The UK’s Secretary of State for Culture Media and Sport, Karen Bradley, has said she is “minded to” refer US media company 21st Century Fox’s proposed takeover of pan-European pay-television broadcast group Sky to UK media watchdog Ofcom after the parties involved issued formal notification of the merger to the European Commission.
Fox and Sky in December confirmed they had reached agreement on the terms of a recommended pre-conditional cash offer by the former for the fully diluted share capital of the pan-European pay-television broadcaster, which Fox and its affiliates do not already own.
The announcement came after Sky, a major broadcaster of sports coverage, confirmed a takeover approach for the 61 per cent of the company that is currently not controlled by Rupert Murdoch’s Fox in a deal that is set to value Sky at £18.5bn (€21.7bn/$23bn).
In a statement issued on Friday, Bradley, who has 10 working days from today (Monday) to make a final decision on referring the deal to Ofcom, said: “I can confirm that formal notification for the proposed merger of Sky and 21st Century Fox was lodged with the European Commission and I have… written to the parties to inform them that I am ‘minded to’ issue a European Intervention Notice on the basis that I have concerns that there may be public interest considerations – as set out in the Enterprise Act 2002 – that are relevant to this proposed merger that warrant further investigation.
“To be clear – I have not taken a final decision on intervention at this stage. In line with the guidance that applies to my quasi-judicial role I am inviting written representations from the parties and will aim to come to a final decision on whether to intervene in the merger within 10 working days of today’s (Friday’s) notification.”
Bradley said she has issued a ‘minded to’ letter to the parties on two of the public interest grounds specified in section 58 of the Enterprise Act 2002.
She added: “The first public interest ground on which I am minded to intervene is media plurality. That is, specifically, the need for there to be a sufficient plurality of persons with control of the media enterprises serving audiences in the UK.
“The second public interest ground on which I am minded to intervene is commitment to broadcasting standards. This ground relates to the need for persons carrying on media enterprises, and for those with control of such enterprises, to have a genuine commitment to attaining broadcasting standards objectives.”
Bradley has invited further representations in writing from the parties, and has given them until 5pm GMT on March 8 to provide these. The secretary plans to make a final decision in the week commencing March 13.
A Fox spokeswoman told UK newspaper The Guardian that the company is confident the takeover will be approved. “As we have previously indicated, we anticipate regulators will undertake a thorough review of the transaction, and we look forward to engaging with them as appropriate,” she said. “We… are confident that the transaction will be approved based on a compelling fact set.”
European regulators have up to 25 days to analyse competition issues but are believed to be prepared to clear the takeover having previously approved Fox’s ultimately aborted move for Sky in 2010, along with the latter’s acquisition of its sister businesses in Germany and Italy.
Fox currently has a 39-per-cent stake in Sky, which in 2014 completed acquisitions of sister operators Sky Deutschland in Germany and Sky Italia in Italy. Fox has previously said the Sky deal is expected to close before the end of 2017.