June 19, 2018

Murdoch's Sky £11.7bn bid referred to CMA

13 September 2017, 12:45 | Lionel James

Fox's Sky Deal: UK Plans In-Depth Review on Competition and Broadcasting Standards Grounds

21st Century Fox takeover of Sky referred to competition watchdog

Fox, which has agitated for a speedy resolution to official scrutiny of the Sky deal, criticized United Kingdom culture minister Karen Bradley's announcement Tuesday that she was inclined to refer the deal for examination by the Competition and Markets Authority, both on grounds of media plurality and on whether the Murdochs would adhere to British broadcasting standards.

Responding to Ms Bradley's words, Sky plc said in a statement: "We are disappointed by this further delay and that the Secretary of State is now minded to refer the proposed acquisition to the CMA in relation to broadcasting standards despite Ofcom, as the independent broadcast regulator, maintaining its advice that there are not sufficient concerns to justify such a reference".

This is the latest bump in the road for Rupert Murdoch's attempt to buy the long-coveted 61% of pay-TV giant Sky that Fox does not already own.

However, in a statement to Parliament on Tuesday she said that none of the representations she received allayed her concerns about the deal.

"Nevertheless we will continue to engage with the process as the Secretary of State reaches her final decision", Sky said.

Ofcom has now confirmed it considers this to raise non-fanciful concerns but which are not sufficiently serious to warrant referral.

"The existence of non-fanciful concerns means that, as a matter of law, the threshold for a reference on the broadcasting standards grounds is met".

The announcement made on Tuesday caused shares in Sky to plummet 5 percent.

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British authorities have increased scrutiny of the impending deal following several complaints raising concerns that the Fox News parent company is not fit to own Sky News. "Extra reasons have been added as to why it is being referred to the CMA, such as broadcasting standards and corporate governance, but from a practical standpoint it doesn't hugely change things", said Liberum Capital's Ian Whittaker. She remarked that she had outstanding non-fanciful concerns about these matters and was of the view that they should be further considered by the CMA.

Competition reviews can take up to six months to complete, potentially putting a decision off until 2018.

Sky shares were off 2 per cent at 933.5 pence at 2.13pm in London, their lowest since the deal was announced in December 2016.

The broadcaster did say though that its actions were as a result of the channel no longer being a viable option in the United Kingdom as the costs of distributing the USA network meant it was not in 21st Century Fox's commercial interests to continue its offer.

The deal's progress has already been set back by the upheaval of the United Kingdom general election, the furore over racial and sexual harassment allegations at Fox News and obstruction by the deal's opponents.

The past few months have also seen pressure for a referral on the broadcasting standards issue, partly from campaign group Avaaz and also a group of high-profile MPs.

Critics have said the Murdochs have too much power as owners of Fox and News Corp., which owns British newspapers The Times and The Sun, while Fox has highlighted the separation of its entertainment businesses from newspaper company News Corp. a few years ago and the rising influence of online and social media.

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