CMA says takeover of Sky by Rupert Murdoch's Fox 'not in public interest'. Does it matter with Google and Facebook dominating news?

Disney could solve the problem if US watchdogs agree to its takeover of much of Fox

James Moore
Chief Business Commentator
Tuesday 23 January 2018 14:38
New media is coming to dominate not just Britain’s national voice, but the global voice in a way that Murdoch could only dream of
New media is coming to dominate not just Britain’s national voice, but the global voice in a way that Murdoch could only dream of

So the Competition and Markets Authority (CMA) has teeth after all.

It was handed one of the hottest of political hot potatoes outside of Brexit when asked to review the bid by Rupert Murdoch’s 21st Century Fox to take full control of broadcaster Sky.

With its decision to provisionally frustrate the ambitions of one of the world’s most powerful tycoons, depriving him of one last big win before handing the reins over to Disney, the CMA has viewed the bid through a rather narrow regulatory lens.

Doing that wasn’t as easy as it might appear because the CMA was asked to look at this bid in the context of media plurality rather than competition, where there’s lots of case law for it to refer to.

But its carefully reasoned findings are going to prove hard to knock.

As the CMA points out, news outlets ultimately controlled by the Murdoch Family Trust are watched, read or heard by close to a third of the UK’s population.

The trust therefore has a greater share of the national voice than any provider outside of the BBC or ITN. Taking full control of Sky, which has a powerful digital offering in addition to its broadcasting output, can only strengthen its hold.

Murdoch may draw some comfort from the fact that, despite the fierce criticism from his opponents, the CMA has upheld the view of Ofcom on the subject of broadcasting standards.

There’s been the phone hacking scandal at the (now closed) News of the World, and the accusations of sexual harassment that have dogged Fox News in the US, both of which the CMA makes note of. However, it doesn’t see that they cause problems with the deal, and it is even complimentary about the way Sky conducts itself.

But that’s like telling someone who’s lost their home that they should be really happy because the garden looks pretty.

Where the CMA has really shown its mettle is in its willingness to go toe to toe with Murdoch when it comes to the remedies it would be willing to consider to allow the deal were Disney not on the scene.

Murdoch openly mooted closing Sky News if it proved to be an impediment to his beloved Sky deal. Unacceptable, says the CMA.

It has also taken a highly sceptical view of Fox’s proposed “firewall”, which would involve establishing a separate editorial board to oversee the independence of Sky News editorial content along the lines of those that exist at Dow Jones, and The Times.

The divestiture of Sky News would seem to satisfy its concerns, but who would buy it? It becoming a standalone business providing content over the Sky platforms looks like a non-starter, so outside of some new proposals from Fox, what we’re really faced with here is either the deal gets crushed, or Disney saves everyone’s bacon by pulling off its purchase of Fox.

While the CMA hasn’t entirely hidden behind Disney, as it might have chosen to do, it has accepted that most of its concerns fall away if Bob Iger’s media megalith wins its prize, despite the substantial stake in the combined business that the Murdochs would have at the end of the process.

One idea it proposes is to recommend to Culture Secretary Matt Hancock that he blocks the deal unless the Disney-Fox transaction goes through on broadly the same terms to the ones currently envisaged. Such a “sunset” clause represents a novel approach but this is a novel investigation.

You can bet that the CMA will be told that Hancock really quite likes that idea, which works wonderfully well for all concerned. Assuming the US regulators scrutinising the Disney-Fox deal play ball and shine a little sunshine onto the Mickey Mouse club house, it’s a get out of jail free card.

There is of course a rather large postscript that should be added at this point and it comes in the form of a question: does any of this matter as much as it seems to in the era of Facebook and Google?

Those two are coming to dominate not just Britain’s national voice, but the global voice in a way that Murdoch could only dream of. Their grip becomes tighter by the day. Their argument that they are simply tech companies offering up neutral platforms looks more frayed by the day.

With his call for them to pay carriage fees to content providers, Murdoch will suddenly find himself on the same side as more than a few of the opponents of Fox’s takeover of Sky.

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