Rupert Murdoch's Sky deal facing headwinds

Mr Rupert Murdoch’s legacy as a media mogul will be tested when British regulators report to the government on whether 21st Century Fox should be allowed to buy the rest of British satellite giant Sky.
Mr Rupert Murdoch’s legacy as a media mogul will be tested when British regulators report to the government on whether 21st Century Fox should be allowed to buy the rest of British satellite giant Sky. PHOTO: NYTIMES

LONDON • Will media mogul Rupert Murdoch's Sky-high ambitions get a boost or suffer a setback?

That issue will hinge on the report British regulators were slated to submit to the government yesterday, on whether 21st Century Fox should be allowed to buy the rest of British satellite giant Sky.

Mr Murdoch's global media conglomerate21st Century Fox owns 39 per cent of Sky and had proposed taking over the company in 2010.

But that effort was abandoned amid a telephone hacking scandal.

As part of their review, British regulators are scrutinising whether 21st Century Fox meets broadcasting standards and if the £11.7-billion (S$20.7-billion) takeover would unfairly hamper the British media landscape.

They are also evaluating whether 21st Century Fox executives are "fit and proper" to retain broadcasting licences in Britain.

The timing is awkward for Mr Murdoch and other 21st Century Fox executives, including his sons James and Lachlan.

They have tried to put an end to a sexual harassment scandal at Fox News that led to the ouster of host Bill O'Reilly and chairman Roger Ailes, yet those issues have arisen in the British review.

It also is likely to renew criticism that Mr Murdoch, 86, holds too much sway over the British media, which he has denied.

Two regulators - the Office of Communications (Ofcom) and the Competition and Markets Authority - were asked by the government to review 21st Century Fox's proposed takeover of Sky soon after the deal was announced in December last year.

When the company tried to acquire Sky in 2010, Ofcom had criticised Mr James Murdoch's handling of a phone hacking scandal at News Of The World, a British newspaper which was then part of News Corp, a predecessor to 21st Century Fox.

While the regulator said Mr James Murdoch's actions "fell short", he was cleared and Sky ultimately was deemed "fit and proper" in that review.

Now, 21st Century Fox is grappling with the aftermath of a sexual harassment scandal at Fox News.

Regulators at Ofcom have met lawyers who represented several of the accusers and a woman who made sexual harassment allegations against O'Reilly.

Analysts said there are four potential outcomes from the report.

Ofcom may give its unconditional backing to the takeover or recommend that the government block the deal, both of which are considered unlikely.

It could recommend that 21st Century Fox make concessions, such as guaranteeing the independence of Sky News, the British news organisation owned by Sky.

Or the authorities may call for a more in-depth review by Britain's competition authority, extending the outcome until autumn.

No matter what happens, it will probably be weeks, if not months, before a final decision is made.

The potential takeover of Sky would cement Mr Rupert Murdoch's position in the fast-changing media landscape, where Netflix and Amazon are offering consumers new forms of programming.

Sky owns Now TV, a European rival to these streaming services, which could help 21st Century Fox compete.

When the company proposed in December its takeover of Sky, many opposition lawmakers - and even some from the governing Conservative Party - were vocally opposed to the deal.

That situation has become even more complicated following British elections this month, which left Prime Minister Theresa May without a majority in Parliament.

And with talks on Britain leaving the European Union putting severe strains on her government, Mrs May and her ministers could be under pressure to postpone a final decision on the takeover.

NYTIMES

A version of this article appeared in the print edition of The Straits Times on June 21, 2017, with the headline 'Rupert Murdoch's Sky deal facing headwinds'. Print Edition | Subscribe