Fox Calls for "Expeditious" Completion of U.K. Review of Sky Deal

Courtesy of Sky
Sky

Meanwhile, opposition politician and deal critic Tom Watson says culture secretary Karen Bradley should take her time and argues that "aggression is the Murdochs' modus operandi."

21st Century Fox on Thursday called on the U.K. government "to complete the regulatory process expeditiously" in its review of the conglomerate's bid to take full control of pay TV giant Sky, with the latter also urging authorities to make a swift decision on next steps.

U.K. culture secretary Karen Bradley had earlier on Thursday said that she still expects to move ahead with a recent initial decision that Fox's proposed deal should get a more in-depth review by Britain's Competition and Markets Authority (CMA), but she said she needed more time to make a final call and expected to do so within weeks. 

"A decision by the secretary of state on the next step in the process, whatever that may be, now needs to be made as swiftly as possible," Sky said.

"Businesses require a level of certainty in order to plan and invest," it said. "As such, we are disappointed by this further delay. Almost eight months have now elapsed since the announcement of the offer with decisions to clear the transaction received from all other relevant regulatory authorities, including the European Commission and the relevant authorities in all four of the other main jurisdictions, in which we operate."

It added: "In the U.K., a thorough process has been concluded by the industry regulator Ofcom, which the secretary of state has publicly acknowledged was 'unequivocal' in its advice that there are no broadcasting standards concerns justifying a reference to the CMA." 

Fox in a response on Thursday said "we have proposed comprehensive undertakings to address the points raised" on competition grounds, adding that "we are disappointed that the secretary of state remains minded to refer on plurality."

"In light of the transaction’s benefits to the U.K. creative economy, we would urge the secretary of state to complete the regulatory process expeditiously," Fox said. But it added: "We respect the importance of regulatory scrutiny, and we continue in our commitment to work constructively with authorities as we have done since this process began."

In a Friday letter signed by CEO James Murdoch and executive chairman Lachlan Murdoch, Fox urged Bradley not to let politics affect her decisions about the regulatory review of the deal and pushed for a quick decision.

"In light of the transaction’s benefit to the U.K. and the implications for delay, we would urge you to continue to ensure that political considerations are not allowed to cloud the decision-making process," the Murdochs said in the letter published by Fox on Wednesday. "While we await the outcome of the regulatory process, important investment decisions will inevitably need to be deferred."

They concluded: "As one of the first, and the most significant investment to be proposed following last year’s referendum on exiting the EU, our proposed transaction will be carefully scrutinized by others keen to gauge the government’s commitment to creating a climate conducive to investment, or in the words of the prime minister and several of your fellow ministers, 'open for business'."

Tom Watson, a Labour Party member of parliament who has been a vocal critic of the Sky deal, in Thursday's parliamentary session with Bradley criticized the Murdochs' letter. Calling it "a somewhat intimidating letter to [Bradley] trying to bounce her into a decision," he said: "We know that aggression is the Murdochs' modus operandi."

Watson called on Bradley to take her time, arguing "there is absolutely no need for [her] to announce a decision during the summer recess," which ends in early September. "It is not her job to operate to 21st Century Fox’s corporate timetable."

The companies and other parties had then submitted comments on Bradley's "minded to" decision by a July 14 deadline, and the secretary will continue to analyze those before making a final decision.

Fox had in its submission not offered additional concessions beyond ones made so far, Bradley confirmed Thursday, with several analysts saying that this would lead to the extended so-called "phase 2" CMA review. 

CMA reviews typically take around six months. That makes it likely that the deal will only be completed in 2018. If it doesn't wrap by the end of this year, Fox would have to pay Sky shareholders a dividend of 10 pence a share, or about $220 million.

Fox currently owns a 39 percent stake in Sky and in December offered to buy full control.

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