Government set to refer Fox's Sky takeover to CMA over broadcasting standards

Javier Stokes
September 13, 2017

Culture Secretary Karen Bradley has told MPs that she intends to refer 21st Century Fox's planned takeover of Sky to the competition regulator.

Addressing parliament today, Bradley said: "I am now minded to refer the merger to the CMA [Competition and Markets Authority] on the grounds of genuine commitment to broadcasting standards". Adding Sky News to the mix would give the Murdoch family influence over a third of the news sources used in the United Kingdom, according to a June report by communications watchdog Ofcom.

"Nevertheless we will continue to engage with the process as the Secretary of State reaches her final decision", Sky said. "On the evidence before me, I am not able to conclude that this raises non-fanciful concerns".

"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. These are matters the CMA may wish to consider".

Twenty-First Century Fox said it was disappointed in the decision, noting that United Kingdom broadcast regulator Ofcom had advised the government that the deal did not raise concerns about broadcast standards.

Bradley said she had changed her mind on a broadcasting standards referral after seeking further advice from communications regulator Ofcom following new evidence. She also wants the CMA to investigate corporate governance issues at Fox, despite Ofcom believing that these concerns do not warrant a referral.

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A previous attempt by Fox to buy Sky failed in the wake of the phone hacking scandal that led to the closure of The News of the World.

The CMA is set to appoint a panel of experienced competition lawyers and industry grandees who would give their recommendation to Ms Bradley. "However, it is clear to me that Parliament intended the scrutiny of whether an acquiring party has a "genuine commitment" to attaining broadcasting standards objectives to happen before a merger takes place". She was not confident that weaknesses in Fox's corporate governance arrangements were incapable of affecting compliance in the broadcasting standards context.

Sky shares dropped by roughly 2% in London. It would likely entail hearings with Fox and Sky executives, as well as harvesting huge amounts of data from the companies, their rivals and industry bodies.

Fox News has fallen foul of the United Kingdom code seven times in recent years, including four times last year, one of which was for a programme that featured a guest who said Birmingham was a city "where non-Muslims just simply don't go". The European Union and other countries already approved the deal. The group has further threatened Ms Bradley with a legal challenge if she were to choose not to call for a deeper probe of Fox's commitment to broadcasting standards.

They have pointed to the behaviour of Fox News in the United States as evidence that there needs to be a fuller investigation into whether the Murdochs are fit to own a combined company, and whether it would comply with the relevant broadcasting standards.

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