Fox strengthens commitment on Sky News independence

Media giant 21st Century Fox has strengthened its commitment to protect the independence of Sky News as it seeks to buy the channel's owner, Sky plc (Frankfurt: 893517 - news) .

Fox, the world's fourth-biggest media company, promised that, if allowed to buy Sky, it will maintain a Sky-branded news service for 10 years. Previously, it had promised to maintain such a service for five years.

The company also guaranteed funding for Sky News for five years at a level "not materially different" from its current funding, with a further five years of investment to be determined in future.

In addition, it said the independent board it proposes for Sky News would have to provide a certified annual statement to the Government, as well as having the right to nominate a candidate for the head of Sky News in the event of the post becoming vacant.

The commitments come after the Competition and Markets Authority (CMA) provisionally ruled last month that the £18.5bn takeover "may be expected" to act against the public interest because it concentrated too much influence over the UK media industry in the hands of the Murdoch Family Trust (MFT).

The trust - the vehicle through which Rupert Murdoch, the executive chairman of 21st Century Fox, owns a controlling stake in that company - also has a controlling stake in News Corporation (Frankfurt: A1W048 - news) , owner of The Sun, the UK's top-selling national newspaper, as well as The Times, The Sunday Times and the Wall Street Journal.

The latest commitments follow a previous set of undertakings made last week by Fox which, in December 2016, agreed to buy the remaining 61% of Sky that it does not already own.

The proposed takeover has already been given the green light by the European Commission and by regulators in Germany, Austria, Ireland (Other OTC: IRLD - news) and Italy, the other countries in which Sky broadcasts.

Another change to the proposals regards the so-called "sunset clause" related to a separate deal in which Fox agreed to sell its entertainment assets to Walt Disney Co before Christmas.

The $52bn deal, which includes a sale of Sky to Disney, requires regulatory clearance of its own but cannot proceed until the CMA has given its own final ruling on Fox's proposed takeover of Sky.

Originally the sunset clause meant that, in the event of Disney buying Sky, the commitments regarding Sky News would fall away.

Under Fox's latest proposal, it would have to ask the Secretary of State for Digital, Culture, Media and Sport to release it from those commitments, with the Secretary of State themselves obliged to consult the CMA before agreeing to do so.

Matt Hancock, the current Secretary of State for Digital, Culture, Media and Sport, is due to give a final ruling on the proposed takeover within 30 working days of being sent the report.

The CMA has a deadline of 1 May to submit it.

In its provisional ruling on the deal, last month, the regulator said that earlier proposals tabled by both Fox and Sky to strengthen the editorial independence of Sky News did not go far enough.

It said: "Given their extensive experience of the UK market and direct current and historic involvement with the Sky business, Rupert and James Murdoch [the current chief executive of 21st century Fox and chairman of Sky plc] would be likely to have considerable opportunity to influence the recommendation for any new head of Sky News."

"Our view is that although the MFT will not have full ownership of Sky following the transaction, the significantly increased control it will be able to exercise over Sky and Sky News is sufficient to give rise to concerns that, as a result of the transaction, there could be increased editorial alignment of Sky News and the newspapers owned by News Corp."

The CMA said there were a number of remedies that the parties could offer to address its concerns.

The first is that the deal be called off.

The second is a potential sale or divestiture of Sky News.

The third would be "behavioural remedies" to insulate Sky News from the influence of the MFT.

Shares (Berlin: DI6.BE - news) of Sky plc, which are valued at 1075p under the proposed Fox takeover, were up 1.5p at 1104.5p in mid-morning trading.