CMA Preliminary Findings – Fox and Sky
Yesterday, the Competition and Markets Authority (CMA) announced preliminary results of its review of the anticipated acquisition by 21st Century Fox, Inc of the 61% of the shares in Sky plc that it does not already own. The CMA has provisionally found that the anticipated acquisition by Fox is not in the public interest on the grounds of media plurality. However, there are enough caveats to the findings that it is impossible to discern what the final outcome will be.
That is, the CMA has continued its investigation despite Fox's proposed sale of its current 39% stake in Sky to The Walt Disney Company as part of a larger transaction between these two behemoths. Because the Fox and Disney deal is unlikely to be completed (if at all) until after Fox would take full control of Sky, the investigation continued after the larger deal was announced and is why the CMA has confirmed that the findings focus solely on the proposed acquisition by Fox of the remaining shares in Sky and do not take into account the Disney transaction.
Should the Fox acquisition of Sky go ahead, the CMA report indicates its belief that the Murdoch Family Trust's control across media platforms in the UK would result in it having too much influence over public opinion and the political agenda and therefore is not in the public interest. The Murdoch Family Trust (MFT) is the largest shareholder of Fox and News Corp and according to the CMA at present MFT's media platforms are consumed by nearly a third of the UK population. This acquisition would increase that percentage. The CMA took into account two key factors when assessing media plurality: the MFT's increased control in relation to diversity of viewpoints consumed and the ability to influence public opinion and political agenda. The CMA also considered the extent to which an increase in the degree of influence by MFT might be mitigated by other media enterprises, including social media platforms – which it found was not the case.
It remains unclear what conclusion the CMA will draw in its final report due by 1 May 2018. The CMA's Notice of possible remedies to address the concerns of media plurality lists the following three potential approaches: to prohibit the transaction; to have a structural remedy - such as to require that Fox spin off or sell off Sky News; or a behavioural remedy, such as to order specific steps to insulate Sky News from the MFT's influence. Once the CMA has issued its final report it will be for the Culture Secretary, Matt Hancock, to consider and decide within 30 days what, if anything, to do in order to remedy any adverse public interest effects identified by the CMA. These remedies could follow the CMA's recommendations but they do not have to. With Matt Hancock expecting to have a final decision made by 14 June 2018, we will have to wait and see: (i) whether this deal will go ahead; and if it does, (ii) what remedies are decided on to address the CMA's concerns.
Written by Tom Guida and Hannah Blake.