Culture Secretary Karen Bradley has said she is now “minded” to refer the proposed takeover of Sky by 21st Century Fox to the competition watchdog both on media plurality and broadcasting standards grounds.
Bradley said she had changed her mind on a broadcasting standards referral after seeking further advice from communications regulator Ofcom following new evidence.
Fox controlling shareholder Rupert Murdoch is attempting to buy the remaining 61 per cent of Sky he doesn’t already own in a deal worth £11.7bn. According to Ofcom deal would give Sky/News Corp the third-largest total reach of any UK news provider (behind the BBC and ITN).
Addressing parliament today, Bradley said: “I am now minded to refer the merger to the CMA [Competition and Markets Authority] on the grounds of genuine commitment to broadcasting standards.”
Bradley said the “legal threshold” for referral to the competition watchdog is “low”, adding: “I have the power to make a reference is there is a risk, which is not purely fanciful, that the merger might operate against the specified public interests.”
Bradley said she had received 43,000 representations (of which 30 were substantive) about the takeover bid. Her decision to refer to the CMA on broadcasting standards goes against advice from Ofcom.
The MP for Staffordshire Moorlands said: “In its original report Ofcom stated that: ‘We consider that there are no broadcasting concerns that may justify a reference.’ At the time Ofcom appeared to be unequivocal.
“Following the additional representations, Ofcom has further clarified that: ‘While we consider there are non-fanciful concerns, we do not consider that these are such as may justify a reference in relation to the broadcast standards public interest consideration.’
“The existence of non-fanciful concerns means that, as a matter of law, the threshold for a reference on the broadcasting standards grounds is met. In light of all representations and Ofcom’s additional advice I believe these are sufficient to warrant the exercise of my discretion to refer.”
She added: “The first concern was raised in Ofcom’s public interest report that Fox did not have adequate compliance procedures in place for the broadcast of Fox News in the UK and only took action to improve its approach to compliance after Ofcom expressed concerns.
“Ofcom has now confirmed it considers this to raise non-fanciful concerns but which are not sufficiently serious to warrant referral. I consider that these non-fanciful concerns do warrant further consideration.
“The fact that Fox belatedly established such procedures does not ease my concerns, nor does Fox’s compliance history.”
Bradley said concerns about the “Foxification” of Fox-owned news outlets internationally were fanciful, but added: “I consider it important that entities which adopt controversial or partisan approaches to news and current affairs in other jurisdicatinos should at the same time have a genuine commitment to broadcasting standards here [in the UK].”
She said corporate governance failures at Fox did raise non-fanciful concerns and, again against Ofcom advice, said: “In my view it would be appropriate for these concerns to be considered further by the CMA.”
Fox now has ten working days to respond to Bradley’s “minded to” decision. After which time she will make her final decision on whether or not to refer the merger to the competition watchdog.
She said referral would prompt a full, six-month investigation by the CMA, but warned MPs that “such a referral does not signal the outcome of that investigation.”
Shadow Culture Secretary Tom Watson welcomed Bradley’s change of mind over broadcasting standards concerns and also criticised Ofcom.
“I think it’s the first time a minster in the current government has ever stood in the way of what the Murdoch’s want and frankly not before time – so well done,” he said.
“The statement does reflect a failure on the part of Ofcom. In the first report which said that there were no broadcasting concerns that would have prompted a reference they have since admitted that there are non-fanciful concerns and on that basis she had to refer the bid and she has done so.
“It should have been obvious to Ofcom, it certainly was to everyone on this side of the house, that concerns about the Murdochs were more than fanciful. After all it’s the Murdochs who have a long history of regulatory non-compliance and of corporate governance failure.”
In a statement, 21st Century Fox said: “Ofcom, the expert independent regulator on UK broadcasting, undertook a robust and rigorous review of our commitment to the Broadcast Code, concluding 21st Century Fox and Sky have records of compliance consistent with other comparable license holders, including the Public Service Broadcasters.
“Furthermore, in its advice to the DCMS [Department for Digital, Culture, Media and Sport dated August 25, 2017, Ofcom reiterated its position having reviewed new representations, stating: ‘We consider there are not sufficient concerns that may justify a reference in relation to the broadcast standards consideration.’
“We are therefore disappointed that the Secretary of State has chosen not to follow the unequivocal advice of the independent regulator, which is the expert body tasked with enforcing the Broadcast Code.
“As the correspondence between DCMS and Ofcom makes clear, we do not believe that there are grounds for the Secretary of State to change her previous position.
“21st Century Fox has engaged with the regulatory process relating to this transaction since the outset and will continue to do so.
“The proposed acquisition was originally announced in December 2016 and was formally notified to the European Commission (starting the overall formal review process on March 3,
“We are surprised that after independent regulatory scrutiny and advice, and over four months to examine the case, the Secretary of State is still unable to form an opinion. We urge the Secretary of State to take a final decision quickly.
“We look forward to engaging with the CMA on their in-depth review as soon as possible. Subject to any further delays in the decision-making process, we anticipate that the transaction will close by June 30, 2018.”
Picture: Parliament Live TV
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