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Fox News harassment claims threaten Murdochs’ deal to take over Sky

Fox News harassment claims threaten Murdochs’ deal to take over Sky
Protestors from the National Organization for Women of New York rally April 20, the day after Fox News cut ties with Bill O'Reilly. (Timothy A. Clary / AFP/Getty Images)

The sexual harassment scandal enveloping Fox News now poses a threat to parent company 21st Century Fox’s deal to take full ownership of the European satellite TV service Sky.

Douglas Wigdor, the attorney whose firm represents 20 plaintiffs in sexual harassment and racial discrimination cases against Fox News, has been invited to appear before the Office of Communications, also known as Ofcom, the British regulatory body reviewing whether Fox should buy Sky.

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"I am pleased that Ofcom has invited me to appear in London next week on behalf of our 20 clients and look forward to sharing the information that I have come to learn about 21st Century Fox through the dedicated men and women that I am privileged to represent," Wigdor said in a statement.

The development highlights how a scandal that has prompted the resignations of top Fox News executives and star host Bill O'Reilly has become a major headache for 21st Century Fox, potentially disrupting a long-sought deal.

The New York-based Murdoch family-controlled media company for years has had ambitions to control Sky, Britain’s satellite pay-television juggernaut that boasts exclusive rights to soccer and other sporting events. Sky also sells broadband Internet service, an online streaming plan and a Sky-branded phone service. Fox currently holds a 39.1% interest in Sky, but Rupert Murdoch and his sons are determined to consolidate Fox’s ownership.

21st Century Fox, formerly known as News Corp., made its first attempt to buy Sky in 2010 for $12 billion, but pulled back following revelations that reporters and operatives for its London tabloids had hacked into cellphone messages left for members of the royal family, celebrities such as Hugh Grant and even crime victims.

Now, another controversy imperils Fox’s plans. Federal investigators have widened their probe into how Fox News handled the financial reporting of payments made to settle sexual harassment claims. The probe includes a review of ousted Fox News Chief Executive Roger Ailes’ actions while he ran the top-rated cable news operation, according to two people with knowledge of the investigation who are not authorized to discuss it.

The U.S. Postal Service has now joined the investigation, which is being conducted by the office of the U.S. attorney for the Southern District of New York, said a person familiar with the matter who was not authorized to comment.

Ailes' attorney, Susan Estrich, did not respond to a request for comment.

A number of former Fox News employees have been subpoenaed in the investigation. They include the network's former communications chief Brian Lewis, who is said to have received immunity from prosecution for his grand jury testimony, according to the Wall Street Journal.

Former Chief Financial Officer Mark Kranz has also been subpoenaed, according to people familiar with the matter. Kranz was dismissed from Fox News in August shortly after the ouster of Ailes. The prosecutors also recently interviewed John Nallen, 21st Century Fox's chief financial officer.

Wigdor's testimony in Britain will follow an appearance by Wendy Walsh, the radio psychologist who recently went public with her harassment complaint against Fox News. Walsh's attorney, Lisa Bloom, confirmed that her client has been invited to speak before Ofcom on Monday.

Walsh alleged that Fox News anchor Bill O'Reilly went back on a stated commitment to get her a position as a paid contributor at Fox News after she rejected his advances at a 2013 dinner meeting at the Hotel Bel-Air. The revelation of Walsh's claim — along with the disclosure that $13 million had been paid to settle harassment claims made by other women against O'Reilly — led to the popular host's April 19 firing.

Wigdor's clients include Juliet Huddy, a former Fox News host who received a settlement after alleging that she was sexually harassed by O'Reilly. His firm also represents 13 current and former black employees of Fox News who claim that they have faced racial discrimination throughout their tenure at the company. Fox News correspondent Kelly Wright is among the group.

Yet another case emerged Thursday when Wigdor filed a gender discrimination lawsuit against Fox News on behalf of radio correspondent Jessica Golloher. Golloher alleges that she was terminated the day after she called Paul Weiss, the law firm investigating harassment claims made against Fox News. Fox News has denied the accusation, saying Colloher's position was eliminated in budget cuts.

The problems at Fox News began after Ailes was sued by former anchor Gretchen Carlson for sexual discrimination in retaliation in July. Fox News settled the case for $20 million and Ailes was forced out while denying the allegations. Fox News has since faced numerous allegations of sexual harassment against Ailes and O'Reilly. Bill Shine, a longtime deputy for Ailes who was promoted to co-president of Fox News in August, was also forced to resign on Monday due to the perception that he did little to deter inappropriate behavior within the company.

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The Wall Street Journal reported that prosecutors also have shown an interest in Ailes' use of a private investigator to dig up negative information on women who lodged sexual harassment complaints. Bo Dietl, a private investigator running for mayor of New York, acknowledged in press interviews Friday that he had been hired by Fox News' law firm — and not Ailes personally — to do investigative work on the company's employees, but he maintained that he had done nothing illegal.

In an interview with the New York Daily News, Dietl said he did investigate whether Carlson had "some involvement with an anchor" while she was married.

Jacob Frenkel, a former federal prosecutor and Securities and Exchange Commission enforcement attorney, said the high profile of Fox News and Ailes, makes them a “magnet’ for a federal investigation. But it does not guarantee indictments.

"The mere existence of a government investigation does not mean that there will be a criminal or civil violation," Frenkel said. "It simply means they are looking."

Twitter: @SteveBattaglio

Times staff writer Joe Tanfani in Washington contributed to this report.

UPDATES:

4:30 p.m.: This article was updated with additional reaction and details on the federal investigation into Fox News.

This article was originally published at 9:50 a.m.

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