Six years after his first frustrated bid to take full ownership of Sky, Rupert Murdoch is seeking once again to capture the 61% he doesn’t already own. In 2011, the bid from Murdoch’s News Corporation (for what was then BSkyB) was first referred to Ofcom, then derailed by the phone hacking scandal.
As soon as the Conservatives unexpectedly won the 2015 general election, it was always a matter of “when” rather than “if” his full takeover bid would be renewed.
Never mind that the vehicle this time is Murdoch’s 21st Century Fox, which he created after splitting his film and TV business from his news publishing business. For the purposes of ownership concentration and media power, the issue is ultimate control. And there is certainly no debate over who controls both News Corp and Fox.
Despite being perfectly timed to hit the festive period – and therefore slip quietly between the Christmas shopping and the New Year hangover – Murdoch’s bid has provoked a storm of protest and a massive Christmas headache for culture secretary, Karen Bradley. As soon as the bid is formally notified to the European Commission (likely to be imminent), she will have 10 working days to decide whether or not to refer it to Ofcom on plurality grounds, by issuing a Public Interest Intervention Notice (PIIN).
Murdoch’s supporters are urging Bradley to let it through without referral. They argue that the media landscape has been transformed since 2010, and that the proliferation of online news publishers, the arrival of entertainment players including Netflix and Amazon, BT’s entry into the sports rights market, and the burgeoning power of social media sites such as Facebook and news aggregators such as Google generate more than enough competition to satisfy plurality imperatives. They are completely wrong, for three reasons.
Reasons to be wary
First, Murdoch’s power in the news market remains undiminished. His papers still command more than a third of national newspaper circulation and, more importantly, are as instrumental as the Daily Mail in setting the news agenda. Ofcom’s news consumption metrics – frequently quoted by Murdoch’s allies to demonstrate the “dominance” of the BBC – fail to account for the impact of press headlines, commentators and partisan editorialising on the nation’s news agenda (including broadcasters).
Impartiality requirements will not be enough to protect Sky News from the undiluted attention of Murdoch ownership. Reporting can be perfectly balanced while owners still exercise a subtle and decisive influence over news running orders or the balance between celebrity and serious news. When Murdoch told the House of Lords select committee in 2007 that he would like to see Sky News become more like Fox News, he did not mean turning it into a Conservative Party cheerleader, rather that he’d like to see it adopt more of Fox’s energetic presentational features.
Second, there is the enhanced capacity to mobilise editorial support for his own commercial interests, whether it be new TV programmes, pricing innovations, major sports contracts, or Fox movie premieres. Private Eye provides constant reminders of both blatant and more subtle approaches to cross-promotion, which can include distorting or removing coverage of rival initiatives.
Finally, Murdoch’s power will be entrenched through disproportionate influence over the regulatory environment. Lengthy and costly litigation drains the resources of both regulator and competitors. In a rare interview after stepping down as Ofcom chief executive, Ed Richards described the “intense pressure from the participants” during the 2010 bid and the “unhelpful” and costly legal battles which BSkyB fought through the courts whenever its dominance was challenged. However tough its senior executives, Ofcom will be battered, bruised and intimidated by an expanded and wealthier Murdoch empire.
There is another, intensely political reason why Bradley should refer the bid. Theresa May’s pitch to the electorate in her conference speech in October was that she would stand up to the “rich and powerful” on behalf of ordinary people. Her low-key but widely reported meeting with Murdoch during her 36-hour trip to New York in October smacks of precisely the kind of backdoor assignations associated with David Cameron and Tony Blair. Despite Murdoch’s recent protestations that: “I’ve never asked any prime minister for anything”, British voters will not be impressed by yet another prime minister canoodling with the very embodiment of wealth and power. A referral to Ofcom will give her political cover.
Adding to the political turmoil, the bid has created more pressure on the government to launch the second part of the Leveson Inquiry, which was specifically designed to investigate the relationship between senior Metropolitan police officers and executives at Murdoch’s newspapers. Former prime minister Gordon Brown has written to the culture secretary arguing that a “new body of evidence” raises unanswered questions about allegations of malpractice in Murdoch’s companies (which have consistently been denied by Murdoch), demanding that any takeover must be delayed until this the truth is established.
For the same reason, Ofcom is coming under renewed pressure to apply a second regulatory test, which does not require government referral: to establish whether James Murdoch, chairman of 21st Century Fox and Sky, is a “fit and proper person” under the terms of the 2003 Communications Act to hold a broadcasting licence.
Whether Murdoch underestimated the political furore that his bid would unleash (unlikely) or made a political calculation that a government mired in Brexit turmoil would be desperate for his support (more likely), he has ignited a political firestorm that both the prime minister and the regulator could do without. If the culture secretary really does wave the transaction through, she would destroy all credibility in Theresa May’s claim to be working for “ordinary people”.