UK Regulator: Rupert Murdoch's Sky Takeover 'Not in Public Interest'

UK Regulator: Rupert Murdoch's Sky Takeover 'Not in Public Interest'
UK Regulator: Rupert Murdoch's Sky Takeover 'Not in Public Interest'
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24 January, 2018

Those remedies included blocking the deal, spinning off or selling Sky News, or seeking to "insulate" Sky News from the influence of the Murdoch Family Trust. Karen Bradley, then culture secretary, referred the bid to the CMA in September past year. The nuclear option is to stop the deal. The second is a spin-off or divestiture of Sky News, thereby limiting the impact of a takeover.

Tom Watson, the Labour Party's spokesman on media and culture and a fierce critic of the Murdochs, welcomed the CMA's preliminary report, calling it "the right decision".

Twenty-first Century Fox's 39 percent stake in British cable-TV giant Sky PLC was viewed as one of Fox's most valuable assets when The Walt Disney Company entered a $52 billion agreement to consolidate the Murdoch family-owned media group.

As part of that deal, Disney would take over the 100% shareholding in Sky that Fox would gain should the deal ultimately go through. Disney will also assume the USD13.7 billion in Fox debt taking the total deal value to USD66.1 billion. Murdoch's assets now include Sky News - the television network arm of Sky - and Britain's largest newspapers: The Sun, The Times, and The Sunday Times.

Could Sky News be closed?

Nor would it do anything to improve plurality in the media industry.

"It's good news today that the regulator isn't going to block the deal outright", said Michael Wegener, managing director at Case Equity Partners, a Sky shareholder.

Disney has yet to state its intentions over Sky News' future. Ofcom has said a loss of Sky News could "present risks to plurality equal to or greater than those presented by the transaction itself".

An objection on broadcasting standards would have likely sounded the death knell for the deal.

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The government had referred the matter to the Competition and Markets Authority (CMA) for an in-depth probe last September owing to concerns about media plurality and broadcasting standards.

In a statement, Fox said it was "disappointed" by the findings.

While the probe found Fox "has a genuine commitment" to broadcasting standards in the United Kingdom, issues with the compliance at Fox News were identified.

Who makes the final decision?

Final results are due to be published later this year. But they offered remedies that may pave the way for the deal go ahead.

Fox bid two years ago for the 61 per cent of Sky it does not already own, following a failed earlier takeover attempt.

But it added: "We do not see why, based on our considerations, Sky would wish to close Sky News in the event of a decision by the Secretary of State to prohibit the transaction as the continued operation of Sky News would be unlikely to represent an obstacle to the Disney/Fox transaction".

Rupert Murdoch is a man accustomed to getting his own way.


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