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European pay TV giant Sky and its 39 percent owner 21st Century Fox have offered to sell the Sky News channel to Walt Disney if that would help address U.K. regulators’ concerns about Sky News’ independence from Fox.
The news came in a latest filing published by the Competition and Markets Authority (CMA) on Tuesday, in which Fox made the latest offers to seal the deal.
The Sky offers included new details on a previously offered legal separation and ringfencing of Sky News, as well as what it called “a divestiture of Sky News to The Walt Disney Company envisaged to occur only after completion of 21 Century Fox’s acquisition of Sky (and irrespective of whether Disney’s proposed acquisition of 21st Century Fox reaches completion).”
The ringfencing proposal for Sky News now calls for the news operation to be established as an independent company with its own independent board, but with a funding guarantee for 15 years, up from 10 years in a previous offer.
The regulator is expected to consider both proposals as it explores the latest remedies and what they mean for its stance on the deal. Fox in December 2016 offered to buy the rest of Sky. The CMA has previously said it was inclined to recommend the deal not be approved, but it gave the companies a chance to submit remedies to change its mind.
Critics have voiced concern that the deal would give the Murdoch family, which controls Fox, too much influence over Sky News. The final decision on the deal will come from U.K. culture secretary Matt Hancock.
Sky said in a statement that it “believes that both of these remedy proposals comprehensively address any plurality concerns the CMA may have, and would guarantee the long-term future of Sky News and its ongoing editorial independence.” It added: “As the regulatory process remains ongoing, shareholders are advised to take no action at this stage. The independent directors of Sky are mindful of their fiduciary duties and remain focused on maximizing value for Sky shareholders. A further announcement will be made as and when appropriate.”
Disney’s December deal to acquire for $52.5 billion many of Fox’s assets, including its stake in Sky, is separate from the Sky News offer. Comcast also recently offered to acquire Sky for $31 billion.
“If the Secretary of State for Digital, Culture, Media and Sport agrees, and Fox acquires Sky, Disney would buy Sky News and agree to sustain the operating capital of Sky News and maintain its editorial independence,” Disney said in a statement. “The divestment of Sky News to Disney is separate from, and not conditional on, Disney’s acquisition of Fox.”
“We have now submitted a new, revised set of remedies should they be considered necessary by the CMA and ultimately by the Secretary of State for Digital, Culture, Media and Sport,” Fox said in a statement. It highlighted that under the Sky News ringfence proposal, “Sky News would operate entirely independently with guaranteed funding by 21 Century Fox for 15 years. Additionally, we offered personal undertakings given by 21st Century Fox executive chairmen and its CEO not to influence or attempt to influence the editorial choices made by the head of Sky News. We offered this even though the record before the CMA shows that, over the course of nearly 30 years as Sky’s founding shareholder, neither 21st Century Fox, nor the Murdoch Family Trust, have ever sought to influence the editorial direction of Sky News.”
It also said the company “has proved itself to be a genuine custodian of quality journalism over many decades.”
The Fox statement went on to outline its proposed remedies: “Alternatively, The Walt Disney Company has expressed an interest in acquiring Sky News, with a view to adding it to Disney’s existing portfolio of television channels, whether or not Disney’s proposed acquisition of 21st Century Fox proceeds.”
It concluded: “We remain committed to working with the CMA to find remedies that will ensure the continued editorial independence of Sky News. We will continue to work with the regulator, and then the Secretary of State at the appropriate time, and leave open the possibility to pursue all of our legal options if necessary.”
“21st Century Fox’s proposed remedies on Sky News should be enough to overcome the CMA concerns on news plurality over Fox’s bid for Sky,” said Ian Whittaker, an analyst at Liberum Capital, in a first reaction.
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