Fox’s pursuit of European pay-TV giant Sky hits a new roadblock

Rupert Murdoch and his sons’ bid to expand their media empire by acquiring full control of the European pay-TV giant Sky for $15 billion was dealt a setback Thursday.

Britain’s secretary of state for culture, Karen Bradley, told members of Parliament that she was considering recommending a more comprehensive review of 21st Century Fox’s proposal to buy the 61% of Sky that Fox does not own.

Bradley did not rule out eventually approving Fox’s proposed takeover of Sky. She gave the media company until July 14 to recommend measures that would satisfy the government that the Murdoch family would not meddle in editorial decisions at the Sky News unit.

Bradley said she was concerned that the Murdoch family, through its various media holdings, would have a unique position in Britain’s media landscape.

“The proposed entity would have the third-largest total reach of any news provider — lower only than the BBC and ITN — and would uniquely span news coverage on television, radio, in newspapers and online,” she said in a written statement to Parliament.

In addition, the sexual harassment and race discrimination scandal at Fox News in New York has cast a cloud over Britain’s approval process. The problems at Fox News represented “significant corporate failures,” Britain’s media watchdog, the Office of Communications, said in a report to Bradley this month. That office, known as Ofcom, completed the first phase of the regulatory review of the Sky deal.

Ofcom separately determined that the Murdochs and Fox executives passed the “fit and proper” test.

If Bradley opts for a second phase of the review, the deal would be referred to Britain’s Competition and Markets Authority.

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Fox, which owns 39% of Sky shares, has secured approvals from other European regulators, including the European Union and the Republic of Ireland, and now needs Bradley’s consent to complete the transaction.

Owning Sky outright would give the New York-based media company reach into more than 22 million homes in Britain, Ireland, Germany, Austria and Italy. It also would fulfill the Murdoch family’s ambition to consolidate a lucrative enterprise that Rupert Murdoch launched 28 years ago to compete with the venerable British Broadcast Corp.

For a monthly subscription, Sky offers dozens of entertainment channels, including Nickelodeon, Comedy Central and HBO, and popular sports such as soccer, cricket and Formula 1 racing. The service also provides broadband Internet and phone service.

“While we welcome the Secretary of State’s decision on broadcasting standards, we are disappointed that she does not accept Ofcom’s recommendation stated in its report that ‘….the proposed undertakings offered by Fox to maintain the editorial independence of Sky News mitigate the media plurality concerns,’” Fox said in a statement. If the case is referred to the Competition and Markets Authority, Fox said, it would delay the deal closing until June 2018.

Fox’s bid for Sky has generated controversy in Britain. Opponents have said the deal would give the Murdoch family too much influence over news and information in Britain. Sky owns the growing 24-hour Sky News channel, which is a competitor to the BBC. Sky News reports also are distributed to commercial radio stations throughout Britain, making it a leading source of content for outlets not affiliated with the BBC.

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“Karen Bradley should make this decision based on what’s best for the British people, not Rupert Murdoch,” said Alex Wilks, campaign director at the activist organization Avaaz, which has been leading the charge to deny the bid.

“If the government greenlights the deal based on more empty Murdoch promises, we’ll look hard at a legal challenge to protect our democracy,” Wilks said in a statement.

Detractors have pointed to the sexual harassment scandal that has engulfed Fox News for the past year and the cellphone hacking scandal in Britain, which erupted six years ago, derailing the Murdochs’ first bid to acquire 100% of Sky.

Murdoch has had much political influence in Britain for decades through his News Corp. stable of publications — the Sun, the Times of London, the Sunday Times and the now-defunct News of the World. News Corp. also owns the Wall Street Journal and the New York Post.

Fox executives have already recommended an independent board of directors to oversee Sky News. The Murdochs also pledged not to change the name of Sky News for at least five years.

Approval of the Sky deal has been slowed by Britain’s fraught political environment. The Conservative Party, which controls Parliament, lost its majority this month in an ill-fated move by Prime Minister Theresa May to call an early election, and she has been weakened in the process.

Murdoch’s British Sun tabloid — a strident ally of Conservatives — has since taken shots at May. Prominent members of the opposing Labor Party are wary of Murdoch and his news outlets.

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Bradley, who also is a member of the Conservative Party, said her decision would be based on the facts, not politics.

Fox unveiled its Sky deal in December, taking advantage of the sharp decline of the British pound against the U.S. dollar, following Britain’s “Brexit” vote to leave the European Union. Fox is hoping to have the deal wrapped up by the end of the year.

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