UK regulator: Fox takeover of Sky not in public interest

Rupert Murdoch
The Associated Press

LONDON (AP) — Britain’s competition regulator issued a preliminary ruling Tuesday that 21st Century Fox’s planned 11.7 billion-pound ($16.3 billion) takeover of Sky plc isn’t in the public interest because it would give Rupert Murdoch and his family too much control over the country’s news media.

The Competition and Markets Authority’s decision will be finalized by May 1, when the regulator will send its report to the secretary of state for culture, media and sport, who will make a final decision on the deal.

Fox has faced hurdles in its effort to buy the 61 percent of Sky it doesn’t already own because of its widespread holdings in Britain’s media, including major newspapers such as the Times and the Sun. The Murdoch family trust is the largest shareholder in Fox and News Corp., which owns the British newspapers. London-based Sky operates an influential U.K. news channel as part of its European pay TV business.

“The (Murdoch family trust’s) news outlets are watched, read or heard by nearly a third of the UK’s population, and have a combined share of the public’s news consumption that is significantly greater than all other news providers, except the BBC and ITN,” the regulator said in its statement. “Due to its control of News Corp., the Murdoch family already has significant influence over public opinion and full ownership of Sky by Fox would strengthen this even further.”

The authority suggested that the completion of Walt Disney Co.’s planned $52.4 billion takeover of Fox would weaken Murdoch’s control over Sky and eliminate concerns about media plurality. However, that deal is unlikely to be completed before Britain’s review of the Sky deal is wrapped up.

The regulators offered potential remedies to their objections, which range from blocking the Sky deal to the spin-off or sale of Sky News.

Sky said it took note of the authority’s preliminary ruling, but also highlighted the possible remedies.

Former Culture Secretary Karen Bradley asked the Competition and Markets Authority to evaluate the takeover in September, directing it to look at Fox’s commitment to broadcasting standards and the deal’s impact on media plurality in the U.K.

In its decision, the CMA dismissed concerns about broadcasting standards, saying that Fox and Sky had a good record in this area. As part of its investigation, the authority considered allegations of sexual harassment at Fox News in the U.S.

“While these are serious, the CMA has provisionally found that these are not directly related to the attainment of broadcasting standards and do not call into question Fox’s or the (Murdoch family trust’s) commitment to broadcasting standards in the U.K,” the authority said.

Fox is seeking to consolidate its control over Sky as media companies try to combine content creation and distribution channels amid pressure from competitors such as Netflix, Google and Amazon.

Sky’s European pay TV operation has 22.5 million customers, attracted by offerings such as English Premier League soccer and “Game of Thrones.”

A previous bid for the whole of Sky foundered amid the 2011 phone hacking scandal, in which journalists working for Murdoch newspapers were accused of gaining illegal access to the voicemail messages of celebrities, members of the royal family and crime victims.

Murdoch’s News Corp. withdrew its bid for Sky in 2012.

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