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UK culture secretary 'minded to' refer planned takeover of Sky by Fox for further investigation

The planned takeover of Sky by Twenty-First Century Fox should be investigated by the Competition and Markets Authority (CMA), the UK culture secretary has provisionally decided.

Karen Bradley said she was "minded to" refer the proposed deal to the CMA after reflecting on concerns media regulator Ofcom raised (146-page / 3.06MB PDF) about the impact it could have on media plurality.

Fox and Sky will have an opportunity to respond to Bradley's initial opinion and even file undertakings in an effort to mitigate the concerns raised and avoid a lengthy investigation by the CMA before Bradley issues a further decision, expected on 14 July.

The media companies have already tabled undertakings which, Bradley said, were aimed at ensuring editorial independence of Sky News would be maintained post-transaction. However, although Ofcom said that the undertakings would address the concerns it highlighted, Bradley said she was minded to reject them.

Bradley asked Ofcom in March to review the planned £11.7 billion deal and make a recommendation on whether the deal should be allowed to go ahead on public interest grounds. Fox already owns a 39% stake in Sky.

Ofcom subsequently looked into whether there would be "sufficient plurality of persons with control of the media enterprises" serving UK audiences should Fox complete a takeover of Sky, as well as whether the management at Fox "have a genuine commitment" to the attainment of the objectives of broadcasting standards outlined in UK communications laws.

Separately, Ofcom also looked into whether Sky would remain a fit a proper holder of a broadcast licence if Fox was to complete a takeover.

Ofcom said that there is not a "reasonable basis" for it to conclude that Sky would no longer be a fit and proper holder of broadcast licences (21-page / 626KB PDF) if owned and controlled by Fox. However, in its separate public interest assessment, Ofcom flagged media plurality concerns and recommended to Bradley that she refer those issues for further scrutiny by the CMA.

In particular, Ofcom said a merger of Sky and Fox would have "material influence over news providers with a significant presence on television, radio, printed newspapers and online" and that the combined news operations would have the third largest reach of all news providers in the UK, behind only the BBC and ITN. It also assessed the online news market and the potential impact and influence the Murdoch family could have on the news agenda if the deal went ahead.

Ofcom said the planned merger "raises public interest concerns as a result of the risk of increased influence by members of the Murdoch Family Trust over the UK news agenda and the political process, with its unique presence on radio, television, in print and online".

Bradley acted on that finding by stating that she was minded to refer the deal for investigation by the CMA.

"The reasoning and evidence on which Ofcom’s recommendation is based are persuasive," Bradley said. She said the issues Ofcom raised were "clear grounds" for making a referral to the CMA.

Bradley said she was not minded to ask the CMA to look further at the impact the deal could have on broadcasting standards. Ofcom said it saw no reason for the culture secretary to ask the CMA to look further into the issue.

Bradley said that, in line with legislative requirements, she would allow Fox and Sky and other stakeholders to respond to her proposals and give views on Ofcom's assessment.

"While there are strong feelings among both supporters and opponents of this merger, in this quasi judicial process, my decisions can only be influenced by facts, not opinions - and by the quality of evidence, not who shouts the loudest," Bradley said.

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