UK leans towards intervening in Fox’s acquisition of Sky

Bloomberg

The UK government said it is leaning toward intervening in 21st Century Fox Inc.’s proposed 11.7 billion-pound ($14.3 billion) takeover of Sky Plc, citing the potential impact on media plurality and broadcasting standards, and will make a final decision within 10 days. “I have concerns that there may be public-interest considerations — as set out in the Enterprise Act 2002 — that are relevant to this proposed merger that warrant further investigation,” Culture, Media and Sport Secretary Karen Bradley said.
Fox’s bid to take over Sky, in which it already has a 39 percent stake, was officially referred to European Union competition authorities on Friday. While the EU isn’t expected to intervene, the notification triggered a 10-day window for Bradley to decide whether to ask the UK’s communications regulator, Ofcom, to start its own investigation. “This is not an announcement of my final decision in relation to intervention, but an indication of what I am presently minded to do,” Bradley said. She said she plans to give a final decision in the week beginning March 13. Media billionaire Rupert Murdoch’s previous attempt to acquire Sky was thwarted in 2011 over a phone-hacking scandal at his newspapers. Murdoch’s News Corp. has since been split, with Fox owning the entertainment business, but opponents of the current proposal have continuing concerns about Murdoch having too much control over UK media.
UK opposition lawmaker Tom Watson, a vocal critic of the Murdochs at the time of the phone-hacking revelations, said the government should have referred the takeover to Ofcom “immediately and without equivocation.” “It is clear that Fox’s bid to take full control of Sky will significantly increase the size of the biggest media organization in the UK and further concentrate power in the hands of a dominant industry player,” Watson said in an emailed statement.
Bradley, in her statement, said her concerns were focused on issues of ownership and the impact on broadcasting standards. “The first public interest ground on which I am minded to intervene is media plurality,” she said. “That is, specifically, the need for there to be a sufficient plurality of persons with control of the media enterprises serving audiences in the UK”
People who run media enterprises need “to have a genuine commitment to attaining broadcasting standards objectives,” she said. Uncertainty over whether Fox will succeed in buying the rest of Sky has led traders to discount the UK satellite broadcaster’s stock. Sky declined 0.3 percent to 9.965 pounds at 2:30 p.m. in London, leaving the stock 7.3 percent below Fox’s offer of 10.75 pounds per share. Fox was little changed at $30.20 in New York.
Speaking at a conference in London on Thursday with Ofcom Chief Executive Officer Sharon White in attendance, Fox CEO James Murdoch, 44, made the case that changes in technology are presenting new opportunities that require media companies to combine their strengths, while also addressing the issue of media diversity.
“There is no other firm so committed in deeds to increase plurality in markets we operate in,” Murdoch said. Fox said it expects regulators to review the transaction thoroughly and that it looks forward to engaging with them. The company is “confident that the transaction will be approved based on a compelling fact set,” Fox said by email. Sky declined to comment.