Fox’s Sky purchase to face EU review in March soonest

Bloomberg

European competition authorities may
be formally notified of 21st Century Fox Inc.’s bid for the rest of Sky Plc in March at the earliest, setting off reviews of the $14.5 billion deal, according to a person familiar with the matter.
The companies’ filing to the EU allows regulators to check whether the deal might harm competition. It would also start a window of 10 working days during which the UK culture secretary must decide whether to refer the bid for scrutiny to the country’s communications regulator, Ofcom. The person asked not to be identified as the information is confidential.
Rupert Murdoch’s Fox bid this month for the 61 percent it doesn’t own of Sky, the UK’s largest pay-TV provider. The renewed pursuit comes as traditional media companies increasingly seek to combine content with distribution to fend off digital rivals including Netflix Inc. The deal spurred fresh complaints about potential risks to UK media plurality from opponents of the billionaire, whose first approach for Sky was derailed in 2011 by a phone-hacking scandal at his newspapers.
UK Culture Secretary Karen Bradley is facing pressure to have Ofcom review the deal on public-interest grounds from the opposition Labour Party and campaigners including Hacked Off, a media accountability advocacy group formed during the phone-hacking scandal. Speaking in the House of Commons on Tuesday, Bradley said she understands the concerns of the public and Parliament over the proposed takeover but cannot address them until she is formally notified.
Bradley told lawmakers she “will not be taking a break over Christmas” and will update them after the holiday.
Sky’s shares are trading at a discount to the 10.75 pound ($13.30) per share offer, as investors weigh regulatory and political risks and the time it may take to complete the deal. European competition authorities weren’t officially notified of Murdoch’s 2010 bid for Sky until more than four months after the offer was made public.
Representatives of Fox and Sky declined to comment. In a sign of confidence that the deal will go through, four non-executive directors of Sky together purchased almost 3,600 pounds worth of shares in the company Wednesday. Martin Gilbert, Matthieu Pigasse, Tracy Clarke and Andrew Sukawaty together bought 364 shares at 986.50 pence a share, according to a filing by Sky.

DECISIONS FOR BRADLEY
Bradley will probably refer the bid to Ofcom, according to Enders Analysis in London. The threshold for intervention is low; it’s the easier path to take and a referral doesn’t prejudge the outcome of an investigation by the regulator, analysts led by Alice Enders wrote in a report on Wednesday. Evan Harris, joint executive director of Hacked Off, said Fox’s bid for Sky makes it even more important for Bradley to also decide to move ahead with a second phase of an inquiry into the phone-hacking scandal, known as Leveson 2. The inquiry would address whether Fox Chief Executive Officer and Sky Chairman James Murdoch’s past conduct with regards to the phone-hacking scandal affects a corporate-governance requirement for Sky to hold a broadcasting license, known as the “fit and proper person test.”
“This means that for the next few months the culture secretary will be
waiting to make a decision on referring
the Fox bid to Ofcom as well as consid-ering whether to cancel the ‘Leveson 2’
inquiry,” Harris said.