Published: Wed, September 13, 2017
Economy | By Guillermo Lane

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

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

Karen Bradley, the Secretary of State for Culture, Media and Sport, says she is "minded to" refer 21st Century Fox's £18.5bn takeover of Sky plc, the owner of Sky News, to competition watchdogs on grounds of broadcasting standards.

In a statement, a spokesman for Sky said: "We are disappointed by this further delay and that the Secretary of State is now minded to refer the proposed acquisition to the CMA in relation to broadcasting standards despite Ofcom, as the independent broadcast regulator, maintaining its advice that there are not sufficient concerns to justify such a reference".

"The fact that Fox (NASDAQ:FOX) belatedly established such procedures does not ease my concerns, nor does Fox's compliance history", said Bradley.

MPs from across political parties, including former Labour leader Ed Miliband, had called for a CMA probe into the company's broadcasting standards in a letter last month.

On corporate governance failures, Ofcom felt concerns were "non-fanciful" in respect of the broadcasting standards ground but felt these concerns do not warrant a reference but Bradley felt it would be appropriate for these concerns to be considered further by the CMA.

While the blockbuster deal has already raised concerns about the influence of the Australian-born United States tycoon over Britain's media landscape, industry observers are also anxious that the controversial reporting style of Murdoch's Fox News channel could be adopted by Britain's Sky News. 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.

"These are matters the CMA may wish to consider in the event of a referral", Bradley said.

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Britain's culture minister said Tuesday that she was leaning toward asking the country's competition regulator to carry out a more detailed review of a bid by Rupert Murdoch's 21st Century Fox to take full control of the British satellite television giant Sky.

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. She was not confident that weaknesses in Fox's corporate governance arrangements were incapable of affecting compliance in the broadcasting standards context.

Fox and Sky now have 10 working days in which to respond to Ms Bradley's statement. "On the evidence before me, I am not able to conclude that this raises non-fanciful concerns".

Shares in Sky closed down 1.6% at 937.00 pence Tuesday.

On 29 August in what was seen my many observers as a tactic to ease the bid, Fox News was pulled from Sky's United Kingdom grid.

But Bradley, who has remained United Kingdom culture secretary in May's new government, has been seen as being under pressure to not wave the deal through given that the topic of the Murdochs and their political power has been a hotly discussed topic in Britain.

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