Karen Bradley today confirmed that she will send Rupert Murdoch’s £11.7billion bid to buy Sky to regulators.
The Culture Secretary said she has now made a final decision to refer the controversial bid to Ofcom and the Competition and Markets Authority amid concerns about the Murdoch family’s influence over the UK media.
Earlier this week she said she was ‘minded’ to order the reviews.
Culture Secretary Karen Bradley (pictured in the Commons today) said she has now made a final decision to refer the bid to the monopolies watchdog
Rupert Murdoch’s £11.7billion bid to buy Sky is facing major delay due to the inquiries
The £11.7billion takeover bid has been met with fierce opposition from senior Labour figures
In a reversal of her previous position, Mrs Bradley said on Tuesday the probes would cover the potential risks to broadcasting standards.
A first round review of the deal before the summer cleared Fox on a ‘fit and proper person’ and ‘broadcasting standards’ tests, but warned that putting Sky News under the control of a firm which owns major UK newspapers was potentially a problem.
Ms Bradley told MPs in July that she was delaying a final decision after receiving more representations.
However, today she announced that the referral to regulators is set to go ahead. There will be a 10 day period for Fox and Sky to make a last ditch appeal.
‘I can confirm that none of the representations received have persuaded me to change my position. Accordingly, I can confirm my intention to make a referral on the media plurality ground to the CMA,’ Mrs Bradley said.
She added: ‘I have taken careful account of all relevant representations and Ofcom’s advice and have, today – as required by the legislation – written to the parties to inform them I am now minded-to-refer the merger to the CMA on the grounds of genuine commitment to broadcasting standards.’
Mrs Bradley said she was persuaded a full review was needed ‘in spite of, not because of’ a huge campaign by left-wing group 38 Degrees, which has been bombarding her and other MPs with emails demanding the takeover be blocked.
FOX-SKY DEAL: WHAT HAPPENS NEXT?
In July Karen Bradley delayed her final decision whether to send out Fox’s bid to buy Sky for a full review.
An initial Ofcom probe the previous months raised concerns about competition in UK news if 21st Century Fox is allowed to buy Sky outright.
The Culture Secretary said today she is once again ‘minded’ to send the deal out for a full review.
The review will now cover concerns about broadcasting standards, as well as media plurality.
Mrs Bradley’s statement triggers a 10-day process for Fox and Sky to try to answer the concerns raised by Ofcom.
Going ahead will mean a full public consultation on the deal by regulators.
Mrs Bradley said the first concern was around Fox’s compliance procedures for the broadcast of Fox News in the UK, noting the company only took action to improve its approach after Ofcom expressed concerns.
Ms Bradley said: ‘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.
‘Ofcom was reassured by the existence of the compliance regime which provides licensees with an incentive to comply.
‘However, it is clear to me that Parliament intended the scrutiny of whether an acquiring party has a ‘genuine commitment’ to attaining broadcasting standards objectives to happen before a merger takes place.’
Ms Bradley said concerns were also raised about the ‘Foxification’ of Fox-owned news outlets internationally.
She said: ‘On the evidence before me I am not able to conclude that this raises non-fanciful concerns.
‘However, I consider it important that entities which adopt controversial or partisan approaches to news and current affairs in other jurisdictions should, at the same time, have a genuine commitment to broadcasting standards here.
‘These are matters the CMA may wish to consider in the event of a referral.’
Ms Bradley said Ofcom had concluded concerns over corporate governance failures do not warrant a referral, adding: ‘I agree that corporate governance issues at Fox raise non-fanciful concerns, but in my view it would be appropriate for these concerns to be considered further by the CMA.
‘I agree with the view that, in this context, my proper concern is whether Fox will have a genuine commitment to attaining broadcasting standards objectives.
‘However, I am not confident that weaknesses in Fox’s corporate governance arrangements are incapable of affecting compliance in the broadcasting standards context.
‘I have outstanding non-fanciful concerns about these matters and I am of the view that they should be further considered by the CMA.’
Broadcasting giant Sky, which is listed on the FTSE 100 Index, saw its shares fall 3 per cent after the announcement.
Nearly 43,000 people bombarded Ms Bradely over the summer about the £11.7billion bid, with many warning that Sky would become too Right-wing if the UK broadcaster was allowed to become part of Mr Murdoch’s 21st Century Fox empire.
Just 30 of those messages contained ‘substantive’ information that was useful to her decision, Miss Bradley said.
Most were orchestrated by lobby groups such as the New York-based Avaaz Foundation and 38 Degrees
Ms Bradley said in July that she could reach her final decision during the summer recess – meaning the controversial decision could be taken while MPs are away from Westminster.
Shadow culture secretary Tom Watson welcomed the news earlier this week.
‘The Secretary of State has taken her responsibilities seriously, and I give her credit for that,’ he said.
‘I give her credit, too, for listening to the evidence before her, including new evidence submitted after she announced her initial decision, and for changing her mind.
‘I welcome her decision – or, I should say, the fact that she says she is ‘minded to’ make this decision – to refer the bid on broadcasting standards grounds as well as on media plurality grounds.
On Tuesday shadow culture secretary Tom Watson welcomed the news that the minister was ‘minded’ to refer the deal, praising Mrs Bradley for ‘looking at the evidence’
Ed Miliband, pictured speaking in the Commons on Tuesday, has been urging ministers not to do a ‘grubby deal’ with the Murdochs
‘This is the first time a minister in the current government has ever stood in the way of what the Murdochs want, and frankly it’s about time. Well done.’
In a statement today, 21st Century Fox said it was ‘disappointed’ by the announcement.
’21st Century Fox has engaged with the regulatory process relating to this transaction since the outset and will continue to do so,’ the statement said.
‘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, 2017).
‘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.’
Fox previously urged the government not to ‘bow to political pressure’ from Ed Miliband and unjustly block their bid to control Sky.
The £11.7billion takeover bid has been met with fierce opposition from the former Labour leader who has urged ministers not to ‘do a grubby deal’ with the Murdochs.
But in a furious riposte over the summer, Fox accused Mr Miliband of unfair and ‘blatant form of political interference’ in trying to derail the proposed merger.
It urged Ms Bradley to dismiss unfair attacks against it by Labour politicians.
WHAT WILL MURDOCH AND FOX OWN IF THE DEAL IS ALLOWED?
In 2013, following the closure of the News of the World, the media mogul split his businesses and Fox then acquired the Sky stake.
The New York-based company now owns a 39 per cent stake in Sky.
Sky has 22million customers across five countries – the UK, Ireland, Germany, Italy and Austria.
It has annual revenues of more than £11billion and is Europe’s leading investment of television content.
The company has a programming budget of £4.9billion. It paid £4.2billion for the rights to show Premier League football for three years from the 2016/17 season.
It also has a deal with HBO – a huge network in the US – to exclusively show a number of television series, including Game of Thrones.
Sky’s revenues rose by seven per cent to nearly £12bn earlier this year.
Mr Miliband has since joined forces with other MPs including sole Lib Dem leadership contender Sir Vince Cable to claim that Ofcom made ‘fundamental failures’ in its investigation and calling for a full CMA inquiry into the deal.
When the Culture Secretary said a damning initial report by Ofcom raised ‘persuasive’ concerns Fox said it was ‘disappointed’ at the prospect of further delay.
The entertainment giant vowed to press ahead and close the deal by June 30 next year.
If the deal eventually goes ahead it would create Britain’s third biggest news provider, behind only the BBC and ITN. It would bring together the Sun and Times newspaper groups with the Sky News TV channel.
In her ‘minded to’ decision in June, Ms Bradley said: ‘This potentially raises public interest concerns because, in Ofcom’s view, the transaction may increase members of the Murdoch Family Trust’s ability to influence the overall news agenda and their ability to influence the political process and it may also result in the perception of increased influence.’
WHY DID MURDOCH’S BID TO BUY SKY FAIL LAST TIME
What happened in 2010?
An investigation was launched the last time Rupert Murdoch’s organisation wanted to take over Sky because News Corp, 21st Century Fox’s then parent company, owned the Times and the Sun.
Now, the newspaper assets and the film and television studios are two separate companies, meaning technically there are no longer concerns about media ownership in the UK.
But, because both companies have the same owner, there may still be concerns raised.
The 2010 deal ultimately collapsed for political reasons linked to the phone hacking scandal, not because it fell foul of regulators.
Why are people concerned?
As part of its role, Ofcom must ensure that holders of broadcast licences are ‘fit and proper’ – and some politicians and campaigners have questioned whether Murdoch and his family fit the bill since the phone-hacking scandal exploded in 2011.
Murdoch has held a unique position in Britain in years gone by, with former prime ministers such as Tony Blair and David Cameron lining up to secure the blessing of the media mogul and the backing of his newspapers. Critics say this has given him too much say over public and political life in Britain.
The phone-hacking scandal prompted Ofcom to investigate whether Sky was still a fit and proper broadcast licensee due to its links to James and Rupert Murdoch. James Murdoch was at the time a former CEO and chairman of Sky while Rupert Murdoch was linked due to his role at biggest shareholder News Corp.
While it found that James Murdoch ‘repeatedly fell short of the conduct to be expected of him’ during his time running News Corp’s newspaper business, it did not conclude that he had deliberately engaged in any wrongdoing.
Sky was found to be fit and proper. The test is an ongoing requirement facing all broadcast licensees, and lawyers said they did not expect it to feature in any new Ofcom probe.