The Government has today said that it will support Rupert Murdoch’s 21st Century Fox bid to buy Sky only on the understanding that Sky News is sold to Disney or another buyer.
Culture Secretary Matt Hancock said the deal must be backed by at least ten years of guaranteed funding for the news channel, but warned he would block the merger if this could not be met.
He also cleared the way for Comcast and its rival “superior cash” offer for Sky, which includes Sky News, saying he will not intervene in the proposed takeover deal from the US media giant.
If Fox’s deal is ultimately approved it looks set to result in a bidding war for the ownership of Sky.
Addressing Parliament, Hancock said: “I agree with the CMA that divesting Sky News to Disney, as proposed by Fox, or to an alternative suitable buyer, with an agreement to ensure it is funded for at least ten years, is likely to be the most proportionate and effective remedy for the public interest concerns that have been identified.”
He added: “I am optimistic that we can achieve this goal, not least given the willingness 21st Century Fox has shown in developing these credible proposals.
“However, if we can’t agree terms at this point, then I agree with the CMA that the only effective remedy now would be to block the merger altogether. This is not my preferred approach.”
Murdoch’s bid to buy the 61 per cent of Sky he does not already own has been snagged by media plurality concerns, with the UK competition watchdog provisionally ruling in January that it was “not in the public interest”.
The media mogul has twice upped his bid in the hopes of pushing it through, first guaranteeing five years of funding for Sky News, then ten years, and finally 15 years plus an agreement to separate it from the rest of Sky.
Hancock said media plurality concerns included the “potential erosion of Sky News’ editorial independence” under the merger and a reduction in the “diversity of viewpoints” available to the public.
He repeated concerns from the Competition and Markets Authority that the merger of Fox and Sky would give the Murdoch Family Trust, which controls Fox and News Corp (ultimate owners of the Sun and Times newspapers) “increased influence” over public opinion and the UK’s political agenda.
Parties in the Fox deal have 15 days to consult on the demands, with Hancock saying he aimed to publish the consultation within a fortnight.
Fox first made its £11.7bn offer to buy Sky in March last year. The deal was recommended by Sky until April this year, when Comcast entered its rival £22bn bid.
In December last year, Fox sold most of its film and studio assets to Disney in a multi-billion dollar deal, with an agreement that the US giant would “assume full ownership of Sky” once Fox’s takeover bid was complete.
In a statement today, Fox said: “[Fox] has already submitted proposed undertakings to achieve the divestiture of Sky News to Disney.
“We note that the Secretary of State agrees with this solution and has instructed officials from the Department for Culture, Media and Sport to agree final undertakings that he would be prepared to accept and consult on within the two-week timeframe.
“We now look forward to engaging with DCMS and we are confident that we will reach a final decision clearing our transaction.”
Also in a statement today Sky said it welcomed the Culture Secretary’s announcements, but gave little else away.
It said: “The Independent Directors of Sky are mindful of their fiduciary duties and remain focused on maximising value for Sky shareholders. A further announcement will be made as and when appropriate.”
Shadow Culture Secretary Tom Watson said Labour had “serious concerns” about the long-term future of Sky News as a UK-based, independent organisation under the proposal to sell it off to pass the Fox bid.
He said: “Were the Fox-Disney deal to fail, it could leave Sky News isolated from Sky and owned by a foreign company with few news interests in the UK. It’s hard to see how that would be in the public interest.”
Watson added: “With Comcast now in the ring, the future for Sky is uncertain. A bidding war is on the horizon. That might be good for shareholders, but it’s the minister’s duty to protect the interests of the public.
“Sky is a gem of British broadcasting, respected worldwide. It’s future and global reputation for excellence is at risk in this process so it’s right that if there is any doubt about whether the proposed solution is workable then it’s the duty of the Secretary of State to ensure that this merger is blocked.”
Picture: Chris Radburn/PA Wire