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Sky shares spike on Fox takeover approval hopes

Culture secretary Karen Bradley says she is 'minded' to refer deal to CMA but offers 10-day deadline for companies to propose solutions.

 
Sky shares spike on Fox takeover approval hopes

Shares in Sky (SKYB) have spiked after culture secretary Karen Bradley said she was 'minded' to refer 21st Century Fox's takeover bid to the Competition and Markets Authority (CMA), but handed both companies a 10-day deadline to propose remedies to its concerns.

Bradley said she accepted there were serious concerns over handing Fox owner Rupert Murdoch and his family 'increased influence over the UK news agenda and the political process', after Ofcom recommended the deal be referred to the CMA. Fox is bidding for the 61% of Sky it does not already own.

But she handed both companies a 10-day deadline to propose new remedies that would overcome the risk of undue Murdoch influence over the news agenda.

Shares in the broadcaster jumped 3.5% to 990p on the news, but remain well below the £10.85 offer price from Fox.

Jerry Dellis, analyst at Jefferies, said the news represented 'a positive step towards approval of the Fox-Sky merger'.

'The probability of approval without CMA referral now appears higher than previously expected,' he said, pointing to potential proposals from both companies to assuage the government's concerns.

'Ofcom asserts that effective remedies could include safeguarding independence in the ongoing process for appointing independent members to a Sky News editorial board and committing to keep the channel for more than five years,' he said. 'Both look feasible.'

Murdoch’s 21st Century Fox currently owns 39% of Sky. Ownership of the Sun and the Times is held by the separately incorporated New Corp, although both are ultimately controlled by the family.

Taking full ownership of Sky would allow the business to roll out many of the business’s innovations to its other broadcasters, such as Germany’s Sky Deutschland.

Representatives of the business have argued that the proliferation of online news sources since it withdrew its last bid in 2011 - following revelations about News Corp journalists’ phone hacking – had removed the risk to media plurality.

More recently, a series of sexual harassment scandals at US division Fox News, which have claimed the career of the broadcaster’s founder and architect Roger Ailes, among others, have raised questions about whether Fox is a ‘fit and proper’ owner, however.   

While describing the allegations as 'extremely serious and disturbing' Ofcom ruled that there was no evidence that misconduct reached the parent company, and that it would not raise an objection of conduct grounds.

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