FCC Probing Whether Fox Network Misled It : TV: Agency was unaware Murdoch firm put up virtually all the money, regulator says.

One of the top regulators involved in a 1985 proceeding that led to the creation of the Fox network said he was not aware at that time that an Australian-based company controlled by Rupert Murdoch had put up virtually all of the money for the venture.

The Federal Communications Commission is investigating whether Fox misled the commission about its ownership structure 10 years ago when seeking approval to acquire six TV stations that become the foundation of the network.

“At no time was I aware that News Corp. would own 99% of the equity or any percentage above 25%,” said Roy Stewart in a document filed Friday as part of an investigation into Fox’s ownership.

By law, foreign companies are not allowed to own more than a 25% stake in a U.S. broadcast station unless the FCC says it is in the public interest.

When the FCC approved the Fox transaction in 1985, Stewart, who is now the agency’s top broadcast regulator, was chief of the division responsible for processing Fox’s applications.

Fox disputed Stewart’s account Friday, saying the company had filed documents with the commission making clear that all but 1% of the $600 million used to purchase the stations was put up by News Corp., the Australian-based company that is the parent of Fox.

Preston Padden, president of network distribution for Fox, cited testimony from at least two other former FCC officials--Alan Glasser and Jerald Fritz--who recalled seeing financial documents providing this information in 1985.

“We have long sought to sit down with our old friend Roy to show him the applications from 1985,” Padden said in an interview.

The FCC investigation is in response to a complaint filed by the National Assn. for the Advancement of Colored People in November, 1993.

The NAACP alleged that Fox masked its true corporate structure and that its foreign ownership denied opportunities to members of U.S. minority groups.

Fox has denied this.

The NAACP’s attorney, David Honig, believes Stewart’s statement provides a major boost to its case.

Stewart, who recused himself earlier this year from the Fox investigation, had not made any public comments about the 1985 review until Friday.

Fox officials, speaking on condition of anonymity, questioned the timing of the document--three days before further comments by Fox on the investigation are due. They also pointed out that because Stewart has withdrawn from the case, Fox attorneys cannot question him about his comments.

But Stewart, in the document, said he decided to make the statement Friday because “the absence of my statement may be seen as leaving the record in the current Fox proceeding incomplete and may leave a misimpression as to my willingness to provide a statement for the record.”