Fox-Sky merger heads to the CMA under cloud of uncertainty

The bureaucratic bouncy ball has been given a new lease of life with Ofcom passing the Fox/Sky merger buck to the Competition and Markets Authority.

Back in March, the UK’s Secretary of State for Culture, Media & Sport, Karen Bradley had asked regulator Ofcom to investigate the implications of the potential £11.7 billion deal, but the report has not really shed any further light on the situation. Having taken a couple of months to ponder the merger, Ofcom has essentially come back and said someone else should have a crack at it.

The report states:

“The transaction 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. We consider that the plurality concerns may justify the Secretary of State making a reference to the Competition and Markets Authority.”

In other words, Ofcom is pretty sure that one group should not have that much influence over the news within the UK, but the CMA should weigh into the argument as well. This is what most pessimists would call ‘passing the buck’, as it has identified the problem, but is either unwilling or unable to do anything about it directly. It’s quite possible that this marks the extent of what Ofcom was empowered to do, which makes you wonder why this wasn’t just passed to the CMA in the first place.

Government intervention in such matters, especially those where such a whopping amount of cash is involved, has to be scrutinised very carefully. This might be an example of building such a case against the merger, collecting as much support as possible, to ensure that any legal backlash would fall on deaf ears.

Announced back in December, the deal would see News-Corp owned Twenty-First Century Fox acquire the remaining 60.1% of shares it does not already own in Sky. It would create a mega-media business which would have the third largest reach in the UK (only behind BBC and ITV), but would have a much broader mix which would span TV, radio, newspapers and online.

Even those bored of government intervention which seems to slow down the money-train, have to admit they do have a point. Should the Murdoch family be allowed to have that much influence over one of the most important pillars of our democratic society?

“Ofcom’s report states that the proposed transaction would give the Murdoch Family Trust material influence over news providers with a significant presence across all key platforms,” Bradley said in a statement.

“This potentially raises public interest concerns because, in Ofcom’s view, the transaction may increase members of the Murdoch Family Trust’s ability to influence the overall news agenda and their ability to influence the political process and it may also result in the perception of increased influence.”

Media plurality is a phrase you will hear a lot as this process drags on, but this deal does potentially threaten the diversity of opinion in the UK. If the objective of the press is to inform and provide the general public with a range of opinions so they can make up their own mind, how many brands should be under the control of the Murdoch family? When you look at the current list, it is already baffling.

Fox has already promised to maintain the editorial independence of the Sky News business, as well as continuing the same levels of investment for at least five years, though how much credibility there is to this promise remains to be seen. We are all adults and we know that what public figures say in statements isn’t necessarily golden. Just look at what has happened on the UK political scene in the last two years.

The investigation will continue over the next couple of months, and you can almost guarantee that there will be some sort of legal action at the end. Either Fox with sue because the merger has been blocked or a busy-body competitor will sue because they want to cause chaos. We’re no closer to the end of the deal, but it is not looking great for the Murdoch media empire.