Murdoch control of BSkyB at risk

LONDON -- The inquiry into whether BSkyB is a "fit and proper" owner of a U.K. broadcasting license has been stepped up by local media regulator Ofcom. The Financial Times has revealed that a team, known as Project Apple, was set up in January at the regulator to scrutinize the ever-growing mountain of evidence that has emerged from such sources as the Leveson inquiry into press ethics, politicians' committees and police investigations. News Corp. owns 39% of BSkyB. In the worst case, Ofcom could revoke its U.K. broadcasting license if the company failed the "fit and proper" test.Other options open to the regulator include putting pressure on James Murdoch to stand down as chairman of the satcaster, and forcing News Corp. to scale down its stake in BSkyB, a move that would end its control of the highly profitable operator.Ofcom began preliminary inquiries into whether BSkyB was a "fit and proper" owner of a broadcasting license last summer, after phone hacking became toxic when it emerged that the cell phone belonging to murdered schoolgirl Millie Dowler had been hacked by the News of the World. The paper, owned by News Corp. off-shoot News International, was subsequently shuttered. Since July the crisis has become even more dangerous for News Corp.Recently 10 of journalists at the Sun, also owned by News International, were arrested. They are alleged to have bribed public officials. A Freedom of Information request by the FT revealed that in January the media regulator established Project Apple. The regulator will pay special attention to a report by a committee of pols on phone hacking, due to be published this spring. Both Rupert and James Murdoch, who last week ankled as executive chairman of News International, were grilled by this committee. The regulator said: "Ofcom has a duty under the U.K. Broadcasting Acts 1990 and 1996 to be satisfied that any person holding a broadcasting license is, and remains, fit and proper to do so."New evidence is still emerging from hacking and corruption allegations. Ofcom is continuing to assess the evidence, including the new and emerging evidence, that may assist it in discharging its duties."Ofcom officials are believed to be liaising with the London police teams that are investigating hacking and bribery allegations, and scrutinizing evidence given to Leveson.Reports suggest that the regulator could make a ruling on the "fit and proper" status of News Corp. ahead of the conclusion of any criminal trials. Contact the Variety newsroom at news@variety.com