Mon | Jul 16, 2018

Murdoch takeover bid for Sky delayed for extra scrutiny

Published:Friday | June 30, 2017 | 12:00 AM
Campaigners from the community-based organization Avaaz, wearing a mask of Rupert Murdoch, right, and Prime Minister Theresa May, stage a protest opposite parliament in London, Thursday, June 29, 2017.

Britain's government stalled Twenty-First Century Fox's takeover of the Sky pay television and broadband network Thursday after regulators said the deal could give Rupert Murdoch and his family too much influence over the country's media.

Culture Secretary Karen Bradley said Thursday that the deal "potentially raises public interest concerns" and that she is "minded to" send it to the Competition and Markets Authority (CMA) for further review.

Twenty-First Century Fox has two weeks to respond to issues raised by the communications regulator, Ofcom, before Bradley makes a final decision.

In a report on the transaction, Ofcom said the merged company would be Britain's third-largest source of television news, and its influence would be magnified because it also owns newspapers, radio stations and online outlets.

"The transaction may increase members of the Murdoch Family Trust's ability to influence the overall news agenda and their ability to influence the political process, and it may also result in the perception of increased influence," Bradley said.

Murdoch's New York-based media group is trying to buy the 61 per cent of Sky it doesn't already own, giving Twenty-First Century Fox easy access to Sky's 22 million customers in the United Kingdom, Ireland, Austria, Germany and Italy. Critics have charged that the £11.7-billion (US$15.2-billion) deal would give Murdoch too much power in the UK, because his company already owns two of the country's biggest newspapers, The Sun and The Times.

Despite the government's move to investigate further, shares in Sky rose over three per cent in London as investors seemed optimistic the deal would ultimately go through.

Buoying those hopes was the fact that Twenty-First Century Fox gave Ofcom assurances that it would protect the editorial independence of Sky News after the takeover. These promises may mitigate the public interest concerns, Ofcom said.

Also, Ofcom recognised that under Twenty-First Century Fox, Sky would remain a 'fit and proper' company to hold a broadcast licence. Bradley said she would not question this finding. That is important because several women who allege they were sexually harassed at US-based Fox News, said the takeover should be blocked because of corporate governance issues at the parent company.

"We have no clear evidence that senior executives at Fox were aware of misconduct before it was escalated to them in July 2016, after which action was taken," Ofcom said.

Twenty-First Century Fox said in a statement that a CMA review would last at least 24 weeks, and that in such an event "the transaction is expected to close by June 30, 2018".

An earlier attempt to buy Sky was thwarted by the 2011 phone-hacking scandal that rocked Murdoch's British newspapers and led to the closure of the 168-year-old News of the World tabloid.

A campaign group challenging the merger, Avaaz, compared the sexual-harassment scandal at Fox to phone hacking, in which journalists were alleged to have illegally tapped into the phones of public officials, crime victims and members of the royal family.

- AP