March 16, 2017 / 11:57 AM / 2 years ago

British regulator to investigate Sky takeover by Murdoch's Fox

LONDON (Reuters) - The British government has referred Rupert Murdoch’s planned 11.7 billion pound ($14.4 billion) takeover of European pay-TV group Sky to regulators to decide if the deal is in the public interest.

The flag of the Twenty-First Century Fox Inc is seen waving at the company headquarters in the Manhattan borough in New York June 11, 2015. REUTERS/Eduardo Munoz/File Photo

Media Secretary Karen Bradley told parliament it was important to seek advice from the regulator Ofcom on whether the deal would give Murdoch and his companies too much control of Britain’s media, and whether the new owner would be committed to broadcasting standards.

Murdoch’s U.S. TV business Twenty-First Century Fox already owns 39 percent of Sky. Murdoch and his family have long coveted full control of Sky, despite the damaging failure of a previous attempt in 2011 when their British newspaper business became embroiled in a phone-hacking scandal.

Bradley has given Ofcom a 40-day timetable to investigate, and expects to receive its report by May 16.

She said Ofcom, as an independent regulator, would assess in the same time frame whether Murdoch’s company was a “fit and proper” holder of a broadcasting license.

Twenty-First Century Fox said it was looking forward to working with British authorities in their reviews of the deal, and it believed it would be approved.

“We are confident that a thorough review of our track record over 30 years will underscore our commitment to upholding high broadcast standards, and will demonstrate that the transaction will not result in there being insufficient plurality in the UK,” the company said on Thursday.


Some opposition lawmakers oppose the deal, saying Murdoch, the owner of The Times and The Sun newspapers, would wield too much influence if he had full control of a pay-TV group present in more than 12 million British and Irish homes.

“Many of us believe if you look at the conduct of the Murdochs and the untrammeled power they already have it is not in the public interest for them to take over Sky and have full control,” Ed Miliband, former leader of the opposition Labour Party, said on Thursday.

Miliband was a prominent critic of the deal the last time it was proposed.

Murdoch’s son James, who is chief executive of Fox and chairman of Sky, was criticized by Ofcom in 2012 over his handling of the phone hacking scandal.

The regulator said his management of the group’s UK newspapers at the time “repeatedly fell well short of the conduct to be expected of as a chief executive and chairman”, although it said Sky remained a fit and proper owner of broadcast licenses.

Twenty-First Century Fox, which owns cable, film and pay-TV assets around the world, said the media market had changed dramatically in recent years as broadcasters face new challenges from streaming services.

The Murdoch family’s newspaper businesses have been split from its television and film assets in a move that helped pave the way for another tilt at Sky.

Sky has also combined its businesses in Britain, Germany and Italy since the previous bid.

James Murdoch has sought industry backing for the deal by recently praising the quality and creativity of British television and the positive contribution made by Sky.

He said a Fox-owned Sky would spend at least 700 million pounds a year on original British production.

Shares in Sky were largely unaffected by the decision, which had been widely expected after Bradley said earlier this month she was minded to intervene.

They were trading up 0.4 percent at 9.89 pounds. The buyout offer is priced at 10.75 pounds.

Editing by Kate Holton/Keith Weir

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