21st Century Fox "Surprised" By CMA Referral Decision
14 September, 2017, 01:03 | Author: Warren Cooper
21st Century Fox's £11.7 billion bid to take over Sky has suffered a setback after the culture secretary said that she was minded torefer the deal to regulators over concerns about broadcasting standards.
On Tuesday she unexpectedly went even further and said she meant to refer the takeover for further investigation on the grounds that broadcasting standards at Sky could be undermined if the deal went ahead. "We urge Secretary Bradley, the CMA and all members of Parliament to continue to take serious the most recent developments at Fox News and 21C Fox that bring to light the Murdochs' negligence in adhering to broadcasting standards and establishing strong compliance procedures and corporate governance systems", said Angelo Carusone, the group's president.
In saying she is now minded to trigger a broadcasting standards investigation, Ms Bradley has effectively overruled Ofcom. "I agree that corporate governance issues at Fox raise non-fanciful concerns, but in my view it would be appropriate for these concerns to be considered further by the CMA".
Ms Bradley gave the parties involved ten days to submit further evidence before she makes her final decision on whether an investigation should take place. She will make the final decision on whether to clear the merger after considering the CMA's feedback, which could come as late as March 2018.
Market watchers said Bradley was keen to avert the legal action that had been threatened if the deal wasn't sent for comprehensive review by the Competition and Markets Authority.
British broadcasters are bound by stricter rules governing balance and neutrality than those in the United States, where Fox News' partisan style has won it a large audience.
"Third parties also raised concerns about what they termed the "Foxification" of Fox-owned news outlets internationally", she said. I consider that these non-fanciful concerns do warrant further consideration.
Rupert Murdoch's Fox, which owns 39% of Sky, wants to buy the shares it does not already own. I consider that these non-fanciful concerns do warrant further consideration.
Fox News also has been at the center of a sexual harassment scandal that has engulfed 21st Century Fox and has led to the firing of on-air talent and executives.
The CMA referral makes it nearly certain that Sky will now have to pay a special dividend of about 170 million pounds to its shareholders as the takeover won't complete by December 31.
Bradley's decision on referring the deal to the CMA has delayed for several months but its outcome isn't unexpected.
But Bradley, who has remained United Kingdom culture secretary in May's new government, has been seen as being under pressure to not wave the deal through given that the topic of the Murdochs and their political power has been a hotly discussed topic in Britain.
Other opponents of the deal lined up to laud Bradley's announcement.
While that may seem something of a logical leap, concerns about governance of the Murdochs' media empire have run high in Westminster ever since it emerged in 2011 that their newspaper titles (now part of a separate company) had routinely hacked people's phones (including the phone of a missing schoolgirl who was subsequently found murdered) and made improper payments to police.
At the close of trading Sky shares were 937 pence, down 1.6 per cent and significantly short of Fox's £10.75 offer.
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