As expected, UK regulator Ofcom has been instructed to investigate 21st Century Fox’s £11.7B ($14.5B) bid to acquire the 61% share of pay-TV giant Sky which it does not already own. Moments after Rupert Murdoch’s company formally asked the European Commission to approve the takeover on March 3, the British government said it was likely to scrutinize the acquisition to assess issues of media plurality.
Today, Britain’s Secretary of State for Culture, Media and Sport, Karen Bradley, issued a European intervention notice requesting Ofcom to report by May 16 on the effects of the proposed transaction on the public interest. Bradley has asked Ofcom to consider the matter with regard to both plurality and commitment to broadcast standards.
Ofcom today published a guidance note setting out the process and timetable for preparing its report and has also published an invitation to comment via written submissions by March 30.
Fox issued a statement in response to the news, saying:
“21st Century Fox looks forward to working with UK authorities in their reviews of our proposed transaction to combine with Sky. We are confident that a thorough review of our track record over 30 years will underscore our commitment to upholding high broadcast standards, and will demonstrate that the transaction will not result in there being insufficient plurality in the UK. The media market has changed dramatically in recent years, as has our business. We believe our proposed £11.7 billion investment will benefit the UK’s creative industries. We look forward to continuing to work with all stakeholders and are confident that the transaction will be approved.”
Ofcom has an ongoing duty to be satisfied that the holders of broadcast licenses are fit and proper to hold such licenses. The public interest test that Ofcom has been asked to make and the fit and proper test are separate legal processes. March 30 is also the deadline for submissions in relation to fitness and propriety.
The Murdochs have been down the fit and proper path before. In 2011, the UK hacking scandal forced then-News Corp to scrap a deal to acquire the rest of Sky, a stake long-coveted by Murdoch Sr. Then, almost exactly five years ago today, Ofcom started a probe into whether James Murdoch (then BSkyB Chairman) and News Corp were fit and proper persons to own a broadcast license. Ultimately, Sky passed the test but Ofcom was critical of the younger Murdoch who had by that time stepped down as chairman of BSkyB. He’s now been Chairman of Sky for close to a year.
With regard to plurality, Fox and the media landscape are very different from 2010 when the initial bid to acquire Sky (then BSkyB) was attempted. 21st Century Fox is a content-focused business that doesn’t own newspapers and is legally independent from the new(ish) News Corp.
Sky said this past December it had reached a deal with Fox for the remaining stake on an offer price for £10.75 per share in cash. They expect the transaction to close by the end of this year.