Fox-Sky Merger goes on…and on and on

Rupert Murdoch’s quest to buy the one media company to rule them all is starting to make Frodo’s trip to Mordor look like a walk in the park. The Murdoch owned 21st Century Fox, which already holds 39% of Sky’s shares, launched their (second) bid to purchasing the remaining 61% all the way back in December 2016. It took just two days for the two companies to agree on a price. Eight months later, however, regulatory consent from the government is still a distant prospect.

So why the hold up? Ofcom concluded in June that James Murdoch, CEO of Fox, was a fit and proper owner. But Karen Bradley, the culture secretary who holds the balance of power on this merger, has repeatedly announced that she is minded to intervene on the grounds of media plurality. Essentially, Bradley was worried that the merger would mean that the Murdochs would hold too much control over UK news.

This quest was delayed further when this month, Bradley asked Ofcom to look again at their ‘fit and proper’ judgement. This announcement came after pressure from senior Labour MPs, including Ed Miliband, who highlighted the current lawsuit against Fox News in the US for coluding with the White House over a story that contained fake quotes. It takes one fake news proprietor to know one, I suppose, Donald.

The importance of this additional intervention will not be lost on the Murdoch family. The Culture Secretary was previously only going to refer the merger to the Competition and Markets Authority on the grounds of media plurality. But if Ofcom reverses their decision, Fox would also be assessed on their fitness to own Sky. Not only would this complicate the process, it would likely lengthen it even further. An interesting competition is developing between the merger and Brexit to see which saga can last longest.

What does this mean for the future? Sky told investors that whilst they are still confident of eventually finalising the deal, it won’t happen until 2018 at the earliest. The companies are preparing themselves for a far reaching and challenging inquiry, with interest in the merger unlikely to dissipate any time soon.

Who produces the news and why does it matter?

So what’s the fuss all about? Why should we care about ownership?

Image credit: Media Reform Coalition

Image credit: Media Reform Coalition

Firstly, owning an important media organisation allows individuals to wield major opinion forming and political influencing power. In 2015, the Media Reform Society released a report, warning that 71% of the national newspaper market was owned by just 3 companies, of which Murdoch’s News Corp is the largest. Adding Sky News to the roster would only make this situation more acute. The channel had a reach of 14.5 million in the first quarter of 2017 alone.

What this means for the UK is less diverse news sources. Corporates, brands and politicians would be ever more reliant on Murdoch organisations for access to their considerable audiences. This increase in media power coincides with the culling of other journalists and outlets. According to the Press Gazette, the number of journalists has halved since 2008 and papers such as the Independent moving to online only and cutting the majority of jobs in the process. A senior journalist at the Financial Times told us recently that it too will go online only in the not to distant future. 

Digital disruption

21st Century Fox’s counter-argument is that the media landscape has fundamentally changed since their first failed bid. Tech giants have massively changed the way we absorb our news. Rather than opening a broadsheet at the breakfast table, we now consume our news via platforms such as Facebook, Google and Twitter. But with tech platforms playing the role of news distributor rather than producer, LSE experts claim that this serves only to magnify the existing news producers further. 

The second concern campaigners raise is that, with Murdoch rejecting a request from Karen Bradley to legally ensure Sky News’ editorial independence, news production could play second fiddle to corporate interests. Peter Oborne, former political editor at the Telegraph, warned against the dangers of such a conflict. During his time at the paper, commercial interests came to take precedence over editorial integrity. This allegedly resulted in the paper censoring negative stories about HSBC, who were embroiled in a money laundering scandal at the time, in order to protect advertising revenues from the bank. Oborne wrote ominously, “the past few years have seen the rise of shadowy executives who determine what truths can and what truths can’t be conveyed across the mainstream media”.

Should Fox take over Sky, they would have full control of the Sky board. There would be no independent executives acting as safeguards against corporate malpractice. Arguably however, having such a public facing executive increases the accountability of the company. When something goes wrong at Sky, Murdoch’s global profile subjects him to far more public scrutiny outcry than a 14 year old in a #fakenews farm in eastern Europe.

Foxification

Finally, there are worries of a supposed ‘foxification’ effect. A fun neologism made popular by the Australian media, it refers to the changes that took place at Sky News Australia after it was fully acquired by News Corp in 2016. Opinionated chat shows have taken the place of news shows, and right-wing voices have been empowered at the expense of more moderate commentators. The prime example is Paul Murray, a polemical commentator known for his aggressive rants. He once called a senior government minister a ‘wanker’ and an ‘arsehole’ live on air. Of course, Australia, the US and the UK are three very different countries. But campaigners, such as the Media Reform Coalition, worry that this type of news programming could soon arrive at a Sky News studio closer to home.

All this combined makes the Sky-Fox merger an unwanted and poisoned pill for Culture Secretary Karen Bradley. Pressure from campaigners, academics and an influential cross party group of MPs is keeping the issue on the agenda, leaving the government no place to hide. With the increased pressure of a slim majority, Bradley finds herself in a weak position, unable to fend off even the slightest amount of political pressure. It doesn't seem, however, that Murdoch’s inexorable march towards taking over Sky will be stopped, merely delayed. The effects of this eventual merger will of course not be immediate. The changes that come about will be gradual, perhaps imperceptible. Media insiders and communications professionals alike will have to keep their ear to the ground, prepared to adapt to the ever shifting media landscape.   

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