Murdoch hacking scandal spreads to Sky News

LONDON Thu Apr 5, 2012 6:39pm BST

The Sky News logo is seen on television screens in an electrical store in Edinburgh, March 3, 2011. REUTERS/David Moir

The Sky News logo is seen on television screens in an electrical store in Edinburgh, March 3, 2011.

Credit: Reuters/David Moir

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LONDON (Reuters) - Sky News, part of Rupert Murdoch's media empire, said on Thursday it had hacked into emails on two occasions but insisted it had acted in the public interest, as the channel's parent company faces an investigation by British regulators.

The potentially damaging admission came two days after Murdoch's son James quit as chairman of Sky News's parent BSkyB in an attempt to limit the spread of a phone-hacking scandal that has already forced the closure of one of Murdoch's main British newspapers.

Public uproar compelled Murdoch to shut down the News of the World last year after it was revealed that the tabloid had hacked into voicemails of a murdered teenager, and to call off a bid to buy the 61 percent of BSkyB it did not already own.

Whether BSkyB is "fit and proper" to hold a broadcast licence is now being scrutinised by Britain's television regulator, Ofcom, which is considering the conduct of its owners and directors.

Sky News said it had authorised a journalist in 2008 to access the emails of people suspected of criminal activity in the so-called "canoe man" case of a Briton who faked his own death after paddling out to sea.

The channel said it had shared the material with police and that it had helped secure the conviction of the man's wife, who had been living with her husband for part of the time in Panama, and was sentenced to six years in jail.

In the second hacking episode, a journalist accessed the email accounts of a suspected paedophile and his wife in an investigation that did not lead to any material being published or broadcast.

"We stand by these actions as editorially justified and in the public interest," the head of Sky News, John Ryley, said in a statement.

Email hacking is a criminal offence under Britain's Computer Misuse act, for which there is no public-interest defence. But public prosecutors do act as a filter by questioning whether a prosecution itself would be in the public interest.

"So although there isn't a public interest defence, in practical terms there is," said Jonathan Coad, a London-based media partner at law firm Lewis Silkin.

His "gut feeling" was that prosecutors would be unlikely to pursue the Sky News case.

"DOUBLE STANDARDS"

In a blog post, Ryley accused the Guardian newspaper, which has led the drive to uncover the extent of phone-hacking at the News of the World and first reported the Sky News email hacking story on Thursday, of double standards.

"If it was looking for further examples, the Guardian could have found them much closer to home," he wrote, citing the case of Guardian assistant editor David Leigh, who admitted last year that he had once hacked the phone of an arms dealer.

Ryley said Sky News's coverage had made clear it had "discovered" and supplied emails to the police, and emphasised that the channel had not published or broadcast any of the material until the Darwins were convicted.

Sky News said it had commissioned an external review of its email records and an internal audit of payment records. It said the email review was nearing its conclusion and no grounds for concern had been found.

Boston University journalism professor Louis Ureneck, a former deputy editor of the Philadelphia Inquirer, wrote: "Journalists have an obligation to obey the law like all citizens. The Sky News response seems more rationalisation than justification."

BSkyB shares closed down 3.4 percent at 652 pence, the top losers in a FTSE blue-chip index, which closed 0.4 percent higher.

"In the longer term, the announcement adds to concerns over whether News Corp will be found to be 'fit and proper', making a renewed bid for BSkyB, in our view, unlikely," Bernstein Research analysts wrote in a note.

"Greater scrutiny is also likely to distract management at an important time."

Ofcom, Britian's television regulator, has set up a dedicated team to investigate whether BSkyB is a "fit and proper" owner of a broadcast licence, in light of the phone-hacking scandal at controlling shareholder News Corp.

On Thursday, it issued a statement saying: "We will consider all relevant evidence as part of our ongoing duty to be satisfied that persons are fit and proper. We are not, however, going to provide a detailed running commentary."

Three separate criminal probes are now under way in Britain after police reopened their investigations a year ago, along with a judge-led inquiry at which Rupert Murdoch will be called to testify under oath later this month.

(Additional reporting by Kate Holton; Editing by Paul Hoskins and Giles Elgood)