03:07 - Source: CNN
Fallout for Murdoch's media empire?

Story highlights

Australian media regulators are "digesting" the blistering UK report against Rupert Murdoch

The report said News Corp. CEO Rupert Murdoch was "not a fit person" to run a major company

So far the controversy hasn't hit Australia, where Murdoch's media empire was born

New Corp. runs 70% of newspapers in Australia and the national paper, the Australian

CNN  — 

The Australian media regulatory agency is “digesting” the blistering report from British lawmakers that said News Corp. CEO Rupert Murdoch was “not a fit person” to run a major international company.

“The ACMA is reviewing the British MPs committee report but is not intending to make any further comment at this stage,” said a spokesperson for the Australian Communication and Media Authority (ACMA).

The damning report accused Murdoch and his son James of showing “willful blindness” to phone hacking at the News of the World tabloid and said the newspaper “deliberately tried to thwart the police investigation” into the illegal activity.

The now-shuttered tabloid’s publisher, News Corp. subsidiary News International, “wished to buy silence in this affair and pay to make the problem go away,” the Parliament’s Culture, Media and Sport Committee found.

Tuesday’s ruling by the Parliament committee could prompt British regulators to force Murdoch to sell his controlling stake in British Sky Broadcasting, a significant part of his media empire. The News Corp. board issued a statement Wednesday announcing “its full confidence in Rupert Murdoch’s fitness and support for his continuing to lead News Corporation into the future as its chairman and CEO.”

In Australia, the ACMA has jurisdiction over Foxtel Cable TV, in which Murdoch’s News Ltd owns a 25% stake.

“The ACMA’s test is different from the UK’s ‘fit and proper person’ test. The ACMA administers a ‘suitability’ test for licensees,” the spokesperson wrote by e-mail. “The focus of that test is on the suitability of the licensee, Foxtel Cable TV.

“To be assessed as unsuitable, there needs to be a significant risk of a breach of the Broadcasting Services Act or license conditions by the licensee, Foxtel Cable TV … the ACMA will continue to monitor developments to ensure the Act is adhered to.”

The phone hacking controversy which has led to criminal arrests in the UK has attracted headlines but little else in Murdoch’s home country of Australia, where he began building his media empire. News Corp. subsidiary News Ltd. now runs 70% of Australia’s newspapers and its only national newspaper, The Australian.

“The reaction here has been surprisingly muted, I think because most people regard what’s happening as something only that’s happening in the UK – it’s interesting, it’s exciting, but it doesn’t really have any impact in Australia,” said Bruce Arnold, a lecturer in Law at the University of Canberra.

“I think some people are waiting with baited breath and wondering whether this beautiful façade will start to crumble here, too,” Arnold said.

The office of Communications Minister Stephen Conroy told reporters Wednesday there was no evidence that Murdoch employees engaged in phone hacking in Australia.

In the wake of the phone hacking allegations, the Australia government formed the Independent Media Inquiry in September, also known as the Finkelstein hearings, led by retired judge Ray Finkelstein. The panel was charged to, in part, review the effectiveness of the Australian Press Council to handle complaints against the media.

But Australian media observers said the panel was convened to put pressure on Murdoch publications for aggressive coverage against the ruling Labor Party.

“The Murdoch press has been extremely critical of the Labor government here and a perception here that it had an absolute agenda of attacking the Labor government,” said Martin Hirst, an associate professor of journalism at Deakin University, who gave testimony at the Finkelstein hearings.

Still, the recommendations made from the inquiry – including a statutory authority that would regulate news and commentary – was rejected in a government report, the Convergence Review, issued Monday about proposed changes Australian media regulations. “While agreeing with much of the analysis and some of the findings of the Independent Media Inquiry, the Convergence Review recommends an approach based on an industry-led body for news standards rather than a statutory body,” the report said.

Given the weakness of the ruling Labor Party in popularity polls, Australian media observers say there is little political will to take a hard look at Murdoch media operations there.

“I think the crucial thing is here there isn’t a community interest. If (politicians) saw that there is strong community support to take on Rupert Murdoch, to say, `we will vote for you on the position that you’ll go in there and clean the stables, ’ then maybe they’d act,” Arnold said.

“But there is no community pressure for that, unless we have a real revelation about malpractice in the Australian media industry in a big way,” he added.

The CNN Wire staff contributed to this article