Murdoch's Sky takeover faces investigation from UK's competition regulator


Sky has described itself as "disappointed" at the news that culture secretary Karen Bradley is "minded" to refer Fox's takeover bid to regulators over concerns about broadcasting standards.

"The fact that Fox belatedly established such [compliance] procedures does not ease my concerns, nor does Fox's compliance history", Bradley said.

The UK plans to expand its probe into 21st Century Fox's bid for pay-TV broadcaster Sky, exposing Rupert Murdoch and his family to further scrutiny over governance at their media empire and adding to the uncertainty about the £11.7 billion (€12.98 billion) deal.

But CMA could also investigate the deal on grounds of "genuine commitment to broadcasting standards", the minister said.

The Culture Secretary went on to say that Ofcom had concluded concerns over corporate governance failures do not warrant a referral. She said some representations contended that Ofcom did not adequately take into account Fox's approach to broadcasting in worldwide jurisdictions - for example, the U.S. and Australia - citing examples of "alleged biased, divisive and grossly inaccurate reporting".

"I have the power to make a reference if I believe there is a risk, which is not purely fanciful, that the merger might operate against the specified public interests", she told the House of Commons. Adding Sky News to the mix would give the Murdoch family influence over a third of the news sources used in the United Kingdom, according to a June report by communications watchdog Ofcom. She remarked that she had outstanding non-fanciful concerns about these matters and was of the view that they should be further considered by the CMA.

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The past few months have also seen pressure for a referral on the broadcasting standards issue, partly from campaign group Avaaz and also a group of high-profile MPs.

But Ms Bradley said: "The legal threshold for a reference to the CMA is low. the existence of non-fanciful concerns means that, as a matter of law, the threshold for a reference on the broadcasting standards ground is met".

However, in its latest update, Ofcom clarified it did have "non-fanciful concerns" on broadcasting standards.

Sky and Fox would have 10 days to respond before Ms. Bradley makes a final decision. However, I am not confident that weaknesses in Fox's corporate governance arrangements are incapable of affecting compliance in the broadcasting standards context.

Fox previously said it expects the Sky deal to close by June 30, 2018, later than the previous expectation for a close by the end of 2017. The conglomerate in December agreed to buy the remaining roughly 61 percent stake in Sky for 11.7 billion pounds, which was about $14.5 billion at the time, or $15.2 billion now.

Shares in Sky fell 4 percent on the unexpected twist before recovering slightly to be down 2 percent.