21st Century Fox’s Sky Deal Delayed


Karen Bradley, the U.K.’s Secretary of State for Culture, Media and Sport, says she is “minded” to refer 21st Century Fox’s Sky takeover to the Competition and Markets Authority, citing concerns about media plurality.

British media regulator Ofcom was tasked by Bradley in March to look into the public interest considerations around Fox’s deal to buy the shares in Sky it doesn’t already own. Those findings were given to the Secretary last week and were made public today.

“Our report finds that the proposed transaction raises public interest concerns relating to media plurality,” Ofcom said. “It identifies a risk of increased influence by members of the Murdoch Family Trust over the U.K. news agenda and the political process, with its unique presence on radio, television, in print and online. We consider that the plurality concerns may justify the Secretary of State making a reference to the Competition and Markets Authority.”

Bradley commented, “The reasoning and evidence on which Ofcom’s recommendation is based are persuasive. The proposed entity would have the third largest total reach of any news provider—lower only than the BBC and ITN—and would, uniquely, span news coverage on television, radio, in newspapers and online.”

The parties involved have until July 14 to respond to Bradley’s concerns.

On the “fit and proper assessment,” Ofcom says that allegations of sexual and racial harassment at Fox News are “extremely serious and disturbing.” However, “We have concluded that the overall evidence available to date does not provide a reasonable basis for Ofcom to conclude that, if Sky were 100 percent owned and controlled by Fox, it would not be a fit and proper holder of broadcast licenses. Our assessment finds that Sky would remain a fit and proper license holder in the event of the merger.
As fitness and properness is an ongoing duty, we can re-examine our position if new evidence comes to light.”

Sky said it “welcomes today’s announcement of Ofcom’s decision that Sky would continue to be a fit and proper holder of its broadcast licenses under full ownership of 21CF and will continue to operate its business as usual.”

In its own statement, Fox said, “While we welcome the Secretary of State’s decision on broadcasting standards, we are disappointed that she does not accept Ofcom’s recommendation stated in its report that ‘the proposed undertakings offered by Fox to maintain the editorial independence of Sky News mitigate the media plurality concerns.’ Separately, 21CF is pleased that Ofcom recognizes that Sky, under full 21CF ownership, would remain a fit and proper holder of broadcast licenses. 21CF will now make representations to the Secretary of State regarding her provisional decision and Ofcom’s report, and will continue to work constructively with the U.K. authorities. In the event that the Secretary of State makes a final decision to refer to the CMA, we would expect that the review would take at least 24 weeks. In such an event, the transaction is expected to close by June 30, 2018.”

Fox says the deal has been cleared on public interest and plurality grounds in the other Sky markets of Austria, Germany, Italy and Ireland.