Yahoo Finance Sky takeover by Rupert Murdoch's Fox 'not in public interest', watchdog finds
The competition regulator could block Twenty-First Century Fox’s proposed takeover of UK brodcaster Sky after warning it is “not in the public interest” because it would give Rupert Murdoch and his family too much control over Britain’s news media.
Mr Murdoch’s company, which is set to be acquired by Disney, already owns 39pc of Sky but tabled an £11.7bn bid to take full control in 2016.
Anne Lambert, who led the Competition and Markets Authority’s investigation, said that if the proposed takeover went ahead, “it would result in the Murdoch family having too much control over news providers in the UK, and too much influence over public opinion and the political agenda”.
However it found no issue with Fox's commitment to broadcasting standards, saying that "overall, Fox has a genuine commitment to broadcasting standards in the UK", having held licences in this country for more than 20 years.
Fox could now be forced to agree a spin off of Sky News in order to get the Competition and Markets Authority's seal of approval.
The regulator’s ruling is unlikely to affect Fox’s forthcoming £49bn sale to Disney, which was not conditional on the Sky deal being approved.
Sky said it noted the CMA’s rulings and would make a further announcement “as and when appropriate”.
The regulator will make its final report in May, leaving the Culture Secretary, Matt Hancock, to make the final decision.
The CMA looked at potential remedies that could allow the takeover to go ahead, including a spin-off of the Sky News channel, which was tabled by Fox in 2011 when it last bid for Sky. This would make the channel a publicly listed subsidiary of Sky.
It could also consider a full divestiture of the channel, though it noted this could be problematic as it has never operated as a standalone company and would need to set up its own back office operations.
Sky shares up as broadcasting standards - the thing most likely to kybosh the Fox deal- are off the table. Now a matter of remedies around Sky News that will fall away when Disney takeover of Fox assets is completed. pic.twitter.com/jPwillgLAu
— Chris Williams (@cg_williams) January 23, 2018
The CMA ruled out further remedies, such as a sale of some of the Murdoch family's newspapers, as these were owned by News UK, which is not party to the Sky transaction. News UK owns The Sun and The Times.
The regulator said its concerns over media plurality could "fall away" following Disney's takeover of Fox, but that deal also faces regulatory scrutiny and is expected to take up to 18 months to complete.
Disney is buying up Fox's entertainment assets, including its stake in Sky, in a bid to head off the challenge from online insurgents including Netflix and Amazon.
The CMA also examined whether Fox was fit to hold a broadcasting licence, in light of claims of sexual harassment at its US news channel, but “did not find public interest concerns in this regard”.
Twenty-First Century Fox said it was "disappointed" by the CMA's ruling on media plurality but said the finding moved the deal forward to the "next phase". It still expects approval to be granted by the end of June.
Sky's shares were up 2.4pc to £10.27 in early trade.
