Yahoo Finance Rupert Murdoch’s Sky bid is not in public interest, says regulator
Rupert Murdoch’s £11.7bn bid to take full control of Sky could be blocked after the UK competition regulator said the deal would give his family to much control over UK news media.
The Competition and Markets Authority said 21st Century Fox’s bid to take control of the 61% of Sky it does not already own was not in the public interest due to concerns about media plurality.
The CMA’s investigation into the deal found it would give the Murdoch family trust, which controls Fox and News Corp, the publisher of the Sun and the Times, “too much control over news providers in the UK across all media platforms and therefore too much influence over public opinion and the political agenda”.
As the Competition & Markets Authority provisionally blocked Rupert Murdoch’s bid for full control of Sky, it launched a consultation looking at three options for the future of Sky News.
The first option is to close the loss-making business, which would eliminate the CMA’s concern that the Sky deal would give the Murdoch family too much control of UK news media. Sky has already said it will review Sky News's future if the bid is blocked.
The second option is a spin-off or sale of Sky News. Before the Murdochs abandoned their 2011 bid for Sky – which was derailed by the phone-hacking scandal – the then culture secretary accepted a plan to publicly list Sky News.
The third option is to keep Sky News as part of Sky but to beef up its independence. Fox has already tabled a range of measures, or “firewall” remedies, to broadcasting regulator Ofcom which the CMA is now using as the basis of further consultation. These include a commitment to maintaining investment in Sky News at current levels for a least five years, and establishing an editorial board with a majority of independent directors.
In June, Ofcom said this plan did mitigate media plurality concerns, but the then culture secretary said she would be “reluctant” to accept them as they did not “fully remedy” the problem.
Fox now has an opportunity to submit improved remedies.
The CMA has until 1 May to deliver its final recommendation to the culture secretary, who then has 30 days to make his decision.
The investigation cleared the deal on the grounds of Fox’s commitment to broadcasting standards – despite the phone-hacking scandal at the News of the World and allegations of sexual harassment at Fox News.
The CMA has set out three options for the deal that should be considered in a new consultation: that it is blocked, that Sky News is spun off or sold or that Sky News is insulated from the influence of the Murdoch family trust.
The former Labour leader Ed Miliband, a vitriolic Murdoch critic, said any options other than blocking the deal give the Murdochs a “back door” to get the deal they want.
Sky has previously said it will review the future of Sky News, which employs about 500 staff, if the deal is blocked because closing it down would immediately eliminate media plurality issues blocking the deal.
The SNP MP Brendan O’Hara accused Sky of using its news staff as “pawns in the takeover” to try to coerce the competition regulator and the culture secretary, Matt Hancock, into clearing the deal.
“The greatest disaster that could befall plurality of media in this country would be if Sky News … were to be closed by its new owner,” said John Whittingdale, a former culture secretary, in the House of Commons on Tuesday.
The broadcasting regulator Ofcom has previously said the loss of Sky News could “present risks to plurality equal to or greater than those presented by the transaction itself”.
The CMA will consult on its provisional findings and potential remedies before delivering its final report to the government by a deadline of 1 May.
Fox said it was disappointed by the CMA’s provisional findings on media plurality, but welcomed its decision that a combined Fox and Sky would be committed to meeting broadcasting standards.
The company said: “We welcome the CMA’s provisional finding that the company has a genuine commitment to broadcasting standards and the transaction would not be against the public interest in this respect.
“Regarding plurality, we are disappointed by the CMA’s provisional findings. We will continue to engage with the CMA ahead of the publication of the final report in May.”
Sky said it noted the CMA’s findings but made no further remarks on its announcement.
Anne Lambert, the chair of the CMA’s independent investigation group, said: “Media plurality goes to the heart of our democratic process. It is very important that no group or individual should have too much control of our news media or too much power to affect the political agenda.
“Our in-depth investigation also considered whether the deal would be against the public interest regarding broadcasting standards. Due to their existing track record in the UK, and the range of policies and procedures the companies involved have in place to ensure broadcasting standards are met, we did not find public interest concerns in this regard.”
Tom Watson, the deputy Labour leader and long-time Murdoch critic, praised the watchdog’s findings: “The Competition and Markets Authority is right to say that the Fox takeover of Sky would give the Murdoch family too much power. This is the right decision for the UK.”
The CMA’s announcement is the latest stage of the long-running saga of whether Fox, which is controlled by Rupert Murdoch and his sons Lachlan and James, will take over Sky.
It began in December 2016 when Fox announced it was bidding. The deal was referred to the CMA for an investigation last September by Karen Bradley, the then culture secretary, after an investigation by Ofcom. The regulator raised concerns about media plurality. A separate report by Ofcom found that the Murdochs and Fox were “fit and proper” to hold a UK broadcasting licence, despite the regulator expressing concern about “extremely serious and disturbing” allegations of harassment at Fox News.
The CMA’s investigation has continued despite Fox announcing the sale of most of its entertainment assets – including its 39% stake in Sky – to Disney last month. This $66bn (£47.3bn) deal is unlikely to be completed until well after Fox takes full control of Sky, which is why the CMA has pressed ahead with its investigation.
However, the Disney deal will reshape the Murdochs’ media empire and the CMA found in its investigation that if it went ahead as planned then the link between Sky and the Murdochs would “significantly weaken”.
The regulator said it would further consider the impact of the Disney deal in the consultation into its provisional findings.
