UK government refers Sky takeover to regulators

The UK government has formally referred 21st Century Fox’s planned £11.7 billion (US$14.5 billion) takeover of the 61% it does not already own of Sky to regulators.

Speaking in the House of Commons yesterday, culture secretary Karen Bradley said that it was “wholly appropriate” to seek comprehensive advice from broadcast regulator Ofcom on public interest considerations, and from the Competition and Markets Authority (CMA) on jurisdiction issues.

Ofcom and the CMA each now have 40 working days to prepare and provide reports, meaning they will be due in by Tuesday May 16. Bradley will then make a decision on whether the merger can proceed.

Ofcom previously carried out a test of whether Sky should hold a broadcast licence in 2011 at the height of the phone-hacking scandal that scuppered the bid by News Corp to take control of BSkyB (the identity of the pre-Europe-merged Sky), as the pay TV operator then was.

While Sky was cleared, the regulator criticised now-Fox CEO James Murdoch. However, it fell short of stating that he was not a fit and proper person to hold a broadcast licence.

Bradley said she has issued a European Intervention Notice on the grounds of media plurality and commitment to broadcasting standards, and has written to the parties, Ofcom and the CMA informing them of her decision.

The news comes after Bradley said on March 6 that she was “minded” to refer the takeover to Ofcom as she believed there to be public interest considerations that would warrant further investigation.

“Since my ‘minded to’ decision, I have received just over 700 representations from third parties, the vast majority of which supported intervention,” said Bradley this morning.

“A number of these representations called for me to create a new public interest consideration, which would require a fit and proper assessment of the parties to the merger, to take place as part of the intervention process.”

Bradley said that she had carefully considered adding ‘fit and proper’ as a new public interest consideration in the Enterprise Act – which is used to consider issues of media plurality – but concluded that this is a matter that “quite rightly sits with Ofcom”.

“On Monday this week Ofcom announced that it will conduct its fit and proper assessment at the same time that it would consider any public interest test in response to my decision to intervene in the merger,” said Bradley.

“This means Ofcom will conduct its assessment within the 40 working days it has to report to me on the public interest I’ve specified in the intervention notice.”

A group of UK cross-party politicians, led by former Labour leader Ed Miliband, called for Ofcom to launch a review into James Murdoch’s suitability to hold a UK broadcasting licence in February.

Sky and 21st Century Fox reached terms of a takeover pact in December, agreeing a deal that will value the pay TV operator at £18.5 billion.