Blow to Murdoch takeover of Sky

The £11.7bn Murdoch takeover of Sky by 21st Century Fox is to be referred to competition regulators for a full investigation, the Government has revealed.

The Culture Secretary Karen Bradley said that based on advice from Ofcom she was minded to ask the Competition and Markets Authority (CMA) to conduct deeper scrutiny of the impact the deal will have on media plurality, reports The Telegraph.

The announcement is a blow to Murdoch family hopes of completing the deal by the end of the year. They will have the opportunity to make representations before a formal decision to refer the takeover to the CMA.

Ms Bradley said that Fox had made offers of remedies, including an editorial board with a majority of independent directors for Sky News, to protect it from Murdoch influence.

The news channel, which is not profitable, would be funded at current levels for at least five years, Fox said.

She said that 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”.

Ms 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 Ms Bradley makes a final decision over whether to trigger a CMA investigation.

The Murdochs had hoped that the rise of Google and Facebook as news distributors in the six years since their last attempt to gain full control of Sky failed would mean Ofcom would not find serious concerns over plurality.

The regulator rejected those arguments, however, saying “evidence suggests that traditional news providers retain a strong position online”. It said there was a risk that a Fox takeover of Sky increasing the political influence of the Murdochs.

As well as Murdoch control of the media, Ofcom also examined the potential impact on broadcasting standards at Sky if the family were to gain full control of Britain’s dominant pay-TV operator.

The regulator said there was no reason to refer the takeover to the CMA for investigation on these grounds as it did “not consider that the merged entity would lack a genuine commitment to the attainment of broadcasting standards”.

That recommendation took into consideration a separate assessment of Sky’s fitness to hold broadcasting licences under Fox ownership. Ofcom gathered evidence on the sexual harassment scandal that has engulfed their US channel Fox News over the last year.

The regulator found “significant corporate failures” but said “the overall evidence available to date does not provide a reasonable basis to conclude that if Sky were 100pc owned and controlled by Fox, it would not be fit and proper to hold broadcast licences”.