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Murdoch’s takeover bid for Sky plc to be investigated by UK regulators

Thursday, March 16, 2017 8:17
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Rupert Murdoch’s proposed takeover of Sky plc (LON:SKY) has been referred to regulators by the government to investigate anti-competition concerns.

Murdoch’s 21st Century Fox has put forward a £11.7bn bid to buy the 61% of Sky’s stake it does not already known but the deal has raised worries of giving the media mogul too much control over news output in the UK.

Culture secretary, Karen Bradley, told MPs she has issued a European intervention notice on the grounds of “media plurality and commitment to broadcasting standards” and has sent the proposal to Ofcom to review. In a statement to parliament, Bradley said she had received more than 700 representations about the deal from third parties, a majority of which supported intervention.

Ofcom has been given a 40-day timetable until 16 May to report back to the Secretary of State on its findings, including whether the Murdoch family would be a “fit and proper” owner of Sky following the phone-hacking scandal at his now defunct News of the World newspaper.

The regulator will explore whether Fox is committed to the meeting editorial standards, including accuracy and impartial news coverage. Bradley said she would expect Ofcom to look at her concerns about corporate governance, which she made clear in her original statement to the House of Commons on 6 March.

In reponse to a question from shadow culture secretary, Tom Watson, on whether the referal would give Ofcom the power to review issues such as corporate governance and phone hacking, Bradley said: “Ofcom is an independent regulator.”

She added: “It is for Ofcom to decide what evidence they want to look at. They are open to look at whatever evidence they feel is appropriate to enable them to make their decision.”

Former Labour leader Ed Miliband also questioned Bradley in parliament on whether the 40-day timetable was sufficient to conduct a “fit and proper” investigation. He noted that Ofcom’s review of Murdoch’s last attempt at full ownership of Sky in 2010 took several months. 

Bradley responded: “Ofcom have assured me they have the time and powers they need.”

The Competition and Markets Authority will also have a role in scrutinising the terms of the deal.  

In a statement, 21st Century Fox said it expected the deal to be approved. “We are confident that a thorough review of our track record over 30 years will underscore our commitment to upholding high broadcast standards, and will demonstrate that the transaction will not result in there being insufficient plurality in the UK.”

The proposed takeover would give Murdoch full control over Sky News. Murdoch already has full ownership of The Times, the Sunday Times and Sun newspapers and radio group TalkSport, under News Corp.

Opposing views…

Critics of the deal worry that Murdoch, who also owns Fox News in the US, will be able to influence the news agenda, possibly leading to the “Foxification” of Sky News.

Fox News, known for its right-wing views, has come under fire from Ofcom on several occasions as it is also broadcast in the UK. The watchdog accused a Fox News programme last year of breaching the UK code after a guest said Birmingham was a city “where non-Muslims just simply don’t go”.

Murdoch had previously attempted a takeover of the broadcaster in 2010 but withdrew his bid after a review by Ofcom criticised the conduct of his son James – then the chief executive of the family’s UK newspaper group and the chairman of Sky.

At the time, Ofcom found Sky remained a “fit and proper” owner of a broadcast licence under Murdoch but the political fallout that followed the regulator’s assessment of James Murdoch prompted his father to back out of his offer. 

James Murdoch subsequently stepped down as chairman of Sky and quit the UK newspaper business to run Fox from the US.

Last year, however, he was reappointed as chairman of Sky after winning support from the broadcaster’s biggest shareholder, Fox. If it weren’t for Fox, he wouldn’t have returned to the helm as more than 50% of shareholders voted against the move.

Sky’s shares were little changed following the latest news, rising 0.3% to 988.50p in afternoon trading. 

– Adds details of parliament statement, background, share price reaction –

Story by ProactiveInvestors


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