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Ofcom findings on Fox/Sky merger published

Ofcom’s findings relating to 21st Century Fox’s proposed acquisition of Sky have been published today.

Public interest report

On 16 March 2017, the Secretary of State for Culture, Media and Sport issued a European intervention notice, which asked Ofcom to report on two public interest considerations around plans by 21st Century Fox to acquire the shares in Sky it does not already own.

Specifically, Ofcom was asked to consider whether there would be sufficient plurality of persons with control of the media enterprises; and whether the parties would have genuine commitment to the attainment in relation to broadcasting of standards objectives.

We provided our public interest report on 20 June 2017 to the Secretary of State, who has today published Ofcom’s report.

Our report finds that the proposed transaction raises public interest concerns relating to media plurality.

It identifies a risk of increased influence by members of the Murdoch Family Trust over the UK news agenda and the political process, with its unique presence on radio, television, in print and online.

Our report says that we consider that these concerns may justify a reference by the Secretary of State to the Competition and Markets Authority.

Fit and proper assessment

Ofcom also has an ongoing duty to be satisfied that broadcasting licensees are fit and proper holders of a licence. This means that we can assess a licensee at any time, on our own initiative, as well as being able to respond to concerns raised by third parties.

We announced on 6 March 2017 that we would assess Sky’s fitness and properness to hold broadcasting licences in the event of this change of control, and do so within the same timeframe as completing the public interest report. We have published that assessment today.

Ofcom has considered allegations of sexual and racial harassment at Fox News that are extremely serious and disturbing. It seems clear that there were significant failings of the corporate culture at Fox News. In order to have a concern about fitness and properness, we would need to see evidence of misconduct in the parent company, Fox. However, we have no clear evidence that senior executives at Fox were aware of misconduct before it was escalated to them in July 2016, after which action was taken.

We have concluded that the overall evidence available to date does not provide a reasonable basis for Ofcom to conclude that, if Sky were 100% owned and controlled by Fox, it would not be a fit and proper holder of broadcast licences. Our assessment finds that Sky would remain a fit and proper licence holder in the event of the merger.

As fitness and properness is an ongoing duty, we can re-examine our position if new evidence comes to light.

Secretary of State’s announcement

The Secretary of State has today said that, on the basis of Ofcom’s assessment, she is minded to refer to a Phase 2 investigation on the grounds of media plurality. The Secretary of State added that the parties have until 14 July to make representations before she reaches a final decision.

 

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