Rupert Murdoch's plans for the £11.7B ($15.2B) takeover of Sky have been "set back" after U.K. Culture Secretary Karen Bradley accepted there were "serious concerns" over handing him and his family "increased influence over the UK news agenda and the political process," according to Sweney & Ruddick of the London GUARDIAN. Bradley told the Commons that she accepted a recommendation from U.K. communications watchdog Ofcom to call in the Competition & Markets Authority to conduct a further six-month examination of the deal because of the "material influence" that the Murdoch family would have as a result. She said a warning by Ofcom that media plurality would be reduced was "persuasive." She added, "The proposed entity would have the third-largest total reach of any news provider -- lower only than the BBC and ITN -- and would, uniquely, span news coverage on television, radio, in newspapers and online." Bradley also told MPs that Murdoch's company, 21st Century Fox, made a "series of formal pledges surrounding Sky News last week in a late attempt to push the deal through before her announcement." This included a commitment to spin off Sky News but maintain a branded service for five years, with spending "at least similar to now," and "reinforcing its independence" by creating an editorial board that had a majority of independent members to determine the head of Sky News and "oversee its editorial guidelines" (GUARDIAN, 6/29).
'PUBLIC INTEREST CONSIDERATIONS': In London, Christoper Williams reported the news channel, "which is not profitable," would be funded at current levels for at least five years, Fox said. Bradley said that the the offers "did not change her mind over whether to call in the CMA, despite comments from Ofcom that they did." The media regulator said in its report that "we recognise that behavioural undertakings can be difficult to monitor and enforce and that there are areas in which the proposed undertakings could be strengthened." Bradley told MPs, "While Ofcom suggests that they [the remedies] mitigate its concerns, it is for the Secretary of State to decide whether they sufficiently mitigate -- or ideally fully remedy -- what are serious public interest considerations." Fox has 10 days to improve its offer of remedies, before Bradley makes a final decision over "whether to trigger a CMA investigation" (TELEGRAPH, 6/29).
REGULATORY HURDLES: In London, Bond & Mance reported although Bradley rejected Fox's proposed undertakings, analysts at Citi forecast Fox "would be able to offer enough concessions to complete the takeover." U.K. Shadow Culture Secretary Tom Watson said that the government "was still planning to approve the takeover." Watson: "Nothing about this decision is a surprise. It's the old playbook." Fox "remains confident the deal will eventually be cleared," although the company said that it expected the timing of the completion to "slip," from the end of the year to the end of June '18, if the takeover is referred to the CMA. It added that it was "disappointed" that its undertakings on Sky News were rejected by Bradley. The separate "fit-and-proper" test by Ofcom also concluded the "allegations of sexual and racial harassment at Fox News" were "extremely serious and disturbing." Ofcom said, "However, we have no clear evidence that senior executives at Fox were aware of misconduct before it was escalated to them in July 2016, after which action was taken. Our assessment finds that Sky would remain a fit-and-proper license holder in the event of the merger" (FINANCIAL TIMES, 6/29).
TRADING UP: REUTERS' Sandle & Holton reported shares in Sky stock were "trading up" 3% at 987p on Thursday "in the belief that Fox would find a resolution." Citi analysts said that Fox "could even find a resolution before the July 14 deadline and avoid the lengthy referral." They added, "Ultimately this is a positive outcome for the Fox/Sky in the sense that it makes deal completion more likely" (REUTERS, 6/29).
GETTING POLITICAL: The BBC reported Watson said that undertakings from the Murdoch family were "not worth the newsprint they are written on," as he warned that "lessons had not been learned from the phone-hacking scandal." He also accused the Conservatives of forming "an implicit bargain" with the Murdochs as he pushed Bradley to "order part two of the Leveson Inquiry into phone-hacking." Bradley claimed Watson was making a "cynical" attempt to "politicise the issue and to prejudge the decision." Lobby group Hacked Off Exec Dir Evan Harris said that it "condemned" Bradley's "failure to refer the bid on commitment to broadcasting standards grounds" (BBC, 6/29).
