matters and. others ~- for the Murdochs to ultimately take action. Following the O'Reilly and Alles scandals, advertisers and media buyers quickly learned that associating their brand with Fox News is risky for their businesses. A spokesperson for Mercedes-Benz ~ one of the first companies to pull its ads from The O'Reilly Factor — said regarding associating with Fox: “Given the importance of women in every aspect of our business, we don't feel this is a good environment in which to advertise our products right now.” ’ > Ben Popken, NBC News, 19 April 2017, hitp://www.nbonews.com/business/business-news/bill-o-eilly-reportedly-out-fox-news-n748236. Emily Steele and Michael S. Schmiat, “Bll O'Reilly Thrives at Fox News, Even as Harassment Settlements Add Up,” The New York Times, 1 April 2017, hitps:/www.nytimes.com/2017/04/01/business/media/bill-relly-sexual-harassment-fox-news. hm “Dylan Byers and Brian Stelter, “Fox News co-president Bill Shine out in latest shake-up for network,” CNN Money, 2 May 2017, http://money.cnn.com/2017/05/01/media/bill-shine-out fox-newslindex. html iid=hp-stack-dom. ® Cristina Lépez, “How Bill Shine Has Been Implicated In Fox News' Ongoing Legal Disasters,” Media Matters for America, 28 Apri 2017, https://mediamatters.org/research’2017!04/28!how--ill-shine-has-been-implicated-fox-news-ongoing-legal -disasters/216212. ‘Media Matters staff, "On The Last Word, Angelo Carusone Calls Out Fox's ‘Disgusting’ Sham Investigation Of O'Reilly," Media Matters for America, 10 April 2017, hitps://mediamatters.or!video!2017/04/10/ast-word-angelo-carusone-calls-out-foxs-disgusting-sham-inve sligation-orily/ 215985. * Paul Fathi, "Advertisers flee ‘The O'Reilly Factor’ amid sexual-harassment claims against host,” The Washington Post, 4 April 2017, https:/www.washingtonpost. convlifestyle/style/advertisers-flee-the-orelly-factor-amid-sexual-harassment- 455 Massachusetts Ave NW, Sule 600 | Washington DC 20001 Tel 202.756.4100 | Fax 202.756.4101 ‘mediamatters.org ill O'Reilly Officially Out at Fox News Amid Sexual Harassment Claim:Plainly and simply, the Murdochs have taken a patchwork, slow-moving approach to addressing Fox News' epidemic of harassment and discrimination. The internal sexual harassment investigation they and network executives launched in July of 2016 was so narrowly focused on Ailes that it failed to examine “the broader culture of Fox News,” according to Vanity Fair, confirming that their probe was little more than a public relations move.® “Current and former employees described instances of harassment and intimidation that went beyond Mr, Ailes and suggested a broader problem in the workplace,” The New York Times reported after Ailes’ ouster.’ The investigation marked a missed opportunity for the Murdochs to take real action to address the problems at Fox News. In just the few short weeks after O'Reilly's and Shine's departures, Fox hosts sexually harassed their colleagues on air, with the harassers including Fox co-host Greg Gutfeld, who recently told co-host Kimberly Guilfoyle during The Five that she was giving America a erection."” Rupert Murdoch's failure to correct course at Fox News demonstrates that the system of corporate governance he built portends trouble for a full 21C F takeover of Sky. A former Fox News executive said of Murdoch's willingness to transform the network culture, "If Rupert is stil in position, he's not going to let you change a whole heck of a lot."" Rupert Murdoch further demonstrated his unwillingness to transform the network when, on May 1, after Shine resigned, he elevated then-executive vice president Suzanne Scott to president of programming, Scott has been implicated in the various lawsuits against Fox News, including allegedly ignoring accusations of racial discrimination’? and mutiple complaints of sexual harassment" "; as well as encouraging and organizing retaliation campaigns against those laims-against host/2017/04/04/38f63464-1959-11e7-855e-4824b005d748_story.htmi7utm_tem=.1e5e1¢ 0934a "Tyler Chemy, "Confirmed: Fox News’ Sexual Harassment Investigation Was Just A PR Offensive,” Media Matters for America, 6 September 2016, https:/www.mediamatters.org/blog/2016/09/06/confimed-fox-news-sexual-harassment-investigation-was- just-pr-offensive/212859, ® Jim Rutenberg, Emily Steel, and John Koblin, “At Fox News, Kisses, Innuendo, Propositions and Fears of Reprisal," The New York Times, 23 July 2016, http://www.nytimes. com/2016/07/24/business/at-fox-news-kisses-innuendo-propositions-and-fears-of-repri sal.html?_1=0. © Media litatters staff, ‘Fox Host Tells Colleague She Is Giving America An Erectio ‘America, 19 Apyil 2017, hitps://www.mediamatters.org/video!2017/04/19ifox-host-tlls-colleague-she-giving-america-erection/216 110. "Sarah Ellison, "With Ailes Gone And Megyn Kelly Rebom, A Shell-Shocked Fox News Looks Like An Episode Of The Leftovers," Vanity Fair, 6 June 2017, http://www. vanityair.cominews/2017/06/ailes-gone-megyn-kelly-teborn-shell-shocked-fox-news-looks-ike -an-episode-of-the-leltovers ?mbid=social_twiter. ® New York Supreme Court, 25 April 2017, https://assets. documentcloud.org/documents/3678103/Fox-News-Racial-Discrimination-Lawsuit pa ® New York Supreme Court, 22 August 2017, http://www seribd.com/document/32197 1941/Tantaros-Complainti#download. 455 Massachusetts Ave NW, Suite 600 | Washington DC 2000 Tel 202.756.4100 | Fax 202.756.4101 rmeciamatters org Media Matters forwho came forward alleging harassment "; and enforcing an “aesthetic” for female hosts that includes “skimpy dresses” and high heels.” Fox News’ harassment epidemic is so severe that it has prompted a U.S. federal investigation into “whether Fox News failed to inform shareholders about settlements made with employees Who charged former chairman and CEO Roger Ailes with sexual harassment.”"* The Justice Department's investigation has reportedly widened to include the service of “financial crimes experts from the United States Postal Inspection Service," who specialize in “mail fraud and wire fraud" and “probing possible misconduct by ... personnel ... about the overalll environment at the network.""® And echoing Murdoch's previous phone hacking scandal that doomed his first Sky bid, former Fox News host Andrea Tantaros -- who filed a sexual harassment lawsuit against the network's top executives -- claims that Fox executives "emotionally tortured her by doing things like hacking into her digital devices."*° Beyond harassment, Fox News has also been embroiled in multiple racial discrimination lawsuits. Just days after O'Reilly was fired, 11 former and current Fox News employees filed a class-action lawsuit against the network, accusing it of “abhorrent, intolerable, unlawful and hostile racial discrimination." In the weeks prior to O'Reilly's ouster, three other former Fox employees had filed similar lawsuits.” * This escalation in Fox's legal troubles, combined with * Lloyd Grove, "Andrea Tantaros’s Therapist Backs Her Sex Harassment Claim Against Roger Alles, ‘The Daily Beast, 28 September 2016, http:/Awww-thedailybeast. comvarticles/2016/09/28/andrea-tantaros-s-therapist-backs-her-sex-harassment- claim-against roger-ailes. "New York Supreme Court, 3 April 2017, http:/ www. politico. com/media/f %id=0000015b-344d-dad7-abS-7c7d7b5e0001. * ibid * Lloyd Grove, "Fox News Women: Roger Ailes Asked to See My Underwear, If| Was Single, and More,’ ‘The Daily Beast, 6 July 2016, hitp:/www.thedailybeast.com/articles/2016/07/06/could-ox-news-chairman-roger-alles-become-the-next- bill-cosby, * Dylan Byers, "Fox News under federal investigation over Ailes settlement payments," CNN Money, 16 February 2017, hitp:/imoney.cnn.com/2017/02/15imedia/fox-news-u-s-attorney investigation’ 7iid=EL. ® Brian Stelter, "Exclusive: Federal probe of Fox News expands," CNN Money, 27 April 2017, http://money.cnn.com/2017!04/27/mediaifox-news-federal-investigation/index. html. ® Eriq Gardner, "Andrea Tantaros Claims Fox News 'Tortured’ Her Via Hacking, Social Media Stalking,” The Hollywood Reporter, 24 April 2017, hitp:www.hollywoodreporter.comithr- "Some of the Most Racist Moments in Fox News History,” New York magazine, 27 April 2017, httpv/nymag.com/daily/intelligencer/2017/04/some-of-the-most-racist-moments-in-fox-news-history.html ® Brennan Suen and Katherine Hess, "As He Leaves Fox, Here Are Bill O'Reilly's Worst Moments On ‘The Ai,” Media Matters for America, 19 April 2017, https:/www.mediamatters.orgiresearch’2017/04/19the-leaves-fox-here-are-bill-o-elly-s-worst-moments-2 ini216077. ® Eric Boehlert, "How Bill O'Reilly Defined The On-Air Jerk Culture At Fox News," Media Matters for ‘America, 20 April 2017, https://www.mediamatiers.org/blog/2017/04/20/how-bill-o-elly-defined-airjerk-culture-fox-news/216125. 2 Matt Gertz, "Fox News' New Prime-Time Host Tucker Carlson Is Beloved By Neo-Nazis And Misogynists," Media Matters for America, 5 January 2017, hittps://www.mediamatters.org/blog/2017/01/05/fox-news-new-primectime-host-tucker-carlsor-beloved-neo -nazis-and-misogynists/214933. Media Mattors staff, "Tucker Carlson Botches Bogus Defense Of Racist Texas Voter ID Law," Media Matters for America, 11 May 2017, https:/www.mediamatters.org/video!2017/05111/tucker-carison-botches-bogus-defense-racist-texas-voter- id-law/216397, ® Media Matters staff, “Tucker Carlson: Germany Is Attempting To Atone For Its Past By Purposefully Allowing Refugees To Hurt Them,” Media Matters for America, 26 April 2017, htps:/www.mediamatters.org/video!2017/04/25/tucker-carlson-germany-attempting-atone-ts-past-purpos cfully-allowing-refugees-hurt-themn/216173. * Cat Duffy, Zachary Pleat, and Jared Holt, "Fox News Promotes Eric Bolling, Noted Bigot, Conspiracy Theotist, And Muppet-Hater," Media Matters for America, 19 Apfil 2017, htps:/www.mediamatters.org/tesearch’2017/04/191fox-news-promotes-eric-bolling-noted-bigot-conspirac y-theorist-and-muppet-nater!216108, & Matt Gertz, Zachary Pleat, and Cristina Lépez, "Fox News Rewards O'Reilly Minion Jesse Watters With Prime-Time Slot On The Five," Media Matters for America, 19 April 2017, hitps:/www.mediamatters.org/research’2017/04/191fox-news-ewards-o-reilly-minion-jesse-watters-prime- time-slot-fivel216105, 455 Massachusolls Ave NW, Suite 600 | Washington DC 20001| Tol 202.758.4100 | Fax 202.756.4101 rmediamattersgBolling and Watters to the premiere cable news time slots underscores the continued desire to chase ratings at the expense of fair and fact-based coverage ~ and the same can be expected should the Murdochs fully acquire Sky. It also signifies their disregard for broadcasting standards contained in the 2003 Communications Act and the Broadcasting Code mandated by the act. As our joint report with Avaaz indicated, the network has shown an overwhelming pattern of failure to comply with broadcasting standards objectives, including impartiality, accuracy, offensive and harmful material.** Prime-time host Sean Hannity goes without discipline after pushing baseless conspiracy theories Maintaining his prime-time 10 p.m. slot after O'Reilly's ouster, long-time Fox News host and noted conspiracy theorist Sean Hannity -- who is seen as Fox News’ last big prime-time star ~ has become one of the most visible champions of the reckless and debunked conspiracy that the late Democratic National Committee (DNC) staffer Seth Rich was murdered because he was involved in WikiLeaks’ publication of stolen DNC emails. Over the last month, Hannity has devoted several editions of his TV and radio shows to peddling the bogus claims." * * His ‘commentary not only counters the intelligence community's determination that the emails were hacked and distributed by Russian intelligence services”, but also prompted Rich's family to demand retractions of Fox's reporting. While Fox News ultimately removed its online report that prompted this latest theory.°” Hannity continued to aggressively recycle it without consequences from his employer. ‘As a Fox News source noted, “Hannity beats to his own drum.”** Indeed, Hannity's crusade ® Media Matters and Avaaz staff, "Murdoch Takeover Of Sky Would Undermine British Broadcasting Standards, Joint Report Shows," 30 March 2017, https:iwww.mediamatters. org/blog/2017/04/13imurdoch-takeover-sky-would-undermine-bitish-broadcasti 1ng-standards joint-report-shows/216025. ® David Weigel, “The Seth Rich conspiracy shows how fake news still works,” The Washington Post, 20 May 2017, hitps://www.washingtonpost.com/news/the-fixiwp/2017/05/20/the-seth-rich-conspiracy-shows-how-fake-n ews-stil-works/?utm_term=,bSbeff89b31b. °' Media Matters staff, “Sean Hannity: ‘I'm not backing off' the Seth Rich conspiracy,” Media Matters for ‘America, 19 May 2017, hitps://www. mediamatters. org/video!2017/05/19/sean-hannity-im-not-backing-seth-rich-conspiracy!21657 9. ® Media Matters staff, “Sean Hannity Continues Smear Campaign Against Slain DNC Staffer Matters for America, 18 May 2017, hittps://www. mediamatters,org/video!201 7/05) 18/sean-hannity-continues-smear-campaign-against-slain-d no-staffer/216554. ® Scott Shane, "What Intelligence Agencies Concluded About the Russian Attack on the U.S. Election The New York Times, 6 January 2017, hittps://www.nytimes. com/2017/01/06lus/politics/russian-hack-repor.htmnl?_1=0. "Statement on coverage of Seth Rich murder investigation,” Fox News, 23 May 2017, http:/Auww foxnews. com/politics/2017/05/23/statement-on-coverage-seth-rich-murder-investigation htm ® John Whitehouse, "Fox News shrugs while Sean Hannity has a meltdown over Seth Rich conspiracy,” Media Matters for America, 24 May 2017, hitps:/www.mediamatters. org/blog/2017/05/24/fox-news-shrugs-while-sean-hannity-has-meltdown-over-s eth-tich-conspiracy/216607 455 Massachusetts Ave NW, Sute 600 | Washington OC 20001 | Tel 202.756.4100 | Fax 202.766.4401 rmediamatters.org * Mediacontinued unimpeded even after his own network retracted the story. Hannity himself said, “Nobody tells me what to say on my show. They never have and frankly they never will”® By refusing to retract his reckless conspiracy theories, Hannity became so volatile that major sponsors dropped their ads from his time slot.” Furthermore, the Murdochs' silence as Hannity exploited tragedy to advance a political narrative was deafening. Hannity remains undisciplined for his actions ~ and continues bringing up the debunked Rich claims -- to the present day. Conclusion Rupert Murdoch has expressed a clear desire for Sky News to become more like Fox News.*" Ifhe and his companies were to take full ownership of Sky, he would have the power to reshape Sky in Fox's image. The aforementioned developments demonstrate -- with just as much clarity as others before -- that Murdoch and his sons, through 21C F, will put commercial gain and building political power over journal integrity. Defying editorial independence and ethics, he can turn Sky News into a tool for meddling in British politics and advancing his commercial interests in the same way he has with his UK and US-based news outlets -- Fox News included. It is clear we cannot expect the Murdochs to maintain the highest standards of corporate governance, accountability, and conduct that the British public and the world expect. Sincerely, ‘Angelo Carusone ——————— Ssident, Media Matters for America About Media Matters for America ‘Media Matters for America is a web-based, not-for-profit, 501(c)(3) progressive research and information center dedicated to comprehensively monitoring, analyzing, and correcting conservative misinformation in the U.S. media, Launched in May 2004, Media Matters for America put in place, forthe first ime, the means to systematically monitor 8 cross section of print, broadcast, cable, radio, and Intemet media outlets for conservative misinformation - news or commentary that is not accurate, reliable, or credible and that forwards the conservative agenda - every day, in real time. Using the website mediamatters.org as the principal vehicle for disseminating research and information, Media Mattors posts rapid-response items as well as longer research and analytic reports documenting conservative misinformation throughout the media. Additionally, MediaMatters works daily to notify activists, journalists, pundits, and the general Public about instances of misinformation, providing them with the resources to rebut false claims and to take direct action against offending media institutions. ® Dylan Byers, "Sean Hannity's conspiracy theory puts pressuire on Fox," CNN Money, 24 May 2017, hittp://money.cnn.com/2017/05/24/media/hannity-seth-rich-pressure/index. html ‘© Media Matters staff, “These are Sean Hannity's advertisers,” Media Matters for America, 23 May 2017, https:/www.mediamatters.org/research/2017/05/23/these-are-sean-hannitys-advertisers/216607. * Owen Gibson, “Murdoch wants Sky News to be more like rightwing Fox,” The Guardian, 24 November 2007, https:/www.theguardian. com/media!2007/nov/24/bskyb.television. 455 Massachusetts Ave NW, Sullo 600 | Washington DG 2000} | Tet 202.756.4100 | Fax 202.756.4101 mediamaters.org