British broadcaster Sky News could be sold to Walt Disney under plans put forward by Rupert Murdochs 21st Century Fox, which is trying to take full control of Sky.
Bid to Calm Regulatory Fears
Walt Disney has today offered to buy Sky News, a move intended to calm political and regulatory fears that Fox’s acquisition of Sky News would breach competition regulations.
Murdoch already owns The Sun, The Times and The Sunday Times newspapers, and the prospect of his full ownership of another news outlet has raised concerns over undue influence over the British press.
Murdoch’s Media Influence
Murdoch would get full control of Sky News, a cable news channel, if regulators approved the £11.7bn takeover of Sky News’ parent company, Sky, by Murdoch-owned 21st Century Fox.
Fox has attempted to buy outright the 61% of Sky it does not already own, but the company has faced several regulatory challenges to the acquisition. The UK’s competition watchdog said the deal was not in the “public interest”.
So Fox proposed a potential sale of Sky, a loss-making channel, to Walt Disney, which is separately in a $66bn bid to acquire 21st Century Fox’s entertainment assets.
Disney’s bid on Tuesday would make the process considerably simpler by bypassing Fox to buy Sky News directly.
Regulators Expected to Welcome new Deal
Regulators are expected to welcome the move after Disney said in a statement today that it would be willing to “sustain the operating capital of Sky News and maintain its editorial independence”.
Investors welcomed the move too, as Sky shares rose more than 1% to £13.12 in early London trading.
Fox has also proposed a legal separation and ring-fencing of Sky to ease regulators’ fears. Fox, which currently owns 39% of Sky, said it was confident either option would address regulatory concerns.
“We have proposed a set of solutions that address and resolve any and all questions or concerns that may have been raised by the transaction,” said Gerson Zweifach, Fox’s senior executive vice-president and group general counsel.
Sky added: “Sky believes that both of these remedy proposals comprehensively address any plurality concerns the CMA may have and would guarantee the long-term future of Sky News and its ongoing editorial independence.”
The proposals come as the UK’s watchdog, the Competition and Markets Authority (CMA), considers whether or not to recommend Fox’s bid for Sky to the British cultural secretary, Matt Hancock, who would decide whether to approve or block the deal.
Earlier this year the CMA said the mooted deal was “likely to operate against the public interest” under the terms proposed at the time. The CMA added that remedies such as a spinning off or divestment of Sky News could allow the takeover to go ahead.
Even under the new proposals, it is not clear whether the deal would pass muster. Critics of the deal, including Ed Miliband, the former Labour leader, and former UK chancellor Ken Clarke argue that Murdoch has too much influence over the UK media.
“We are aware that a group of politicians that is opposed to the transaction is seeking to influence the CMA and is making a number of unsupported and fanciful assertions,” Fox said, adding that a rejection of its new proposal “would compromise the integrity of a system” by capitulating to political pressure.