Fox News concerns sees UK Government refer 21st Century Fox/Sky takeover to competition watchdog | Major Businesses | Business
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In a blow to its ambition to fully own pay-TV giant Sky, 21st Century Fox’s proposed takeover has been referred to the country’s Competition and Markets Authority (CMA) following new evidence raising concerns about broadcasting standards and plurality.

SKysportsTVrightsJThe long drawn-out bid process has seen a number of investigations by UK broadcast regulator Ofcom as to the worthiness of the second attempt by Rupert Murdoch to take total control of a company in which he has a 39.1% stake, a hugely controversial move given how the UK media sector has not yet fully revered from the phone-hacking scandal which engulfed the previous attempt to buy the hugely successful pay-TV operator.

On 26 August, UK Secretary of State at the Department for Digital, Culture, Media & Sport, Karen Bradley, confirmed that she had asked for further investigation from UK regulator Ofcom in relation to the proposed merger, over and above the advice that she had received at the end of June 2017, due to concerns regarding plurality of media ownership and broadcast standards issues.

Now furnished with the evidence from Ofcom, Bradley has told the UK Parliament that she is referring the transaction for a full six-month investigation by the CMA. Regarding media plurality, she confirmed that none of the new representations received from Ofcom had persuaded her to change her position to make a CMA referral. On the ground of concerns regarding broadcast standards, she said that the new Ofcom review had resulted in her being minded to refer the merger to the CMA on the grounds of genuine commitment to broadcasting standards.

Originally Ofcom had not found any concerns regarding broadcasting standards but after the new investigation it said “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”. To Bradley, the existence of non-fanciful concerns means that - as a matter of law - the threshold for a reference on the broadcasting standards ground is met. Bradley reminded the House that she had the power to make a reference if she believed there was a risk - which is not purely fanciful - that the merger might operate against the specified public interests.

Key to the decision was a perceived lack of procedures for broadcast compliance in the UK for Fox News, 21st century Fox’s controversial and highly partisan news channel. Bradley noted that the first concern was raised in Ofcom’s public interest report outlining that Fox did not have adequate compliance procedures in place for the broadcast of Fox News in the UK and only took action to improve its approach to compliance after Ofcom expressed concerns. Bradley said that the fact that Fox belatedly established such procedures did not ease her concerns, nor did Fox’s compliance history.

On 29 August, in what was seen my many observers as a tactic to ease the bid, Fox News was pulled from Sky’s UK grid. The broadcaster did say that its actions were as a result of the channel no longer being a viable option in the UK as the costs of distributing the US network meant it was not in 21st Century Fox's commercial interests to continue its offer.

Bradley added that she considered 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, she said, were matters the CMA may wish to consider in the event of a referral.

In her statement, the Culture Secretary also expressed what she said was a proper concern as to whether Fox will have a genuine commitment to attaining broadcasting standards objectives. She was not confident that weaknesses in Fox’s corporate governance arrangements were incapable of affecting compliance in the broadcasting standards context. She remarked that she had outstanding non-fanciful concerns about these matters and was of the view that they should be further considered by the CMA.

Bradley concluded by reminding parties concerned in the move that they had ten working days to respond to her announcement and that following receipt of any representations from the parties she would aim to come to her final decision in relation to both grounds as promptly as she could.