CMA fumbles Sky-Fox decision based on past, not future

A verdict of “not in the public interest” has been stamped on 21st Century Fox’s proposed takeover of Sky in the UK, by the CMA (Competition and Markets Authority). The investigation should never have made it onto CMA desks in the first place and, as expected, the regulatory body has missed the mark. Why is the CMA so intent on distancing itself from its wiser sister in broadcasting and telecommunications regulations, Ofcom?

Fox’s current 39% stake in Sky already yields significant influence by the Murdoch empire over the flavor of news reports reaching consumer screens and newspapers. Increasing this to 100% would not dramatically change the face of Sky, something the CMA disagrees with on the grounds of media plurality – a conclusion reached while clinging on to outdated opinions from the Leveson phone-hacking inquiry some seven years ago.

The CMA report finds that TV, radio, newspapers and online news outlets owned by the Murdoch Family Trust reach one third of UK households – more than 9 million homes. Admittedly, this is higher than almost every other news outlet, yet the BBC and ITV are the two exceptions to this rule – gaining access all area passes without question. Would the same rules apply to an investigation of a major social media takeover? Platforms such as Facebook arguably hold more power in political influence today than any of the traditional news outlets.

Ofcom has cleared the deal and went on record saying there were no grounds for refusing the takeover, although it took action against complaints directed at Fox News by taking the somewhat radical channel off air last August. Clearly Ofcom is not pro-Murdoch, rather doing its best to apply a balanced approach to a political minefield.

The future of Sky News, a non-profitable entity, now hangs in a state of limbo amid Disney in turn taking over 21st Century Fox. Disney CEO Bob Iger claims the company is committed to Sky News, but spinning off or selling the news arm is clearly in Disney’s interests, a solution the CMA has proposed in order to green light the Sky-Fox deal. The other two proposed options are to insulate Sky News from Murdoch family influence or block the deal.

If Disney can invent a way to insulate Sky News within ABC News, without this also being viewed as a threat to media plurality, the CMA would be back to the drawing board. Failing this, Disney will not allow Sky News to stand in the way of acquiring Europe’s top pay TV operator – plowing Disney’s path to a content empire.

Meanwhile, broadcasting standards, should the deal go ahead, were found not to fall foul of public interests, according to the CMA.

Chairwoman of the CMA’s independent investigation group, Anne Lambert, said, “Media plurality goes to the heart of our democratic process. It is very important that no group or individual should have too much control of our news media or too much power to affect the political agenda.”

21st Century Fox responded in a statement, “We welcome the CMA’s provisional finding that the Company has a genuine commitment to broadcasting standards and the transaction would not be against the public interest in this respect. Regarding plurality, we are disappointed by the CMA’s provisional findings. We will continue to engage with the CMA ahead of the publication of the final report in May. We also note that the CMA has elected to avail itself of the statutory 8-week extension, moving its deadline for a final decision to May 1, 2018. We anticipate regulatory approval of the transaction by June 30, 2018.”