Three-D Issue 29: Radical Government shift to a full investigation of the Fox-Sky merger bid

When Culture Secretary Jeremy Hunt decided not to refer News Corporation’s proposed takeover of BSkyB to the Competition Commission back in 2011, serious questions were raised as to the relationship between media and politicians and the future of media plurality in the UK. Of course, the deal was eventually halted due to the outbreak of the phone-hacking scandal and the launch of the Leveson Inquiry that same year. Given that Leveson’s conclusions included a call for Ofcom, Government and industry to work on a measurement framework in favour of plurality in news and current affairs, it seemed unthinkable that the Murdocks could still achieve the proposed merge. Yet, despite the series of scandals surrounding News Corporation, its split into 21st Century Fox and News Corp appears to have facilitated the path to a renewed Sky takeover bid by Fox in December 2016.

Secretary of State for Digital, Culture, Media and Sport Karen Bradley was initially mindful to refer Fox’s bid to the Competition and Markets Authority (CMA) solely on public interest grounds of media plurality in June this year, based on Ofcom’s findings. However, the wave of continuing public consultation submissions contributed to her decision this September to broaden the watchdog’s remit.

This radical shift means the CMA is also tasked with investigating Fox’s commitment to broadcasting standards in the UK. As such, the watchdog will look into potentially new evidence as to whether Fox constitutes a fit and proper broadcaster and Ofcom’s assessment of that public interest ground. Indeed, a number of public consultation representations claim that Ofcom has not considered all evidence of corporate governance failings since 2012 in relation to the phone-hacking scandal: trials involving News International employees, ongoing civil action claims and the House of Commons Committee of Privileges report on the conduct of witnesses. Fox’s partisan approaches to news and current affairs in Australia and the US will also be under the spotlight. Such practices abroad are of great concern as they may herald similar behaviour in the UK following the takeover of Sky. Ofcom already recognises that current regulation in the UK does not fully protect against partiality.

Bradley’s decision to call for such a comprehensive six-month CMA investigation may be seen as a significant sign of the Government’s desire to avoid further criticism. It is certainly a radical shift from the days of the Thatcher government’s contentious decision to allow Rupert Murdock to take over The Times and Sunday Times without referring the proposal to the Monopolies and Mergers Commission – despite him already being in possession of the biggest selling daily and Sunday newspapers, the Sun and the News of the World. Perhaps lessons have been learned after all.

In any case, there is an ever-pressing need for an effective measurement framework in favour of plurality in news and current affairs in the UK as the current media landscape is uneasy. Besides their publishing interests, the Murdocks already own a 39% stake in Sky, which is the UK’s largest pay TV broadcaster. They claim that since their 2011 takeover bid for Sky, media plurality is thriving partially thanks to online news outlets. Yet, according to 2015 figures from the Media Reform Coalition, three companies dominate 71% of the national newspaper market, five companies control 80% of the market share when online readership is included and UK Internet search engines and social networking apps are owned by just a handful of conglomerates. In this context, the CMA’s findings will be significant, not just with respect to the current Fox-Sky takeover bid, but more generally for the future of plurality in news and current affairs, cross-media ownership laws, corporate governance and safeguards to ensure journalistic and editorial freedom.

Posted by Einar Thorsen