Fox’s £11.7bn bid for Sky ‘should be referred to competition authorities’ by Mark Sweney
Jun 20, 2017
Labour’s deputy leader urges culture secretary to act after Ofcom delivers report on Rupert Murdoch’s proposed takeover
Source: The Guardian
Labour’s deputy leader, Tom Watson, has called on the culture secretary to refer Rupert Murdoch’s proposed £11.7bn takeover of Sky to the competition authorities for further scrutiny.
The media regulator, Ofcom, delivered the conclusions of its investigation into the deal to the Department for Culture, Media and Sport on Tuesday. Karen Bradley, the culture secretary, has said she will publish the report by 29 June.
“The proposed takeover of Sky by Fox is a hugely significant deal with the potential to transform the UK’s media market,” said Watson. He urged Bradley to refer the takeover to the Competition and Markets Authority (CMA) for an in-depth investigation.
Ofcom is examining whether the proposed takeover by 21st Century Fox, the owner of Fox News, will give Murdoch too much control of news media and whether the enlarged media group will adhere to existing standards of accuracy and impartiality.
Bradley has up to 10 working days to decide what to do next. She can decide to wave the deal through, discuss various options with Fox to address any issues raised by Ofcom, or refer the takeover to the CMA as requested by Watson.
An in-depth investigation would be Fox’s worst-case scenario as the CMA has a six-month time frame. That could trigger Fox having to pay a special dividend of about £172m for failing to get the deal done this year.
“In our view, the risk is that the DCMS refers the deal to the CMA as it could be politically expedient to do so,” said Wilton Fry, an analyst at RBC Capital Markets, in a note to investors.
James Murdoch, the chief executive of Fox and chair of Sky, has said he does not believe the company will need to make any meaningful concessions to complete the takeover.
During Rupert Murdoch’s previous bid for Sky in 2010, the then culture secretary, Jeremy Hunt, accepted an offer to partially spin off Sky News to allay the media plurality issues Ofcom raised at the time.
However, the takeover collapsed because of the fallout from the phone-hacking scandal that engulfed Murdoch’s News of the World.
Since then, Murdoch has hived off his newspapers into a separate company, News Corp, while the new takeover vehicle, 21st Century Fox, comprises his TV and film businesses.
Critics of the Murdochs argue that the family will still be the ultimate owner of both newspaper and TV assets in the UK and that will give them too much control over UK news media.
Analysts speculate that Ofcom is likely to raise some issues with the takeover – in particular regarding Sky News – but if that is the case, that Fox is expected to offer lesser concessions, such as suggesting that Sky News will have an independent editorial board.
Campaigning groups also say allegations of sexual harassment at Fox News in the US – which have so far claimed the jobs of the late chief executive Roger Ailes, co-president Bill Shine and top presenter Bill O’Reilly – mean that the UK takeover should be blocked.
On Monday Lisa Bloom, a lawyer representing one of the women pursuing litigation against O’Reilly, said the New York state division of human rights was investigating Fox News over a complaint she lodged over harassment and discrimination.
“It is clear we cannot expect the Murdochs to maintain the highest standards of corporate governance, accountability and conduct that the British public and the world expect,” said Angelo Carusone, the president of Media Matters for America, in an open letter sent to Ofcom’s chief executive, Sharon White.