U.K. Gets Tougher on Murdochs as CMA Readies for Lengthy ProbeBy
Government is ‘minded to’ reject Fox offer of editorial board
Fox has until July 14 to address concerns or face probe
A six-month Competition and Markets Authority probe of 21st Century Fox’s bid for Sky Plc looks inevitable after Culture Secretary Karen Bradley said she was "minded to" reject a proposal aimed at maintaining the editorial independence of Sky News.
The U.K. is inclined to refer the 11.7 billion-pound ($15.2 billion) bid to the Competition and Markets Authority for a deeper investigation into the growing impact of the Murdoch family on media plurality, Culture Secretary Karen Bradley said Thursday in a statement in the House of Commons. The government’s outright rejection of Fox’s offer to set up a separate editorial board sets the merger on a different course to Rupert Murdoch’s previous effort to acquire Sky in 2010, where the government similar proposals were on course to be approved before revelations of phone-hacking emerged.
Rejecting an offer in advance of the decision "suggests the government is keen to be taking a firmer line this time around," Becket McGrath, an antitrust lawyer at Cooley LLP in London, said. A "CMA second-phase review looks inevitable."
Bradley gave Fox until July 14 to strengthen proposals it’s made to ensure editorial independence at Sky News as the company attempts to avoid a probe.
Sky shares rose as the market decided that Bradley raised no fundamental issues that would stop Murdoch from completing the purchase.
Sky said it welcomed Bradley’s decision.
Fit and Proper
The company “will continue to engage with the process as the Secretary of State reaches her final decision,” it said in a Regulatory News Service statement. “In the meantime, Sky welcomes today’s announcement of Ofcom’s decision that Sky would continue to be a fit and proper holder of its broadcast licenses” under 21st Century Fox’s full ownership.
The opposition Labour Party questioned Bradley’s decision, saying it wasn’t a surprise, and that the takeover should be rejected because of actions at other Murdoch-controlled properties.
“Referring the bid to a phase two inquiry by the CMA is the government doing just the bare minimum,” Tom Watson, the shadow secretary of state. “If the government now accepts further undertakings in lieu instead it will throw the integrity of this process into question. ”
An in-depth review by the U.K.’s antitrust watchdog would lower the chances that the deal completes this year and would spell a further period of regulatory uncertainty for the bid. The CMA would have up to six months to investigate the takeover and report back their findings, with the final decision resting with Bradley.
"At the end of all this, the CMA’s report is just advice and the secretary of state still takes the decision so in some ways you’re just kicking the can down the road," Stephen Smith, a partner at Bristows LLP, said. “It is theoretically possible the secretary of state could ignore the CMA’s advice, but I think she has been very clear that they would follow the advice of the independent regulator and see it as a judicial process."