The Competition and Markets Authority’s provisional ruling against Fox’s bid to take full control of Sky is a stumbling block. However, Sky’s share price has risen, suggesting optimism that the deal is still on the cards.
The regulator objected to the deal on the ground of media plurality and said that it did not have concerns about broadcasting standards. It fears that the takeover as proposed would give the Murdoch Family Trust (MFT), which controls Fox, “too much influence over public opinion and the political agenda”.
The Murdochs already own News Corp, publisher of The Times, so the regulator believes that full control of Sky would strengthen their influence further. However, it has set out a range of remedies to address this. These included spinning off or selling Sky News, or insulating the news channel from Murdoch influence. For some investors this suggests that the deal could well go ahead.
The idea of a spinning off Sky News is not new. News Corporation offered to do so in 2011 under a similar bid. The takeover offer was later withdrawn but the CMA notes that Jeremy Hunt, who was secretary of state for culture and media at the time, was minded to accept this remedy. Sky has previously warned that it might have to shut Sky News if ownership was an impediment to the deal.
At any rate, the plurality objections will be moot if the $66 billion takeover of Fox by Disney proceeds as planned. Disney does not own any other news outlet in Britain, so there are unlikely to be concerns about it taking ownership of Sky, and its bid for Fox is not conditional on the Sky deal being rubber-stamped.
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The CMA suggested that it would have to reconsider its provisional ruling if the Disney-Fox deal went through. It said: “The Disney/Fox transaction, if completed, would significantly weaken the link between the MFT and Sky which is at the root of our provisional concerns about media plurality. On the face of it, these concerns would fall away if the Disney/Fox transaction went ahead as announced.”
The Disney-Fox deal isn’t due to be completed before mid-2019. Sky and Fox now have two weeks to propose remedies before the CMA makes a final recommendation to Matt Hancock, the culture secretary, on May 1.
