The long-running saga over 21st Century Fox’s bid to acquire Sky appears to be approaching a conclusion after Culture Secretary Matt Hancock indicated he would permit the deal to proceed provided Sky News is sold to a suitable, independent buyer.
Fox first announced its £11.7 billion ($14.6 billion) offer in 2016. The bid was referred to a “phase two” investigation last June by former Culture Secretary Karen Bradley, despite earlier clearance from the European Commission.
Regulatory scrutiny intensified after an Ofcom report warned that a combined ownership including Sky News could increase Rupert Murdoch’s family’s influence over the UK news agenda and political process. In January, the Competition and Markets Authority (CMA) issued a provisional finding that Murdoch’s takeover of Sky was “not in the public interest.” The CMA’s review focused primarily on two concerns: media plurality and commitments to broadcasting standards.
On broadcasting standards, the CMA found no significant problems, citing the involved companies’ existing track records in the UK and the policies and procedures they have in place to meet regulatory requirements. However, echoing Ofcom’s analysis, the CMA raised serious concerns about the potential reduction in media plurality if the merger were allowed to proceed unchanged.
To address those concerns, the CMA suggested remedies intended to preserve plurality. Its preferred solution was the divestment of Sky News to a suitable buyer. Fox offered to sell Sky News to The Walt Disney Company as part of its proposed remedy.
“I agree with the CMA that divesting Sky News to Disney, as proposed by Fox, or to an alternative suitable buyer, with an agreement to ensure it is funded for at least ten years, is likely to be the most proportionate and effective remedy for the public interest concerns that have been identified,” Hancock said.
“The proposals include significant commitments from Fox. But there are some important issues on the draft undertakings which still need to be addressed.”
“They include Sky News’ long-term financial viability, its ability to operate as a major UK-based news provider; and its ability to take editorial decisions independently, ‘free from any potential outside influence’.”
Hancock made clear he has not ruled out blocking the takeover entirely if acceptable terms cannot be agreed. “I am optimistic that we can achieve this goal, not least given the willingness 21st Century Fox has shown in developing these credible proposals,” he added. “However, if we can’t agree terms at this point, then I agree with the CMA that the only effective remedy now would be to block the merger altogether. This is not my preferred approach.”
Fox is not the only contender vying for Sky. Comcast submitted a competing bid valued at £22 billion ($16.47 billion). Hancock said the Comcast proposal did not raise public interest concerns that would require intervention, and it has been cleared.
The government’s conditional approval, centered on ensuring Sky News remains financially secure and editorially independent under a suitable buyer, aims to balance the commercial dynamics of the takeover with the public’s interest in maintaining diverse and independent news sources in the UK.
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