Ofcom defends advice on proposed Sky takeover by 21st Century Fox

(c) Sky News 2017: <a href="http://news.sky.com/story/ofcom-defends-decision-on-proposed-sky-takeover-by-21st-century-fox-11074982">Ofcom defends advice on proposed Sky takeover by 21st Century Fox</a>
 

Ofcom's chief executive has given a robust defence of the regulator's decision not to recommend a referral of 21st Century Fox's proposed takeover of Sky plc (Frankfurt: 893517 - news) to competition watchdogs on concerns over broadcasting standards.

Sharon White said that while the broadcasting and telecoms regulator had uncovered evidence of "extremely disturbing" behaviour at Fox News, which is owned by 21st Century Fox, it did not follow that Sky would not deserve a broadcasting licence following a takeover.

Fox, which currently owns 39.1% of Sky, is trying to buy full control of the business in a deal that would value the parent of Sky News at £18.5bn.

The deal has been referred to the Competition and Markets Authority (CMA) by Karen Bradley, Secretary of State for Culture, Media and Sport, on concerns over media plurality and broadcasting standards.

Ofcom, which carried out a preliminary investigation into the proposed deal, recommended a referral to the CMA on media plurality grounds but not on broadcasting standards.

Asked by members of the Culture, Media and Sport Select Committee about that decision, Ms White said Ofcom had carried out a thorough review of recent activity at both 21st Century Fox and also at News Corporation (Frankfurt: A1W048 - news) - the owner of The Sun, The Times and The Sunday Times - which until 2013 were both part of the same company.

She (Munich: SOQ.MU - news) added: "We did not find a particular concern that would have caused us to believe that Sky News in particular and Sky as a broadcaster, post-transaction, would not be a fit and proper broadcaster."

Quizzed by Labour MP Paul Farrelly about whether recent allegations about sexual harassment at Fox News had been taken into consideration, Ms White explained that Ofcom had looked in detail at the corporate governance of both companies, both recently and longer ago.

She went on: "In the round, we looked at all the corporate governance issues… particularly for Fox News, we found some extremely disturbing and serious behaviour… but the consideration for us as a regulator, with the fitness and propriety of a company to hold a broadcast licence, we would need to demonstrate, particularly taking into account issues surrounding freedom of expression and choice for audiences, whether those corporate governance issues…whether those were sufficiently deleterious that, when you weave them into a broadcasting arena, that that would justify the withdrawing of the licences.

"And our judgement was that the behaviour, particularly at Fox News, was extremely serious and disturbing. We found significant corporate governance failures.

"But it was also our judgement that you could not, within a broadcasting arena, on a reasonable basis, take the view that Sky would not continue to be a fit and proper broadcaster."

Asked by Conservative MP Rebecca Pow whether there had been sufficient scrutiny of the deal by Ofcom, Ms White said the work done by the regulator had been very detailed, particularly on corporate governance.

She added: "I am absolutely confident we did a professional, independent, expert job."

Ms White said Sky (Amsterdam: BK8.AS - news) "currently has a very strong record of compliance on broadcasting" and insisted there was no reason why the company would not maintain a commitment to UK broadcasting standards following a takeover.

Later in the session, Ms White was asked about the issue of so-called 'fake news', and said that social media platforms such as Facebook (NasdaqGS: FB - news) needed to take more responsibility to ensure "appropriate content" was carried on their platforms and that such content could be trusted.

Dame Patricia Hodgson, the Ofcom chairman, added: "We feel strongly about the integrity of news in this country."

Ms White was also questioned about Ofcom's recent negotiations with BT, aimed at boosting investment in the country's high-speed broadband network.

She said Ofcom was "very much holding Openreach [the BT division that runs the UK's broadband network] to the fire" and said early signs of an improvement in service were "reasonably positive".

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