The culture secretary has said that she is likely to refer Rupert Murdoch’s £11.7bn takeover bid for Sky to Ofcom to investigate issues of media plurality and whether Fox will maintain broadcasting standards at the pay-TV company.
Karen Bradley, who has 10 working days from Monday to make a final decision on referring the deal to the media regulator, said that she is “minded to” issue an intervention notice to call in Ofcom to examine the deal.
“I have, today, written to the parties to inform them that I am ‘minded to’ issue a European intervention notice on the basis that I have concerns that there may be public interest considerations,” she said, in a statement issued minutes after the European commission confirmed that Fox had formally notified it about the takeover bid.
“To be clear – I have not taken a final decision on intervention at this stage. In line with the guidance that applies to my quasi-judicial role I am inviting written representations from the parties and will aim to come to a final decision on whether to intervene in the merger within 10 working days of today’s notification.”
Bradley said she was minded to intervene on the basis of two public interest grounds specified in the Enterprise Act.
The first of these is whether Fox’s takeover will raise issues of UK media plurality and concentration in Murdoch’s control.
The second is on whether Fox is committed to the required editorial standards, such as accuracy and impartial news coverage.
“This ground relates to the need for persons carrying on media enterprises, and for those with control of such enterprises, to have a genuine commitment to attaining broadcasting standards objectives,” said Bradley.
“This is not an announcement of my final decision in relation to intervention, but an indication of what I am presently minded to do.”
Bradley said Fox and Sky have until 5pm on 8 March to make representations about the deal to the Department for Culture Media and Sport, with her final decision being delivered in the week commencing 13 March.
If asked, Ofcom will carry out a public interest test on the deal, reporting back within 40 days. If there are no concerns, Bradley must clear the bid.
If Ofcom raises concerns, however, she must decide whether to accept an undertaking from Fox to address them. In 2011, Murdoch’s bid for Sky resulted in a deal to spin off Sky News to quell media plurality issues before the takeover was abandoned.
Murdoch’s son James, now chief executive of Fox and chairman of Sky, has already said he does not believe any “meaningful concessions” will need to be made to authorities this time round.
“As we have previously indicated, we anticipate regulators will undertake a thorough review of the transaction, and we look forward to engaging with them as appropriate,” said a spokeswoman for Fox. “We … are confident that the transaction will be approved based on a compelling fact set.”
European regulators have up to 25 days to look at competition issues but are likely to clear the takeover as they previously gave the green light to the original bid late in 2010, as well as Sky’s £7bn deal in 2014 to buy its sister operations in Germany and Italy.
Fox’s deal to snap up the 61% of Sky it does not already own will give Murdoch control of Sky News and pay-TV operations in the UK, Germany, Austria and Italy.
His ownership of UK news media also includes the Times, the Sunday Times and the Sun as well as radio group TalkSport, which he controls through a separate company, News Corp.
Tom Watson, Labour’s shadow culture secretary, said that the bid should have been referred for scrutiny “immediately and without equivocation”.
“It is clear that Fox’s bid to take full control of Sky will significantly increase the size of the biggest media organisation in the UK and further concentrate power in the hands of a dominant industry player,” he said. “The culture secretary must now ensure MPs are given an opportunity to debate the deal before a decision is taken on whether to approve it.”
An Ofcom investigation found in 2012 that Sky remained a “fit and proper” owner of a broadcast licence, despite the phone-hacking affair that embroiled its then parent company.
However, it published a scathing assessment of James Murdoch – then the chief executive of his father’s UK newspaper group and chairman of Sky – finding that his conduct repeatedly fell short of the standards expected.
Ofcom has the right at any stage to launch a new investigation. However, the regulator has had a chance to air any concerns about James Murdoch and Sky since it was announced he was returning as chairman in January.
In October, he had to rely on the support of Fox, Sky’s largest shareholder, to win approval for his return after more than 50% of independent shareholders voted against his reappointment.
“The public has serious doubts as to whether Rupert Murdoch is fit to take even more control over the UK’s media,” said Maggie Chao, from campaigning group 38 Degrees. “Memories of the phone hacking scandal are still fresh. That’s why more than 230,000 have signed a petition demanding the Sky deal is referred to Ofcom.”
UK culture secretary ‘minded to’ refer Sky takeover to Ofcom – The Guardian