Murdochs face in-depth inquiry into Sky takeover
THE Murdoch family’s failings on corporate governance and editorial compliance are due to be raked over by competition watchdogs after the Government signalled a major expansion of the investigation into their £11.7bn takeover of Sky.
The controversial deal faced new uncertainty yesterday as Karen Bradley, the Culture Secretary, announced that she had changed her mind over the need for a full examination of 21st Century Fox’s commitment to broadcasting standards.
She told MPs there were “non-fanciful” concerns that full Murdoch control of Britain’s dominant pay-TV operator could damage the public interest in maintaining standards on screen.
The move shocked investors, who sent Sky shares sliding to their lowest level since Fox made its approach in December. The sell-off exposed market fears that the Murdochs could once again fail to acquire the 61pc of the company they do not control.
The family’s previous bid, under the News Corp flag, was abandoned in 2011 as the phone hacking scandal engulfed their British newspapers.
Ms Bradley’s reversal means the Competition and Markets Authority (CMA) will be asked to investigate Fox’s commitment to broadcasting standards alongside a previously planned probe of what its full ownership of Sky would mean for plurality.
The media regulator Ofcom said in June there may be grounds for an investigation of Murdoch family control of the British news landscape. It also said there were not grounds for a broadcasting standards investigation. At the time the Culture Secretary agreed.
In saying she is now minded to trigger a broadcasting standards investigation, Ms Bradley has effectively overruled Ofcom. She said 40 representations out of a total of 43,000 received by her department over the summer had introduced substantive new evidence or questioned the regulator’s advice. Ofcom’s responses had convinced her to broaden the CMA’s remit, she said.
Ofcom confirmed there were “non-fanciful” concerns about inadequate compliance procedures at Fox News, the Murdochs’ bombastic US news operation. It made the same assessment about corporate governance failings exposed by a string of sexual harassment allegations at the channel. Yet the regulator said neither set of concerns warranted a broadcasting standards investigation by the CMA.
Sharon White, chief executive of Ofcom, told Ms Bradley in a letter that “while we identified issues giving rise to some concern, in our judgment taking all the evidence in the round there were not sufficient concerns”.
Ms Bradley said she disagreed with Ofcom. Under the Enterprise Act she has discretionary powers to disregard the regulator’s advice.
Ofcom included in its assessment recent allegations that Fox News colluded with a prominent Trump donor to knowingly publish concocted quotes in a false story that claimed a murdered
Democratic Party official was behind the leak of Hillary Clinton’s emails. The story has been retracted and Fox News denies the allegations of collusion.
The addition of broadcasting standards to the CMA’s investigation means a further delay of a takeover that is already running months behind schedule. Fox and others will have 10 days to respond before the case is formally referred to watchdogs. The CMA will then have six months to investigate with an extra eight weeks if required. The Murdochs could also face new criticism in planned court cases over allegations of phone hacking at The Sun.
A Sky spokesman said the company was “disappointed by this further delay”. It has previously claimed that the wrangling over the takeover could limit its ability to invest. At the close of trading Sky shares were 937p, down 1.6pc and significantly short of Fox’s £10.75 offer.