Murdoch’s Sky takeover bid delayed by UK gov’t, sent to CMA for further assessment

Culture secretary says there’s a risk that Murdoch would control too much UK media.

Kelly Fiveash – Jun 29, 2017 12:31 pm | 17

Credit: Strike Back, Sky

Update, June 28, 2017: The UK government has referred Rupert Murdoch’s Sky takeover bid to the Competition and Markets Authority, on the grounds media plurality—that is, culture secretary Karen Bradley is concerned that Murdoch would control too much of the UK media. There will now be a further six-month investigation by the CMA, which will decide if the proposed £11.7 billion merger between Sky and 21st Century Fox can move forward.

Bradley, speaking in parliament today, said she had considered the findings from the Ofcom investigation into the proposed takeover, and decided that an inquiry by the CMA was necessary. Notably, the Ofcom report concluded that acquiring Sky might increase the “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.”

Back in April the European Commission approved the deal “unconditionally.”

Update, December 15: Sky and 21st Century Fox have agreed to Rupert Murdoch’s plan to buyout the remaining stock of the British pay-TV and broadband provider that it doesn’t already own.

The two companies told the City on Thursday lunchtime that Murdoch’s firm would pay £11.7 billion for the remaining 61 percent of Sky. Fox currently owns 39 percent of the broadcaster.

If the deal is waved through unchallenged by watchdogs in the UK and European Union, then Fox expects to have full control of Sky by the end of 2017.

As part of its effort to lobby for a smooth takeover without heavy-handed regulatory meddling, Fox made a number of promises about investing in the UK. Sky said that Murdoch’s company pledged to continue to support development of its technology hub and software engineering academy in Leeds. It added that Sky’s Osterley-based site—which is undergoing a £1 billion “investment programme”—would be maintained.

Rupert Murdoch hopes to swiftly close door on Fox’s planned takeover of Sky. Credit: Kevin Hagen/Getty Images

But opposition to the planned takeover is growing.

“The secretary of state must refer the bid to Ofcom, to assess whether it would result in too much media power being concentrated in too few hands, and whether Rupert and James Murdoch are ‘fit and proper persons’ to run a broadcaster,” said Labour’s shadow culture secretary Tom Watson, who has heavily criticised Murdoch and has campaigned against phone hacking.

Original story (December 9)

Rupert Murdoch’s 21st Century Fox has revived its bid for Sky—some five years after it was forced to pull out of its takeover plan as the phone hacking scandal engulfed the media giant.

Sky told the City late on Friday afternoon that Murdoch’s company was once again seeking to buy the 61 percent of the British broadcaster and broadband provider that it doesn’t own.

An offer price of £10.75 per share in cash has been tabled by 21st Century Fox, Sky said, representing a 40 percent premium on its London Stock Exchange closing price on December 6. The fresh takeover approach values Sky at £18.5 billion. Shares in the company jumped more than 30 percent following the announcement. But Sky warned that “certain material offer terms” were yet to be nailed down by the two firms.

Earlier this year, Murdoch’s son James Murdoch returned to Sky as the company’s chair—much to the reported consternation of some of its shareholders. A money clip of independent directors has been formed by Sky, which says, subject to undisclosed terms, it is “willing to recommend the proposal to Sky shareholders.”

Five years ago, Murdoch’s then-named News Corp sought to buyout the remaining chunk he didn’t own of the then-named BSkyB for £8 billion. But the bid failed following political pressure from MPs who called on the media mogul to ditch the planned merger.

It came during the height of the phone hacking storm, which swamped Murdoch’s empire in July 2011. At the time, News Corp made it clear to the City that it could return with another bid at a later date.

By 2012, Murdoch’s TV business was renamed 21st Century Fox, having been cut loose from News Corp. The brands were separated to help the billionaire octogenarian recover from the “toxic” fallout from the phone hacking saga.

Today, News Corp functions as a publishing company for the firm’s newspapers in the US, UK, and Australia. The publications, including the Sun, the Times, and the Wall Street Journal, had previously operated under the banner of News International—the Murdoch-run firm that launched Sky Television in 1989, before merging it with British Satellite Broadcasting a year later.