London
Rupert Murdoch faces months of fresh scrutiny over how he runs his media empire as UK authorities embark on a wider probe of 21st Century Fox Inc.’s 11.7 billion-pound ($15.5 billion; Dh56.9 billion) pursuit of pay-TV company Sky Plc.
Culture Secretary Karen Bradley on Thursday said she has made a final decision to ask the nation’s competition regulator to investigate Fox’s commitment to broadcasting standards and whether its takeover of London-based Sky would give the Murdoch family too much sway in the country’s media.
The extra review adds more delay and costs to Fox’s purchase of the 61 per cent of Sky it doesn’t already own, Murdoch’s second attempt at the broadcaster he founded after a phone-hacking scandal at his newspapers derailed a 2010 bid. While the investigation opens the deal to more uncertainty, analysts see it as a necessary step toward probable approval.
“It’s very much making sure every base is covered, but it’s unlikely to make a big difference” as the deal will probably be approved, said Ian Whittaker, an analyst at Liberum Capital Ltd. in London. Asking for a deeper probe of both broadcasting standards and media plurality helps Bradley diffuse any political tension and weaken potential legal appeals from opponents, he said.
Sky shares were little changed, trading at 933 pence as of 11:26am in London, a 13 per cent discount to the offer price.
In separate statements, Fox and Sky said they would engage constructively with the CMA.
Fox said it hoped Bradley would respect the findings of the independent authority and reiterated its view that the deal’s close would be pushed to as late as June 30, 2018, as a result of the CMA review, which can last six months. That follows delays for the transaction, which was announced in December 2016, as a result of a snap UK election in June and additional review requested by Bradley from communications regulator Ofcom.
The announcement came hours before Bradley was due to deliver a keynote address at a conference in Cambridge attended by heavy-hitters in Britain’s broadcast industry including Fox Chief Executive Officer James Murdoch, who is also scheduled to speak Thursday.
Bradley had said Tuesday that she planned to send the deal to the CMA on both grounds, bucking communications regulator Ofcom and reversing her own earlier plan to refer it only over media-plurality concerns. She had given the companies time to respond before finalising the decision, but on Thursday she said that Fox and Sky had informed her that while they disagreed with her intention, they wouldn’t be making substantive comments.
Ofcom “took the utmost care” in its review and its advice was clear that a referral on broadcast standards wasn’t needed, the regulator’s CEO, Sharon White, said Thursday at the Cambridge event.
Harassment allegations
James Murdoch and fellow managers now face the prospect of months of interrogation over recent events at Fox News and past corporate governance failings at Murdoch media outlets. The phone-hacking scandal at News Corp. has garnered criticism from regulators before, and now sexual- and racial-harassment allegations at Fox News have given opponents ammunition to try to block a deal investors initially thought would sail through.
The takeover would give the Murdochs control of one of Europe’s most influential distribution platforms, widening New York-based Fox’s footprint and revenue streams and boosting its drama and sports content.
Opponents of Murdoch bid were emboldened by the additional review.
“The Murdochs have finally had to concede the investigation they dreaded. Now the CMA must use their extensive powers to dig up the Murdoch’s darkest secrets,” said Alex Wilks, campaign director at Avaaz, a political advocacy group that last month started a legal challenge of the deal. “The truth will stop this takeover.”
