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Media ownership: the 21st Century Fox/Sky merger

Published Tuesday, May 1, 2018

This Library briefing paper looks at the proposed merger of 21st Century Fox and Sky plc.

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When can the Government intervene in media mergers?

Under part 3 of the Enterprise Act 2002, the Secretary of State for Digital, Culture, Media and Sport can intervene in broadcasting and cross media mergers where they give rise to the following public interest concerns:

  • the need, in relation to every different audience in the United Kingdom or in a particular area or locality of the United Kingdom, for there to be a sufficient plurality of persons with control of the media enterprises serving that audience;
  • the need for the availability throughout the United Kingdom of a wide range of broadcasting which (taken as a whole) is both of high quality and calculated to appeal to a wide variety of tastes and interests; and
  • the need for persons carrying on media enterprises, and for those with control of such enterprises, to have a genuine commitment to the attainment in relation to broadcasting of the standards objectives set out in section 319 of the Communications Act 2003

The proposed 21st Century Fox/Sky merger

In 2010, News Corporation tried to take over British Sky Broadcasting (now Sky plc). The bid was withdrawn in July 2011 after the discovery of phone-hacking by journalists at the News of the World.

21st Century Fox (21CF) was one of two companies formed from News Corporation in 2013 (the other company was News Corp). The Executive Chairman of 21CF is Rupert Murdoch. 21CF owns 39% of Sky plc. The Chairman of Sky is James Murdoch.

In December 2016, 21CF announced plans to acquire the 61% share of Sky Plc which it does not already own.

Critics claim that if the merger goes ahead it will be a “disaster” for media plurality. There are also concerns about the corporate behaviour of 21CF.

On 14 September 2017, Karen Bradley, the then Secretary of State for Digital, Culture, Media and Sport, announced that she would be referring the merger to the Competition and Markets Authority (CMA) for a “phase 2” investigation. The grounds for the referral are public interest concerns about media plurality and genuine commitment to broadcasting standards.

Formal referral to the CMA took place on 20 September 2017. The terms of reference, the DMCS’ referral letter to the CMA, and the final decision letter to the parties are available online. On 10 October 2017, the CMA published an issues statement setting out the scope of its investigation. There is also a webpage explaining how a phase 2 inquiry works.

On 23 January 2018, the CMA provisionally found that the merger would not be in the public interest due to media plurality concerns, but not because of a lack of a genuine commitment to broadcasting standards. A public remedies notice set out a series of potential options for addressing the media plurality concerns.

The original deadline for the CMA’s final report was 6 March 2018 but this was extended by eight weeks to 1 May 2018. This was because of the “exceptional volume of substantive submissions, the need to hold a large number of hearings and the novelty and complexity of the investigation required to address the statutory questions”.

The CMA sent its final report to, Matt Hancock, the Secretary of State, on 1 May 2018. He now has 30 working days (i.e. to 13 June) to make a final decision on the merger and publish the report.

Documents relating to the merger are available from the DCMS and CMA sections of the Gov.UK website.

 

 

Commons Briefing papers CBP-7969

Author: John Woodhouse

Topics: Broadcasting, Competition

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