Regulator blocks Fox takeover of Sky though Disney deal a complication
The proposed takeover of European pay-television broadcaster Sky by 21st Century Fox, the US media giant headed up by Rupert Murdoch, has been provisionally blocked by the UK competition regulator on the grounds of media plurality.
The Competition and Markets Authority today issued a ruling saying that the £11.7-billion ($13.3-billion) deal for the 61 per cent of Sky that Fox does not already control would give the Murdoch family “too much control over news providers in the UK across all media platforms and therefore too much influence over public opinion and the political agenda.”
The investigation cleared the acquisition on the grounds of broadcasting standards.
Sky has its own dedicated 24-hour news channel in Sky News, while the Murdoch’s current assets include News UK, a News Corp subsidiary and the owner of leading UK daily newspapers The Sun and The Times, plus their Sunday editions, and national commercial radio station TalkSport.
The CMA decision means that the takeover is unlikely to go ahead without remedies such as Sky News being spun off from the main company, with a final report set to be delivered to the UK government by a deadline of 1 May, with Matt Hancock, the new secretary of state for digital, culture, media and sport, to make the final decision.
However, the proposed acquisition of key parts of Fox, including Sky, by Walt Disney, the US media and entertainment giant, in a deal worth a $66 billion adds another layer of complexity, with the regulator acknowledging that the takeover would “significantly weaken” the link between the Murdochs and the broadcaster, “which is at the root of our provisional concerns about media plurality.”
The mammoth Disney-Fox deal, announced last month, is subject to regulatory approval unlikely to be granted until well after the review of Fox’s takeover of Sky is completed.
The takeover was referred to the CMA for an investigation by Hancock’s predecessor Karen Bradley last September after Ofcom, the UK’s media regulator, raised concerns about media plurality, though not broadcasting standards.
It is the second time that Murdoch has been frustrated in his attempt to increase his hold on Sky, now the leading subscription broadcaster in the UK, Ireland, Germany, Austria and Italy, with a total of 22.4 million subscribers, and the television home of various top sports properties.
In 2010, News Corp sought to take full control of the company then known as BSkyB, in a move that, at the time, would have valued the broadcaster at about £12 billion, but the board then asked it to increase its offer.
News Corp was prepared to spin off Sky News into a separate company as a concession, only for the negotiations to be put on hold in 2011 following the parent company's involvement in a phone-hacking scandal, which led to the sudden closure of the News of the World, then the UK’s biggest-selling Sunday newspaper.
However, despite the hacking episode and allegations of sexual harassment at US network Fox News, the UK competition regulator is satisfied that the mooted takeover of Sky meets broadcasting standards.
In a statement today, Fox said: “We welcome the CMA’s provisional finding that the company has a genuine commitment to broadcasting standards and the transaction would not be against the public interest in this respect. Regarding plurality, we are disappointed by the CMA’s provisional findings. We will continue to engage with the CMA ahead of the publication of the final report in May.”
The acquisition of Sky would significantly strengthen the Disney empire, which already includes ESPN, the international sports broadcaster, but the Murdochs would retain control of US operations including the main Fox network, Fox News, Fox Business, the Fox Sports 1 and Fox Sports 2 channels and cable outlets such as the Spanish-language Fox Deportes and Big Ten Network, all of which would be spun off into a new public company.