Bad news for Rupert Murdoch, who is facing another hurdle in his years long quest to take full ownership of Sky.
Culture Secretary Karen Bradley has announced that she is “minded-to-refer” 21st Century Fox’s £11 billion bid to take full ownership of the satcaster to the CMA (Competition and Markets Authority).
The CMA is now poised launch a six month investigation into the potential take over. The Secretary of State for Digital, Culture, Media and Sport is minded to make make the referral on two grounds: “media plurality” and “genuine commitment to broadcasting standards”. Fox’s stock price fell slightly following the announcement.
Concerns around media plurality were a known quantity, but the “broadcasting standards” line is new – and likely to come as a surprise to Murdoch and Fox execs. It’s notable that the referral is against the advice of OfCom, who in a stated: “while we consider there are non-fanciful concerns, we do not consider that these are such as may justify a reference in relation to the broadcast standards public interest consideration.”
Bradley went on to explain that her concerns around broadcasting standards related to Fox’s lack of adequate compliance procedures in place for the broadcast of Fox News in the UK. 21st Century Fox stopped broadcasting Fox News earlier this month; a move that was viewed as a cynical attempt to smooth the way for the takeover. Bradley said that this, coupled with Fox’s compliance history, did not allay her concerns.
“Third parties also raised concerns about what they termed the ‘Foxification’ of Fox-owned news outlets internationally. On the evidence before me I am not able to conclude that this raises non-fanciful concerns”, Bradley added. “However, I consider it important that entities which adopt controversial or partisan approaches to news and current affairs in other jurisdictions should, at the same time, have a genuine commitment to broadcasting standards here. These are matters the CMA may wish to consider in the event of a referral”.
Failures in corporate governance, which were in part responsible for derailing Fox’s previous attempts to acquire the 61% of Sky that they do not own, were also highlight by the Culture Secretary. “I agree that corporate governance issues at Fox raise non-fanciful concerns, but in my view it would be appropriate for these concerns to be considered further by the CMA”. A final decision on whether or not to refer the takeover bid will be made after further representations have been received from Fox and Sky.