Gov’t minded to refer Fox’s Sky deal to watchdog

An influential UK politician has said she is “minded” to refer the proposed merger between 21st Century Fox and Sky to regulators over concerns about broadcasting standards.

Fox CEO James Murdoch

The UK culture secretary Karen Bradley previously said she intended to refer 21st Century Fox’s £18.5 billion (US$24.5 billion) takeover of Sky to the Competition and Markets authority on the grounds of media plurality.

An additional referral for broadcasting standards threatens to increase the deal’s regulatory scrutiny, and would come despite Ofcom’s initial claim that there were “no broadcasting standards concerns” to answer.

According to the government, a referral on one or both grounds would trigger a “full and detailed investigation” by the CMA over a six-month period.

Fox (then New Corp)’s previous attempt to take over the shares in European satcaster Sky ended in failure as revelations over a UK phone hacking scandal emerged.

Bradley’s latest position comes after Ofcom submitted additional evidence at the end of August in response to questions raised by the 43,000 representations received by the government over the summer.

“In light of all representations and Ofcom’s additional advice, I believe these are sufficient to warrant the exercise of my discretion to refer,” said Bradley in reference to question of broadcasting standards.

The culture secretary said that the legal threshold for a reference to the CMA is low and that Ofcom’s acknowledgement of “non-fanciful concerns” about broadcast standards means “the threshold for a reference on the broadcasting standards ground is met”.

Sky said in a statement that it was “disappointed” by the further delay, but would continue to “engage with the process” as the UK’s secretary of state reaches her final decision.

“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.”

UK broadcast regulator Ofcom published a ‘fit and proper decision’ in relation to Sky on June 29, but has since submitted two letters that provide further points of clarification to the Secretary of State, and added explanatory wording to two paragraphs to its initial decision document.

One point that Ofcom was asked to offer further advice on was the claim in its public interest report 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 we expressed our concerns”.

“Ofcom has now confirmed it considers this to raise non-fanciful concerns, but which are not sufficiently serious to warrant referral,” said Bradley yesterday. “I consider that these non-fanciful concerns do warrant further consideration.”

“The fact that Fox belatedly established such procedures does not ease my concerns, nor does Fox’s compliance history.”

Bradley said it would also be appropriate for “corporate government issues at Fox” – which were also dismissed by Ofcom as non-fanciful – to be considered further by the CMA.

At the end of August Fox pulled Fox News from the Sky platform in the UK, stating that it was “not in our commercial interest” to continue to providing the channel in the UK and claiming it received “only a few thousand viewers” in the UK.

Sky and Fox now have ten days to respond to Bradley. After these are received, the politician has said she would come to a final decision “as promptly as I can”.