Mur­dochs face in-depth inquiry into Sky takeover

The Daily Telegraph - Business - - Front Page - By Christo­pher Wil­liams

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.

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