Economy

In blow to Murdoch, UK refers Fox bid for Sky to regulator

In blow to Murdoch, UK refers Fox bid for Sky to regulator

The publication of letters between Karen Bradley and the media regulator show the culture secretary was determined to ask their competition counterpart to look into the Murdochs' commitment to broadcasting standards as part of its investigation into 21st Century Fox's £11.7bn bid to take over Sky.

Bradley said that because of submissions she had received over the summer, "I am now minded to refer the merger to the (regulator) on the grounds of genuine commitment to broadcasting standards".

The scope of the planned CMA referral surprised investors, given Ms Bradley had initially said she was inclined to confine the review to questions of media influence.

She said some representations contended that Ofcom did not adequately take into account Fox's approach to broadcasting in worldwide jurisdictions - for example, the United States and Australia - citing examples of "alleged biased, divisive and grossly inaccurate reporting".

"I have the power to make a reference if I believe there is a risk - which is not purely fanciful - that the merger might operate against the specified public interests", she said.

"We urge the secretary of state to take a final decision quickly", Fox said, adding that the deal, announced in December 2016, was now likely to be completed by June 30, 2018, "subject to any further delays in the decision-making process".

Ms Bradley said she will give Fox 10 days to offer feedback on her "minded-to" decision on broadcasting standards, before proceeding with the CMA referral.

Turning to the debate about possible corporate governance failures, Bradley said that Ofcom stated in its latest correspondence "that these raise non-fanciful concerns in respect of the broadcasting standards ground".

Bradley also asked Ofcom to respond to representations that argued that Fox's supposedly tougher new corporate governance measures had failed. However, I am not confident that weaknesses in Fox's corporate governance arrangements are incapable of affecting compliance in the broadcasting standards context.

More news: GOING ELECTRIC | China mulls petrol vehicle ban

British authorities have increased scrutiny of the impending deal following several complaints raising concerns that the Fox News parent company is not fit to own Sky News.

Sky shares dropped by roughly 2% in London.

I have outstanding non-fanciful concerns about these matters and I am of the view that they should be further considered by the CMA.

Fox will have to pay Sky £200 million ($265 million) as a break fee if the new deal falls apart.

The broadcaster did say though that its actions were as a result of the channel no longer being a viable option in the United Kingdom as the costs of distributing the USA network meant it was not in 21st Century Fox's commercial interests to continue its offer.

Other opponents of the deal lined up to laud Bradley's announcement.

But Bradley, who has remained United Kingdom culture secretary in May's new government, has been seen as being under pressure to not wave the deal through given that the topic of the Murdochs and their political power has been a hotly discussed topic in Britain.

They have pointed to the behaviour of Fox News in the U.S. as evidence that there needs to be a fuller investigation into whether the Murdochs are fit to own a combined company, and whether it would comply with the relevant broadcasting standards.