Fox Proposes Independent Sky News Editorial Board Among Sky Deal Concessions

Sky HQ - H 2016
Courtesy of Sky

It argues a U.K. regulator's provisional findings "contain a number of material legal and factual errors" that led it to conclude the deal would be against the public interest, but critics continue to argue it should be blocked.

Twenty-first Century Fox has proposed an independent editorial board for U.K. news channel Sky News as part of what it calls "firewall" remedies that it argues should help it seal its planned deal to take full control of European pay TV giant Sky.

Britain's Competition and Markets Authority (CMA) on Monday published various responses to its recent provisional findings on the deal.

Fox in its submission said that, "if the CMA’s provisional findings are confirmed, the most appropriate form of remedies would be the 'firewall' remedies 21st Century Fox is willing to offer" on top of previously proposed concessions. Fox also reiterated a previous proposal for "a commitment to Sky-branded news services in the U.K. for at least five years with similar levels of investment."

After last year offering to establish an editorial board with a majority of independent members — a proposed remedy that the U.K. culture secretary didn't accept at the time as not going far enough the company is now offering a "fully independent" editorial board, initially comprising two existing Sky independent directors and a third member nominated by the Sky independent directors with senior editorial and/or journalistic experience "to guarantee the editorial independence of Sky News."

Among its key decisions would be such things as "the appointment and dismissal of the head of Sky News, who will have sole responsibility for setting editorial strategy," "any material changes to the authority or reporting lines of the head of Sky News," "decisions regarding the remuneration package of the head of Sky News," "any changes to the Sky News editorial guidelines (which have been amended to provide further safeguards that the head of Sky News will retain complete control over editorial matters and the instructions given to journalists and other editorial staff)," plus "any matters escalated to it by the head of Sky News.'

Fox's submission said it was also willing to offer "a commitment that no employee or officer of 21st Century Fox, or a member of the 21st Century Fox board who is a trustee or beneficiary of the Murdoch Family Trust, will influence or attempt to influence the editorial choices made by the head of Sky News (including the selection or running of news stories or the political comment and opinion to be broadcast on the Sky News services)."

It also highlighted that the concessions would "cease to have effect in the event of certain changes of circumstances, which would result in the potential media plurality concerns identified in the provisional findings falling away." Importantly, the proposed firewall remedies "would terminate upon completion" of the sale of various Fox assets to Walt Disney, it said.

The provisional CMA report raised concerns about the influence of the Murdoch family trust, which controls Fox and News Corp, over the U.K. media landscape. It suggested the government could block the deal, order a spinoff or divestiture of Sky News or set behavioral remedies to "insulate" it from the influence of the Murdoch trust. Media regulator Ofcom in an earlier step of the deal review had also proposed that Sky News should be protected to preserve its editorial independence.

Fox and Sky after the CMA report didn't immediately discuss their openness to possible remedies, but analysts widely expected them to propose a new governance setup for Sky News. 

Fox in its submission to the CMA also argued that its provisional findings "contain a number of material legal and factual errors" that taken together "do not provide a reasonable basis, on which to conclude that the transaction may be expected to operate against the public interest in respect of the media plurality consideration." Fox argued that "correcting these errors would therefore allow the CMA to conclude that the transaction does not raise media plurality concerns and remove the need for any remedies to address such concerns." 

Working under the assumption that the CMA does not change its mind, the conglomerate said its "proposed firewall remedies represent a comprehensive and clear-cut solution that directly addresses the origin of the CMA’s adverse provisional findings."

Meanwhile, Sky in its submission to the CMA highlighted that the regulator had identified three approaches to deal conditions in decreasing order of intrusiveness, namely blocking the deal, "other structural remedies" and "behavioral remedies."

Said the European pay TV giant: "Sky agrees with the CMA that behavioral remedies would be an effective solution to the concerns provisionally identified. A behavioral solution is also the least intrusive, and therefore the only proportionate option, of the solutions identified by the CMA."

Political opponents of the Fox-Sky deal, led by Labour Party politician Ed Miliband, continued to argue it should not be allowed. "We urge the CMA to follow through the logic of its provisional findings and recommend to the Secretary of the State [of Culture] the prohibition of this deal," they said in their submission to the CMA. "We urge it not to be satisfied with ineffective and implausible structural or behavioral remedies, which will fail to protect the public interest or guarantee a secure future for Sky News. In particular, we suggest that the CMA should not go down the same path that has failed before: undertakings given and broken, by the Murdochs."