Media plurality: Ofcom's public interest test for Sky/Fox merger

posted on 07 July, 2017   (public)

Media plurality: Ofcom's public interest test for Sky/Fox merger

On 3 March 2017, 21st Century Fox, Inc. notified the European Commission of its intention to buy the shares in Sky - the leading pay-TV operator in Austria, Germany, Ireland, Italy and the UK - that it does not already own (39%). The Commission gave its go-ahead to the proposed transaction on 7 April  under EU Merger Regulation.

On 16 March 2017, looking from the media plurality perspective, the Secretary of State for Culture, Media and Sport (now renamed department for Digital, Culture, Media and Sport) asked Ofcom to review the effect of the transaction on two public interest considerations: the plurality consideration and the broadcasting standards consideration. Ofcom’s report was received by Culture Secretary Karen Bradley the 20th June 2017 and contains advice and recommendations regarding the proposed acquisition of Sky.

More generally, this report offers a relevant overview of the UK broadcasting sector.

  • The plurality consideration: The proposed transaction would give the Murdoch Family the ability to influence the overall news agenda and political process. Indeed the combined Fox/Sky and News Corp would be used by three in ten adults (31%). Ofcom considers that these public interest concerns may justify a reference by the Secretary of State to the Competition and Markets Authority (CMA). The reports highlight plurality as a keystone for a well-functioning democracy.
  • Broadcasting standards: Even if Fox’s and Sky’s compliance is in line with Ofcom’s Broadcasting Code, Ofcom still has concerns about Fox’s approach to ensure that Fox News content complies with the Broadcasting Code. However Ofcom considers those concerns not sufficient enough to justify a reference by the Secretary of State to the competition and Markets Authority.
  • Fox’s proposed undertakings: Fox has said that it would establish an independent Sky News Editorial Board and safeguards against undue editorial influence although there may be areas in which the proposed undertakings could be strengthened according to Ofcom.

In addition, Ofcom has also provided to Culture Secretary Karen Bradley a copy of its separate fit and proper assessment which it carried out in accordance with its duty under the Broadcasting Acts 1990 and 1996. Ofcom has indeed an ongoing duty to verify that broadcasting licensees are fit and proper holders of a licence.

Also particularly worth highlighting is Ofcom's research report (also published on 29th June) entitled: “News consumption in the UK: 2016”  whose findings provided evidence to assist its work regarding the Sky acquisition situation.

Ofcom had already conducted a similar report about the proposed acquisition of Sky by News Corporation in 2010 (it was the first attempt of the Murdoch family to buy shares in Sky that it does not already own).
In an oral statement to Parliamanent, Culture Secretary Karen Bradley confirmed that she is minded-to refer to a Phase 2 investigation on the grounds of media plurality on the basis of Ofcom’s assessment. A final decision has been announced for after 14 July to allow the parties the opportunity to make representations on this position. 

Sources : Ofcom website