CMA Outlines Review of 21st Century Fox/Sky Deal

The UK government has elaborated on the key issues it will be looking at in its review of 21st Century Fox's bid to buy Sky Plc--actually the 61% it does not already own.

That came in an issues statement Tuesday (Oct. 10) from the Competition & Markets Authority (CMA).

The deal has already been investigated for competition issues by the European Commission, getting a clean bill of health on April 7 of this year.

CMA will be looking at whether there are a sufficient plurality of media ownership after the deal, which in this case means a sufficient diversity of viewpoints "available and consumed" to prevent one owner or voice from having too much influence over public opinion or politics.

Specifically it will be looking at the ability of the Murdoch Family Trust to control or influence Sky News, the general trends in viewpoint availability in the UK and how the deal would impact them, how much social media contributes to media plurality, what level of plurality is sufficient.

It will also look at how the deal squares with current broadcast standards, including regulations on the treatment of employees.

The proposed merger was referred to the authority by Secretary of State for Digital, Culture, Media and Sport Karen Bradley for a full, six-month review.

Her referral came despite a recommendation from Ofcom, the U.K.’s version of the Federal Communications Commission, that the deal did not raise “nonfanciful” issues that required that competition review.  

Bradley can refer a merger to the competition authority for a full review if she believes “there is a risk — which is not purely fanciful — that the merger might operate against the specified public interests."

That was the case with Fox-Sky, she said.

Bradley pointed out that in seeking clarification from Ofcom for its recommendation, Ofcom had clarified that it thought there were nonfanciful public-interest concerns, but they didn’t justify the referral for a full competition review.

She said that given the existence of those non-fanciful concerns, as a matter of law the grounds for referring the deal on public interest grounds were met, and that she believed they were sufficient to warrant her discretion to refer it. Among those concerns was that 21st Century Fox did not have adequate public-interest compliance procedures in place for the broadcast of Fox News Channel in the U.K. and only took action after Ofcom expressed its concerns.

"The fact that Fox belatedly established such procedures does not ease my concerns, nor does Fox’s compliance history," she said.

She also pointed to third-party concerns about the "Foxification" of Fox-owned outlets internationally. While she said she had not concluded that was a nonfanciful issue, she did say it was important "that entities which adopt controversial or partisan approaches to news and current affairs in other jurisdictions should, at the same time, have a genuine commitment to broadcasting standards here," and signaled the CMA might want to take that into account.

Fox said at the time of her referral, saying: "We are disappointed that the Secretary of State has chosen not to follow the unequivocal advice of the independent regulator [ofcom], which is the expert body tasked with enforcing the Broadcast Code."

In December 2016, 21st Century Fox agreed to pay $14.8 billion. for the balance of the Pay-TV service. Sky has 22 million subs in five countries: Italy, Germany, Austria, the U.K. and Ireland.

"21st Century Fox (21CF) welcomes the publication by the Competition and Markets Authority (CMA) of the Issues Statement," the company said in a statement. "We look forward to the CMA process and engaging in a thorough and constructive review."

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.