High hurdles for Sky deal
THERE can be no surprise that 21st Century Fox’s £11.7bn bid for the 61pc of Sky that it does not own faces big regulatory obstacles.
Communications regulator Ofcom must determine where the change of ownership will impact on the variety of news sources in Britain and whether James Murdoch, chairman of Sky, is a ‘fit and proper person’ to have so much UK media power.
Murdoch must regret his stewardship of News Corporation during the phone-hacking scandal and the fact that five years later the embers never have been fully doused.
The goal of 21st Century Fox and Sky will be to show that the Murdoch empire has been transformed. Fox is now a separate quoted entity from publicly quoted News Corporation which has moved scrupulously to clean itself up, closing News of the World and paying compensation.
Moreover, since the last time the Murdoch clan attempted to mop up Sky shares the UK landscape has been transformed.
Hegemony over British media has been weakened by online entrants such as Buzzfeed and the Huffington Post and largely unmonitored news feeds provided by digital giants Facebook, Google and Twitter.
In the name of freedom of the web they peddle bile and push hard on the frontiers of decency. There is much truth in the Murdoch case. The Sun has seen a 46pc reduction in news-stand sales since the last bid for Sky was abandoned.
Nevertheless, we should not be gulled into thinking that because 21st Century Fox and News Corporation fly under different flags that they are not effectively one and the same. It is Rupert Murdoch’s name on the masthead of the Wall Street Journal as executive chairman of the publisher and he is also co-chairman of 21st Century Fox.
As much as Fox News is seen by some as a break with the East Coast liberal consensus it, too, has regulatory and legal shadows most notably the £32.4m pay-off of Roger Ailes over sexual harassment allegations.
Ofcom chief executive Sharon White has some really thorny issues to wrestle with. If her hardball tactics with BT over broadband provision is a guide, Sky will not get an easy ride.
Because it is now the proud owner of Sky Deutschland and Sky Italia the deal will also need to win the approval of the European Commission, which has a robust attitude towards US corporations.
Even if all these barriers are overcome it has never been clear that Sky’s minority investors are getting a good deal.
Inter-company transactions in the Murdoch empire mean the cash 21st Century Fox raised from selling the Europe operations to Britain’s Sky is now being used to buy back the whole caboodle.
Minority interests are being crushed in favour of those of the controlling dynasty.
A less compliant board at Sky would have told Fox to get lost.
Instead, stand-in chairman Martin Gilbert accepted the first offer with uncomfortable speed. The deal should be stopped by regulators – but the financial case against it is just as strong.
Budget blues
AMERICAN budgets are very different to ours. In Britain the Chancellor sets the tax and spending framework and, with exceptions – such as the U-turn over national insurance payments for the self-employed – the Government generally gets its way.
In the US the budget submitted by the President is no more than a wish list and only deals with spending. Tax proposals are made under separate cover by the President to Congress and passage requires deal-making by the White House.
The Trump direction of travel was on display yesterday when he sent his budget to Capitol Hill. He proposes swingeing 30pc cuts for the Environmental Protection Agency to pay for a big increase in spending on the Pentagon and Homeland Security.
More often than not the President’s budget is declared ‘dead on arrival’. Trump, however, has cards to play. Both Houses of Congress are in Republican hands and House Speaker Paul Ryan says the President has been calling Congressional leaders and inviting them to the White House.
A bit of schmoozing, even from a teetotal leader, goes a long way.
Patent sense
FEARFUl of losing valuable technologies such as ‘NAND flash memory’ the Japanese government is fostering a domestic rescue for troubled electronics group Toshiba.
It fears valuable patents could fall into overseas hands. All a bit different to when Softbank bought ARM.