LONDON — British Sky Broadcasting, the satellite TV network partially owned by Rupert Murdoch, remains a "fit and proper" holder of a broadcast license despite the phone-hacking scandal that has engulfed Murdoch's media empire, according to Britain's communications watchdog.
But the regulatory agency harshly criticized Murdoch's son, James, the former head of BSkyB, for his lackadaisical response to the hacking debacle.
The agency said Thursday that James Murdoch "repeatedly fell short of the conduct to be expected of him as a chief executive officer and chairman" of News International, the British arm of his father's media giant News Corp.
Although BSkyB was not directly involved in the phone-hacking scandal, which has centered mostly on the now-defunct century-old News of the World tabloid, its operations have come under scrutiny by media regulators because of News Corp.'s 39% stake in the network.
The Murdochs had hoped to win full control of the broadcaster but were forced to ditch their $12-billion takeover bid last year when the hacking disgrace exploded over revelations that News of the World reporters had tapped into the cellphone messages of a kidnapped teenager.
The announcement by communications watchdog Ofcom that BSkyB could hang on to its license came as a relief to the broadcaster, whose highly lucrative sports and entertainment programming reaches millions of homes in Britain.
"Ofcom is right to conclude that Sky is a fit and proper broadcaster," BSkyB said in a statement. "As a company, we are committed to high standards of governance and we take our regulatory obligations extremely seriously."
But the regulators' criticism of James Murdoch, once a shoo-in to succeed his father as leader of News Corp., was sharp.
Ofcom said that, based on current evidence, there was no definitive indication that James Murdoch knew of the full extent of illegal phone-hacking at the News of the World.
Police said there were potentially thousands of victims, including celebrities and senior politicians, whose private voice mails were accessed by News of the World reporters trolling for scoops and sensational stories.
As allegations of such criminal practices mounted, James Murdoch failed as head of News International to try to get to the root of the matter, Ofcom said.
"We consider James Murdoch's conduct, including his failure to initiate action on his own account on a number of occasions, to be both difficult to comprehend and ill-judged," the media regulator said.
Although he has since issued a public apology, his cursory effort to investigate the hacking accusations raises "questions regarding James Murdoch's competence in the handling of these matters," Ofcom said.
But the agency added that there was no evidence that he was complicit in any efforts to cover up widespread wrongdoing at News of the World. In April, James Murdoch resigned as chairman of BSkyB to prevent the broadcaster from being affected by fallout from the scandal that broke wide open the previous July.
Ofcom also said there was no evidence that Rupert Murdoch had acted inappropriately with regard to the hacking scandal.
"We are also pleased that Ofcom determined that the evidence related to phone hacking, concealment and corruption does not provide any basis to conclude that News Corporation and Rupert Murdoch acted in a way that was inappropriate, and that there is similarly no evidence that James Murdoch deliberately engaged in any wrongdoing," News Corp. said in a statement.
"We disagree, however, with certain of the report's statements about James Murdoch's prior actions as an executive and director, which are not at all substantiated by evidence. As Ofcom itself acknowledged, James deserves credit for his role … in leading Sky to an outstanding record as a broadcaster, including its excellent compliance record."
The hacking affair has spawned three separate Scotland Yard investigations into media wrongdoing, which have produced dozens of arrests, including that of a former senior aide to Prime Minister David Cameron and a high-ranking News International executive.
Earlier this week, two journalists and a police officer were arrested in an investigation of illegal payments to public officials for information. On Thursday, police announced the arrest of a journalist in connection with an investigation into computer hacking.
Times staff writer Meg James contributed to this report.