UPDATE with Fox response: Rupert Murdoch’s recent attempt to acquire the long-coveted remainder of pay-TV giant Sky looks set to face further delay as the UK government continues to mull over whether the deal should be subjected to a full competition probe.
On Thursday morning, culture secretary Karen Bradley told the House of Commons that she was “still minded” to refer 21st Century Fox’s bid to take full ownership of Sky to the Competition and Markets Authority (CMA) on media plurality concerns but not on the grounds of “commitment to broadcasting standards” and that she needed more time to review the deal.
“Having carefully reviewed the party’s representations, and in absence of further proposed undertakings, I am still minded to refer on the media plurality grounds and still minded not to accept the undertakings in lieu of a referral,” Bradley told Parliament.
She said that she needed more time to review the deal and needed to consider new evidence before taking a final decision on whether the acquisition should be subjected to a full competition probe and this could come “in coming weeks” or after Parliament’s summer recess.
Last month, Bradley said she intended to refer Fox’s £11.6B ($14.6B) bid to acquire the 61% of Sky which it does not already own for deeper investigation and gave a July 14 deadline for companies and other parties to weigh in. Since then, the minister said she had received more than 10,000 responses in the latest consultation.
“There has not been time to consider all the representations and I am not in a position today to make my final decision on referral,” she said. “I expect I will be in a position to come to a final decision on referral – including in respect of the broadcasting standard ground – in coming weeks.”
She added: “I may make a decision over the course of the summer recess. But it may take longer.”
Bradley said that “unless new evidence from other representations changes my mind in the coming weeks” it was likely the deal would be referred to CMA based on “at least one ground – media plurality.”
CMA reviews can take up to six months to complete, meaning Murdoch’s long-awaited takeover of Sky would likely be completed in 2018. Fox will of course want a swifter decision on the deal as it’s on the hook to pay a £170M ($219M) dividend to shareholders if the deal doesn’t complete by the end of the year. If it never comes to fruition, Fox will have to pay Sky £200M ($258M).
Last week, Fox chief exec James Murdoch and co-chairman Lachlan Murdoch wrote a letter to Bradley saying that any delay would paint a bad picture of the UK in light of Brexit, signalling the country wasn’t as “open for business” as it claims to be.
Here’s Fox’s statement from today:
“21st Century Fox (21CF) notes today’s statement by the Secretary of State for Digital, Culture, Media and Sport that she continues to consider the representations that have been made before she makes her decision on 21CF’s proposed acquisition of the remaining shares of Sky.
“We welcomed the recent statement by the Secretary of State that ‘Ofcom is unequivocal’ regarding 21CF’s genuine commitment to broadcasting standards, following advice from the independent regulator which found ‘there are no broadcasting standards concerns which may justify a reference by the Secretary of State to the Competition and Markets Authority.’ For over 25 years, 21CF and Sky have been proud broadcasters of good standing in the UK, a responsibility we take very seriously. We also welcomed Ofcom’s decision of 29th June that Sky would remain ‘fit and proper’ to hold a broadcasting licence after this proposed combination.
“In respect of the media plurality public interest consideration, we have proposed comprehensive undertakings to address the points raised by Ofcom. We were pleased Ofcom concluded that these undertakings to maintain the editorial independence of Sky News would mitigate any concerns around media plurality. Consequently, we are disappointed that the Secretary of State remains minded to refer on plurality.
“We respect the importance of regulatory scrutiny, and we continue in our commitment to work constructively with authorities as we have done since this process began. In light of the transaction’s benefits to the UK creative economy, we would urge the Secretary of State to complete the regulatory process expeditiously. 21CF has believed in Sky for over 25 years, and together we have been passionate supporters of the UK creative industries, and built one of the world’s most distinctive brands. Combining 21CF and Sky would create a global powerhouse well positioned to deliver the very best in content and viewing experiences for customers, while securing the UK’s place as a global player in the creative economy.”