By Gabriel Princewill-
New Secretary of State, Jeremy Wright, has reviewed the process regarding the proposed merger between 21st Century Fox (21CF) and Sky Plc (Sky), and given his final approval. The announcement gives Rupert Murdoch the go ahead to take over Sky without the obstacles he faced as a result of associated with fears of monopoly and excessive power over rival media institutions. Sky now has 60 days to weigh up the offers before making a decision, with the deal expected to be completed by October. The news comes in the wake of rival bidder Comcast raising its offer for Sky late last night, in a deal valuing it at $34bn. Comcast claimed its offer has been recommended by Sky’s independent directors to shareholders, and has committed the financing required for the deal.
The Rt Hon Jeremy Wright said today he was satisfied that the relevant parties have ensured a scrupulously clear, fair and transparent process as he informed the House of the final decisions made by my predecessor, Matt Hancock, as Secretary of State. Wright said the decisions were made in a quasi-judicial capacity.
Referring to the decision of his predecessor who considered the Competition and Markets Authority’s (CMA) report, Wright said he agreed with their findings on the public interest grounds and their finding that undertakings to divest Sky News to The Walt Disney Company (Disney) or to an alternative suitable buyer could potentially remedy the public interest concerns identified.
”Following the completion of discussions with the parties, on 19 June he published a consultation on the undertakings offered by 21CF along with new undertakings offered by Disney for the divestment of Sky News to Disney and several associated documents. We received five responses to the consultation, which closed on 4 July. These responses will be published today on the DCMS website, along with the government’s response to the consultation.
Having considered the responses to the consultation, the previous Secretary of State agreed with the parties to clarify a change to Disney’s undertakings and changes to the associated brand licensing agreement. In response to specific concerns raised by respondents, he also agreed that where appropriate the Secretary of State will consult with the CMA in relation to these undertakings and will publish the formal written advice given by the CMA.
”I am content to confirm this position.The final version of the undertakings have been published along with the other relevant documents on the DCMS website.The publication of the undertakings marks the final stage of the public interest consideration of this case. It is right that Ofcom, the CMA and my Department have taken such care in ensuring the bid is properly and effectively scrutinized. It is now a matter for the Sky shareholders to decide whether to accept 21CF’s bid”, Wright said.
HOT
Former culture minister, Matt Hancock’s had set the ball rolling for one of the hottest bidding wars in the broadcasting industry in June. Hancock has now been moved as Digital, Culture and Sports Secretary to Department of Health And Social Care, after the resignation of Jeremy Hunt announced the UK’s . In a detailed eloquent speech at the time, Hancock told the Commons he had undertaken a ”scrupulous, fair and impartial process, based on the evidence available, and objectively justified by the facts”. Hancock at the time said that after considering the merits of the mergers separately, he concluded that public interest concerns identified by his predecessor and the Competition Market Authority(CMA) could be effectively remedied by the use of effective and proportionate measures which the CMA had subsequently considered.
Hancock cited as part of the considerations to his decision, ”a firewall of behavioural commitments that were in place to insulate Sky News from the influence of the Murdoch Family Trust’. Secondly, he said ”a ring fence, where Sky News would be separated structurally from Sky, but still owned by Fox. Along with the same behavioural commitments. Thirdly, divesting Sky News to a suitable third partly, and fourthly, the prohibition of the transaction as a whole.
US media giant Comcast dramatically sparked bidding war in February with a £22bn offer for Sky, effectively dwarfing an offer from Fox, and starting a bidding war. The battle for Sky was heightened on Wednesday after Comcast offered a £26bn deal less than 24 hours after 21st Century Fox increased its offer to £24.5bn.
INTERVENTION
Whilst acknowledging the concerns raised to be legitimate, Hancock said in June that he considered whether the merger actually raises public interest concerns that meet the threshold for intervention, as set out in Section 58 of the Enterprise Act 2002. Exercising his quasi-judicial role, Matt Hancock said he examined the need for a sufficient plurality of people with control of media enterprises. In addition to the need for a wide range of high quality broadcasting, mr.Hancock said he also considered the need for a genuine commitment to broadcasting standards.
Hancock’s conclusion was that the merger would not operate against the public interest. Wright has now categorically affirmed Hancock’s stance. Murdoch must be an extra happy man now.The news comes as rival bidder Comcast raised its offer for Sky late last night, in a deal valuing it at $34bn. Comcast said that its offer has been recommended by Sky’s independent directors to shareholders, and has committed the financing required for the deal.
Politicians and regulators had initially feared the merger would lead to excessive power accruing to affluent Rupert Murdock at the expense of media competitors. Those concerns were understandable but rebutted by Hancock who concluded the proposed merger raised no public interest concerns. His provisional affirmation for its completion has now been given the final stamp of approval in what will see Rupert Murdoch smiling broadly. Intervention was not necessary, the Mp stated, adding that the proposed merger passes the threshold for a relevant merger situation, and provides recommendations on both public interest tests. Further worries of too much influence potentially exerted by the Murdock family trust over public opinion and the UK political agenda were quickly subdued when he expressed confidence in logical safeguards provided by Ofcom’s media plurality framework would ”effectively and proportionately” address the many concerns at hand.
Hancock said he concurred with the idea of divesting Sky News to Disney, as proposed by Fox, or to an alternative suitable buyer, with an agreement to ensure it is funded for at least ten year. His speech was brilliant, and his judgment appeared sound. Today, Wright confirmed that The publication of the undertakings marks the final stage of the public interest consideration of this case. It is right that Ofcom, the CMA and my Department have taken such care in ensuring the bid is properly and effectively scrutinized. It is now a matter for the Sky shareholders to decide whether to accept 21CF’s bid.
Happy: Rupert Murdoch
Sky has promised to offload Sky News to Walt Disney and provide a Disney owned Sky News Channel with a £100m funding for 15 years. Sky’s shares rose to as high as 15.41 pounds on Thursday and were trading at 15.34 pounds in mid-morning, valuing it at 26.4 billion pounds -or $35 billion.