Latest Bill O'Reilly revelation could be another hit to Murdoch's Sky bid

Fox gave O'Reilly contract after $32 million settlement
Fox gave O'Reilly contract after $32 million settlement

The bombshell revelation that former anchor Bill O'Reilly paid $32 million to settle sexual harassment allegations right before Fox News renewed his contract came just days before an important deadline for Rupert Murdoch's business expansion plans in the United Kingdom.

The UK's Competition and Markets Authority is in the middle of investigating the 21st Century Fox Chairman's bid to take over the remaining portion of Sky the company doesn't already own. Tuesday is the last day for "any party wishing to provide evidence" to the CMA regarding its probe into "media plurality," or how the deal would affect the marketplace, and the broadcasting standards considerations.

Some British lawmakers and other stakeholders sent in new comments just before the deadline, urging the CMA to block the deal with the latest revelations taken into consideration.

"It's not the end of the matter, it doesn't necessarily mean [the bid has failed]. I don't see how it can't be taken into consideration," said Steven Barnett, a professor of communications at the University of Westminster, who has advised government ministers, parliamentary committees and the European Parliament on media matters. "It's yet another weight added to the negative side of the balance."

Barnett, who opposes the deal, said he is writing to the CMA to propose "a complete structural separation of Sky as a partial remedy," such as a trust or foundation. It's a highly unlikely outcome.

Tom Watson, the Labour Party's shadow secretary of state for digital, culture, media, and sport, told CNNMoney that he is sending a letter to the CMA, urging it to take into account O'Reilly's settlements and Fox's subsequent renewal of his contract.

"The latest revelations about Bill O'Reilly are depressingly familiar. They show that 21st Century Fox engaged in a prolonged campaign to cover up allegations of serious sexual harassment by a senior employee instead of investigating the claims and taking action against him," Watson said in a statement to CNNMoney. "The fact that Fox handed Mr. O'Reilly a lucrative new contract worth $25 million months after he reportedly paid $32 million to settle a claim by a colleague is jaw-dropping. It raises yet more questions about the corporate culture at 21st Century Fox."

O'Reilly has adamantly denied all accusations, which the New York Times revealed in April and over the weekend, claiming he only paid the settlements to protect his family. 21st Century Fox said in a statement that the company knew about the existence of a new settlement during their contract negotiations, but not the exact amount.

A spokesperson for the CMA declined to comment specifically on how the O'Reilly news might affect the investigation, only saying, "We will consider all relevant matters in relation to media plurality and commitment broadcasting standards."

The regulator has vowed to be transparent throughout the process, recently publishing a list of issues that it is looking into, including 21st Century Fox's approach "to effective corporate governance and other applicable regulations, including regulations relating to the treatment of employees, in the UK and overseas."

CMA will be in touch with 21st Century Fox executives about conduct and governance at Fox News just as British media regulator Ofcom was during the early stages of its own investigation into the Sky deal.

Ofcom's investigation, which wrapped up over the summer, unearthed "non-fanciful" concerns about 21st Century Fox's ability to adhere to broadcasting standards, but the concerns were not substantial enough to warrant a reference back to the government on those grounds.

The assessment would have given air cover for the ultimate arbiter of the deal, U.K. Secretary of State for Digital, Culture, Media and Sport, Karen Bradley, to move the deal along. But she surprised Fox and media observers last month when she announced that she was asking the CMA to look into not only the expected media plurality issue, but to also whether 21st Century Fox would comply with the country's broadcasting standards.

Ofcom expressed concerns in June about the fact that Fox was aware that O'Reilly had settled several harassment claims when the network renewed its contract with him.

"While we accept that Fox considered the evidence in these cases to be equivocal, the number of them is concerning," the regulator said at the time. Ofcom also noted that the Murdochs had made changes to corporate governance and that they had no reason to believe that Sky would not continue to be "a fit and proper broadcaster."

When CNNMoney asked about the latest reported O'Reilly settlement and its effect on the Sky bid, a 21st Century Fox spokesperson pointed to Ofcom's recognition of the previous O'Reilly settlements, saying "this matter was discussed with Ofcom and this is also reflected in their final decision."

Now, though, the CMA might decide the new information was not available to Ofcom at the time of that decision. The latest revelations about additional O'Reilly settlements could upend Ofcom's final decision, Barnett said.

"The curious issue about this is the extent CMA would be prepared to overturn Ofcom's first stage finding. Ofcom found against the deal on plurality but not on broadcasting standards," Barnett said. "This second regulator might have found it awkward to counter their fellow regulator but this would make it easier. If they needed it in terms of internal politics to say: Ofcom didn't have the full story, no fault of their own, they found it the way they did. But the situation has clearly now changed."

-- CNNMoney's Ivana Kottasova contributed reporting.

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