Fox hits new hurdle in $15 billion takeover of Sky after new O’Reilly revelations

Rupert Murdoch leaves the News Corporation building with his son Lachlan Murdoch (R) on July 21, 2016 in New York City.
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The proposed takeover of European broadcaster Sky by 21st Century Fox has hit another hurdle after it was reported that Fox News host Bill O'Reilly had his contract renewed despite the settlement of a $32 million sexual harassment lawsuit against him.

O'Reilly was granted a four-year contract extension in February that would pay him $25 million a year, according to a report in The New York Times on Saturday. Documents seen by the newspaper suggested that Rupert Murdoch and sons James and Lachlan — senior executives at 21st Century Fox — decided in January to hold on to O'Reilly in spite of the allegations.

O'Reilly subsequently lost his job in April; he said in a statement at the time that the claims against him were "completely unfounded."

Fox hits new hurdle in Sky deal
Fox hits new hurdle in Sky deal

But in light of the Times report over the weekend, the U.K.'s shadow culture secretary Tom Watson has said he will write to the Competition and Markets Authority (CMA) urging it to turn down 21st Century Fox's £11.7 billion ($15.4 billion) takeover of Sky.


"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 emailed to CNBC.

"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," he added.

Watson compared the O'Reilly allegations to the phone-hacking scandal that caused the 2011 closure of the News of the World, a U.K. tabloid newspaper then owned by News Corp, also run by Murdoch family members.

"Instead of admitting wrongdoing, the Murdoch family's first instinct is to deny it took place and, in many cases, to label those who try to establish the truth as liars or fantasists. It is a pattern that keeps on repeating itself," Watson said.

21st Century Fox owns 39.1 percent of Sky and in December 2016 it bid to take over the remaining proportion. It must go through EU and U.K. approvals — in April, the European Commission green-lit the deal.

However, British Culture Secretary Karen Bradley referred the case in September to the CMA to examine how a takeover would affect media plurality. The CMA will consider whether one person or group has too much influence over public opinion or the political agenda, and its provisional findings are due in December.

Bill O'Reilly
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A 21 Century Fox spokesperson confirmed in an emailed statement that it renewed O'Reilly's contract in February. It added that the company knew a sexual harassment lawsuit had been threatened by legal analyst and Fox contributor Lis Wiehl, but that O'Reilly had settled it personally on confidential financial terms.

"His new contract, which was made at a time typical for renewals of multi-year talent contracts, added protections for the company specifically aimed at harassment, including that Mr O'Reilly could be dismissed if the company was made aware of other allegations or if additional relevant information was obtained in a company investigation. The company subsequently acted based on the terms of this contract," the statement said, referring to the removal of O'Reilly in April.

The spokesperson added that it had "taken concerted action to transform Fox News," with new leaders and presenters and new ways to report harassment or discrimination, in measures led by executive chairman Lachlan Murdoch and chief executive James Murdoch.

O'Reilly's spokesman Mark Fabiani said that the Times had "maliciously smeared" him, in an online statement, and that Wiehl had repudiated all allegations.