Government Clears Path for Murdoch’s Sky Takeover

Rupert Murdoch Sky Takover

Credit: Avaaz via

For most of us, the word ‘monopoly’ refers to that fun-for-a-while board game that nearly always results in children and occasionally grown adults storming up to bed in a huff after landing on Aunty Wendy’s hotel at Mayfair.

For other more business-minded sorts, a monopoly is a damaging market state where one firm has sole control of the available customer base.

Monopoly is a word that has been bandied around for some time in reference to Rupert Murdoch’s hopes of purchasing a controlling stock in the broadcaster Sky, but those concerns have been seemingly thrown out by the government who look set to green light Murdoch’s bid in the coming weeks.

The Fox News impresario has long battled for a complete stake in Sky, and now that the Culture Secretary, Matt Hancock, has rubber stamped his bid Murdoch will soon increase his share in the firm from 31% to a minimum of 51% – the necessary controlling amount – but with the potential to be a complete 100% ownership deal.

That would make the octogenarian the most powerful figure in news production on both sides of the pond – a real kick in the teeth for those who believe that media impartiality is a necessity for a free and proper society.

Terms of Endearment

The deal now hinges on whether Sky News, the broadcaster’s independent news production firm, can be sold to Disney; an express term in the deal that would prevent Murdoch from owning too large a share in media output in the UK. He formerly owed News International, the media group that included News of the World until that rag’s closure following the phone hacking scandal, of which Murdoch was questioned by police. He still has a stake in The Sun, The Times and the Sunday Times.

The Competition and Markets Authority (CMA), which has adjudicated on the case, has said that Fox’s proposed take over of Sky is ‘not in the public interest’, with concerns over media plurality – i.e. the amount of power with which Fox, and thus Murdoch, can wield their own political agenda – the cited reason.

The CMA offered three resolutions to the government: vetoing the sale going through, allowing the sale if Sky News was not included in the package, or preventing the Murdoch Family Trust from being able to influence Sky News’ output in any way.

And now Hancock, never a politician to shy away from his moment in the spotlight, has intimated that the secondary option is the most likely.

Disney Enters the Fray

Huge deals like these are never simple, and the waters have been muddied further by the presence of Disney, the media conglomerate who want to get their fingers in the pie too.

Back in December they had a £40 billion bid accepted for Fox International, which means that they would buy up most of Murdoch’s assets including his current 31% holding in Sky. If Fox’s bid for the rest of Sky’s stake is allowed, then total ownership of the brand would pass over to Disney.

The firm, which does far more than just make old-school cartoons by the way, has a massive portfolio of entertainment brands across the globe, but is yet to really make any inroads into the UK market – hence why they are so keen to get their hands on Sky via Murdoch.

The consultation involving the Culture Secretary is ongoing, with Hancock insisting that he needed to be confident that any final outcome would preserve the independent editorial ethos of Sky News. He expects a decision to be made once ‘we can all be confident that Sky New can be divested in a way that works for the long term.’

“I am optimistic that we can achieve this goal,” he continued. “However, if we can’t agree terms at this point, then I agree with the CMA that the only effective remedy now would be to block the merger altogether. This is not my preferred approach.”

Player Three Enters the Game

There is a third buyer in the hunt for the Sky deal….

Comcast is an American broadcasting firm that owns US-based channels like NBC, E! and USA Today, as well as the film distribution firm Universal Pictures.

They have had their own bid for Sky cleared by the government, which has turned the race for the media brand into something of a complication three-horse race.

Comcast has the edge because it has no media ownership in the UK or Europe, meaning that fears about neutrality are extinguished. They have the financial girth to go toe-to-toe with Disney and Fox, and it will be worth keeping a close eye on how this ownership battle is fought out.