Ofcom's warning shows concern over the future impartiality of Sky

Ofcom based its findings on a warning issued in 2003 by the Labour peer Lord Macintosh of Haringey, then minister for the Media, that "media plurality" has to be defended because "it would be dangerous for any person to control too much of the media because of his or her ability to influence opinions and set the political agenda".

It concluded that "the proposed acquisition may be expected to operate against the public interest since there may not be a sufficient plurality of persons with control of media enterprises providing news and current affairs to UK-wide cross-media audiences".

Dealing with the argument that Rupert Murdoch already effectively controls Sky, the report acknowledged that News Corporation has "material influence" over the satellite station's output, through the 39 per cent of shares it already owns, but cannot "pass general and special resolutions alone" because of the presence of other shareholders and independent directors. Owning 100 per cent of Sky's shares "would allow News Corp to take decisions involving Sky which are in the exclusive commercial interests of News Corp".

This would "reduce the number of persons with control of media enterprises" as "Sky would cease to be a distinct media enterprise".

Ofcom also warned that "the effect of the proposed acquisition is to bring together one of the three main providers of TV news with the largest provider of newspapers".

The report recognised that impartiality rules would be a "safeguard" even if Sky were wholly owned by News Corporation, but argued that they are not strong enough to guarantee that Sky's news outlet would continue to be impartial. Ofcom rejected News Corporation's argument that the internet is giving people more choice of news outlets than they used to have, because all the top 15 online news providers are either established newspaper or broadcasting companies or websites that aggregate news from other sources, which "suggests that today online news tends to extend the reach of established news providers as opposed to favouring the use of new outlets that are not present on traditional media".

The report also warns that the law may not now be strong enough to enforce the Government's policy on "plurality" in the media, because the authorities can intervene only when a change in ownership is proposed. They conclude "that a more fundamental review and possible reform of the statutory framework may be required".

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