21st Century Fox’s (21CF) attempt to buy pay-TV giant Sky was given approval to go ahead with the rider of adhering to strict conditions, the UK government is now satisfied that its criteria have now been met.
In a Parliamentary Statement assessing the respective bids for Sky from US cable giant Comcast and 21CF on 6 June 2018, UK Secretary of State Department for Digital, Culture, Media and Sport, Matt Hancock express no issue with the former’s bid but noted misgivings previously expressed by the UK Competition and Markets Authority (CMA) and broadcast regulator Ofcom regarding the latter’s.
Specifically, the CMA warned that if the deal went ahead as proposed by 21CF it would likely operate against the public interest by leading to the Murdoch Family Trust (MFT), which controls Fox and News Corporation (News Corp), increasing its control over Sky, so that it would have too much control over news providers in the UK across all media platforms including TV, radio, online and newspapers.
This, it said, would give it too much influence over public opinion and the political agenda. In particular, there were major concerns regarding the future of Sky News and over the last few months reports from the US suggested that 21CF was ready to abandon the news channel to get the deal over the line. The CMA concluded in line with its interim findings that the merger may not be expected to operate against the public interest on the grounds of a genuine commitment to broadcasting standards.
Hancock said in his statement that he agreed with this finding, adding that any such deal could proceed but only if he could be confident that the final undertakings ensure that Sky News remained financially viable over the long-term; was able to operate as a major UK-based news provider; and was able to take its editorial decisions independently, free from any potential outside influence. In essence this would mean 21CF selling off Sky News with Disney, in the process of buying a number of key 21CF TV and film assets, the most likely company to purchase the channel.
Now, after consultation with interested parties in the 21CF bid, Hancock says that his issues have now been resolved and he was now publishing updated undertakings offered by 21CF along with new undertakings offered by Disney for the divestment of Sky News to Disney. These include a commitment from Disney to operate and maintain a Sky News branded news service for 15 years rather than ten years; a restriction on Disney from selling Sky News for 15 years without the consent of the Secretary of State; an extension of the funding commitment from 21st Century Fox from 10 years to 15 years; an increase in the total funds available to Sky News, to at least £100 million per year, with operating costs protected in real terms; and a formal commitment from Disney to preserve the editorial independence of Sky News.
Under UK legislation, Hancock is required to consult formally for 15 days on the undertakings, which he proposes to accept. Views as to whether these proposals are sufficient to remedy the adverse plurality public interest concerns raised by this merger will be sought until 4 July 2018 when it is expected Hancock will make a final decision.
Commenting on the updated announcement, Sky said that it welcomed Hancock’s statement and noted that the UK approval process remained the only outstanding pre-condition prior to 21CF’s offer being put to its shareholders.