U.K. Confirms Six-Month Review of Fox's Sky Deal
The culture secretary says she has made a final decision to refer the deal to the Competition and Markets Authority for a probe "on media plurality and genuine commitment to broadcasting standards grounds."
U.K. culture secretary Karen Bradley on Thursday made it official, saying she has made a final decision to refer 21st Century Fox's proposed deal to take full control of pay TV giant Sky for an in-depth review on two grounds.
That confirmed updated plans she had revealed on Tuesday. The review by the Competition and Markets Authority (CMA) will focus on media plurality, or competitive effects of the deal, and issues of commitment to the U.K. broadcasting standards.
The CMA has 24 weeks to investigate the deal and provide Bradley with advice. "I must then come to a final decision on whether or not the merger can proceed, including any conditions that will apply in order to do so," she said.
Bradley had earlier this summer said she was planning to ask for a review of competition issues only, but she changed her mind amid latest developments and added consultation with U.K. media regulator Ofcom.
Thursday's final confirmation was widely expected. On Tuesday, Bradley had said she would give Fox and Sky a chance to share any final comments on her plans, which were called her "minded-to" decision, before the official referral to CMA.
"Yesterday I received letters on behalf of both parties to the merger confirming that while they disagree with my minded-to decision, they would not be making substantive representations in relation to it," Bradley told the British parliament on Thursday. "As a result, I can confirm my final decision is to refer the merger to the CMA for a phase 2 investigation on media plurality and genuine commitment to broadcasting standards grounds. I will issue and publish my formal referral decision in the coming days."
Fox said in a reaction: "Yesterday we wrote to the secretary of state expressing disappointment that she had changed her mind and decided not to follow the advice of the independent and expert regulator Ofcom regarding broadcasting standards, but informing her that we did not intend to make further representations and encouraged her to make a prompt referral."
It added: "We now, therefore, look forward to engaging constructively with the CMA, as independent authority, and hope that the findings of this process will be respected by the secretary of state." And it reiterated previous comments, saying: "Subject to any further delays in the decision-making process, we anticipate that the transaction will close by June 30, 2018."
Sky in a brief comment said Thursday: "We note the swift decision to now refer this to the CMA and will continue to engage constructively in this process."
Fox will have to pay Sky shareholders a dividend of 10 pence a share, or about $220 million. The dividend comes due if the deal doesn't close by the end of 2017.
Fox already owns a 39 percent stake in Sky, which operates in the U.K., Ireland, Germany, Austria and Italy. The conglomerate in December agreed to buy the remaining roughly 61 percent stake in Sky for £11.7 billion, which was about $14.5 billion at the time, or $15.2 billion now. The European Union and various countries already approved the deal.