LONDON (Reuters) - Britain intends to refer Rupert Murdoch's takeover of Sky <SKYB.L> to a full investigation because the deal raises concerns about the amount of influence the media mogul would wield.
Below is Culture Secretary Karen Bradley's statement to parliament, lightly abridged.
"I came to this House, on 16 March, to confirm that I had issued a European Intervention Notice (EIN) in relation to the proposed merger between 21st Century Fox and Sky Plc on the grounds of media plurality and commitment to broadcasting standards.
The EIN triggered a requirement for Ofcom to report - initially by 16 May but extended to 20 June - on the media public interest considerations and the Competition and Markets Authority (CMA) on jurisdiction.
In line with my commitments, I am today publishing both documents.
On the question of whether the merger gives rise to public interest concerns in relation to media plurality, Ofcom's report is unambiguous.
It concludes, "The transaction raises public interest concerns as a result of the risk of increased influence by members of the Murdoch Family Trust over the UK news agenda and the political process, with its unique presence on radio, television, in print and online. We consider that the plurality concerns may justify the Secretary of State making a reference to the Competition and Markets Authority".
On the basis of Ofcom's assessment, I confirm that I am minded to refer to a Phase 2 investigation on the grounds of media plurality.
The reasoning and evidence on which Ofcom's recommendation is based are persuasive. The proposed entity would have the third largest total reach of any news provider - lower only than the BBC and ITN - and would, uniquely, span news coverage on television, radio, in newspapers and online.
Ofcom's report states that the proposed transaction would give the Murdoch Family Trust material influence over news providers with a significant presence across all key platforms.
This potentially raises public interest concerns because, in Ofcom's view, the transaction may increase members of the Murdoch Family Trust's ability to influence the overall news agenda and their ability to influence the political process and it may also result in the perception of increased influence.
These are clear grounds whereby a referral to a Phase 2 investigation is warranted - so that is what I am minded to do.
There is, however, a statutory process that I must follow. I am required by legislation to allow the parties the opportunity to make representations to me on this position before I reach a final decision. I will now do that and have given them until Friday 14 July to respond.
COMMITMENT TO BROADCASTING STANDARDS
The second question concerns whether after the merger the relevant media enterprises would have a genuine commitment to broadcasting standards. Ofcom is unequivocal.
It concludes, "In light of Fox's and Sky's broadcast compliance records and taking account of our separate assessment of whether Sky remains fit and proper to hold broadcast licenses following the transaction, we do not consider that the merged entity would lack a genuine commitment to the attainment of broadcasting standards. Therefore, we consider that there are no broadcasting standards concerns that may justify a reference by the Secretary of State to the Competition and Markets Authority".
Ofcom's approach sought to measure commitment to broadcasting standards by reference to breaches of regulatory codes. It found that Fox's compliance with the UK's Broadcasting Code is in line with comparable broadcasters. Nor did Fox's compliance record in relation to overseas broadcast jurisdictions (where Ofcom’s analysis focused largely on the EU) give cause for concern.
I also asked Ofcom to consider the effect of any failure of corporate governance on this public interest consideration. Ofcom did this in the context of its separate assessment of whether Fox and Sky would remain fit and proper to hold broadcast licenses following the transaction. It concluded that behaviors alleged at Fox News in the U.S. amount to 'significant corporate failures'. However, these did not in its view demonstrate that the merged company would lack a genuine commitment to broadcasting standards.
In reaching a view I have to be guided only by the evidence before me. As such - based on the Ofcom report - I am currently minded not to refer to a Phase 2 investigation in relation to a genuine commitment to broadcasting standards.
As required by legislation, I am giving the parties an opportunity to make representations in relation to media plurality grounds - where I am minded to refer for a phase two investigation by the CMA. In the interests of transparency and ensuring all the evidence has been considered, I will also invite wider representations on the question of commitment to broadcasting standards - where I am currently minded not to refer for a phase two investigation.
While there are strong feelings among both supporters and opponents of this merger, in this quasi judicial process, my decisions can only be influenced by facts, not opinions - and by the quality of evidence, not who shouts the loudest.
The invitation to make representations will open today and close on Friday 14 July and can be found on the DCMS website.
NEXT STAGE OF THE PROCESS
To be clear, the minded-to decisions I have outlined today are not my final decisions.
A word before I close on Ofcom's fit and proper assessment. As the independent regulator, this is a matter for Ofcom, and my understanding is they will publish their report today. I have seen the report and know many members in this house will want to comment on it. Given my current quasi-judicial role in the merger I will not be commenting on the findings.
It is rightly not for Government to determine who should, and should not, hold TV broadcasting licenses. Ofcom has an on-going duty to ensure all UK broadcasters are fit and proper to hold TV broadcasting licenses. I am clear that if any evidence comes to light then it is for Ofcom to take account of that evidence.
I trust - as before - that this update is helpful to Honourable and Right Honourable Members and that this statement gives an opportunity to debate this important issue, while at the same time, respecting the limits of what I can say given my ongoing quasi-judicial role in relation to this merger.
I commend this statement to the House.
(Reporting by Kate Holton, Paul Sandle and Alistair Smout; Editing by Mark Potter)