While in the US, 21st Century Fox has been talking about selling off some of its content businesses to Disney (see separate story in this issue) much of the UK coverage this week around the company has been about machinations to acquire 100% of Sky across Europe.
The £11.7 billion bid for the 61% of shares which 21st Century Fox does not hold, has fallen foul of the Culture Secretary in the current government, who has referred it to the Competition and Markets Authority. This week two new developments occurred, firstly that the Telecoms Regulator Ofcom, ruled that some of the programs that Sky has shown in the past breached impartiality rules embedded in broadcasting law, and secondly 21st Century Fox made it clear that it cannot promise to keep Sky news as it is, or in the UK, if the deal does not go through.
The Ofcom report was really just for completeness. Ofcom has always said there are no grounds for refusing the takeover deal, but many members of the government wish there were good grounds, and want to distance themselves from the Murdoch family that has wielded political influence through owning 21st Century Fox for multiple decades. So Ofcom quite rightly mentioned that it had upheld some complaints directed at Fox News, an import from the US, directly from the parent company, which is known for radical views and a lack of balance in its programming. That channel was taken off air back in August, but Ofcom wanted everyone to understand that it is not pro-Murdoch, it is just doing its job properly, and thought it would show the kind of consideration that is needed to blot the copybook of a UK broadcaster.
There were two instances, one which related to the Manchester Arena terrorist bombing and another about Donald Trump’s executive order to restricted travel to the US from seven majority-Muslim countries.
On their own these complaints being upheld do not really present a substantial hurdle to the takeover. While the Competition and Markets Authority (CMA) is being asked to investigate 21st Century Fox’s commitment to broadcasting standards, two breaches from a channel that has been pulled hardly constitutes a merger obstacle.
But it warranted a reaction from 21st Century Fox, which said in response that the CMA should not in its assessment simply assume the ‘continued provision of Sky News’ and its current contribution to media plurality.” This was seen as a shot across the bows of the CMA, that one of the top three news sources in the UK could close down or change dramatically, if Murdoch does not get his way, and the merger goes ahead.
Sky News is a 24-hour news channel available in 127 countries. Its coverage is well-respected, unlike Fox News.
Effectively this is a way of the Murdoch family suggesting that if it does not own Sky, it would have less commitment to the UK. In the backdrop of Brexit, it might just mean that Sky would stop Sky News being made in the UK. Neither Germany nor Italy has made any fuss whatsoever over 21st Century Fox buying Sky in those countries.
Sky came into being when Murdoch applied successfully for one of the two original satellite DTH licenses in the UK some 34 years ago, and then later these two companies merged to form BSkyB and went public, leaving Murdoch interests holding initially a third and eventually 39% of the merged company. Murdoch then acquired the German and Italian DTH operations separately and merged them into Sky to create the largest pay TV operation in Europe, ahead even of Liberty Global in total TV subscribers.