The Murdochs face the biggest investigation into their record as media owners since the Leveson inquiry after the culture secretary said their proposed £11.7bn takeover of Sky should face a further six-month inquiry.
Karen Bradley surprised MPs by announcing that she was minded to refer 21st Century Fox’s planned takeover of Sky to the Competition and Markets Authority on the grounds of their commitment to broadcasting standards, as well as on the expected grounds of media plurality.
It means the Murdochs face an investigation not only into their media power in Britain but into their track record as broadcasters and publishers and their commitment to high editorial standards in both the UK and the US.
Fox is controlled by Rupert Murdoch and his sons Lachlan and James. If the Fox bid is successful and it owns all of Sky then the satellite broadcaster will join the Sun, the Times and talkRadio in the Murdochs’ wider British media empire, giving the family a bigger reach than any news provider apart from the BBC.
It had been expected that Bradley would order an inquiry by the competition regulator on the grounds of media plurality. But the minister effectively overruled Ofcom, the media regulator, in also calling for a broadcasting standards investigation after misconduct allegations at Fox News in the US.
Correspondence between Bradley and Ofcom revealed that the minister raised concerns about both a string of sexual harassment allegations at Fox News and claims that the broadcaster colluded with the White House on a discredited story that the murdered Democrat aide Seth Rich was the source of leaked emails.
Bradley told parliament that the existence of “non-fanciful concerns” about compliance procedures at Fox News and corporate governance at the Murdochs’ companies meant the legal threshold for widening the investigation of the deal to broadcasting standards had been met.
“The fact that Fox belatedly established such [compliance] procedures does not ease my concerns, nor does Fox’s compliance history,” Bradley said.
“Third parties also raised concerns about what they termed the ‘Foxification’ of Fox-owned news outlets internationally. On the evidence before me, I am not able to conclude that this raises non-fanciful concerns.
“However, I consider it important that entities which adopt controversial or partisan approaches to news and current affairs in other jurisdictions should, at the same time, have a genuine commitment to broadcasting standards here. These are matters the CMA may wish to consider in the event of a referral.”
Ofcom had said in a report published in June that the evidence available did not justify a broadcasting standards investigation and that Fox and Sky had a record of compliance in line with other major broadcasters.
Shares in Sky closed down almost 2% after Bradley’s announcement as concerns increased among investors about delays to the takeover and whether it would go ahead. There will be a 10-day consultation before Bradley makes her final decision. During this time, Sky and the Murdochs can make submissions to the government.
An investigation into the Murdochs’ commitment to broadcasting standards would be unprecedented for the CMA, which typically focuses on market share and consumer rights.
Wilton Fry, a media analyst at Royal Bank of Canada, said: “The CMA is likely to look at the relationship between Fox, the Murdoch family and control of the organisation. We believe the issues raised – such as potential undue influence, corporate governance etc - should all be able to be resolved via either behavioral and/or structural remedies.
“The real question in our mind, is where is the point of pain, at which point Fox would not be willing to accept the remedies - very tough remedies could include, for example, a prohibition on James Murdoch’s executive powers given his prior relationship with News Corp at the time of the phone-hacking scandal.”
Fox said it was disappointed that Bradley had not followed the advice of Ofcom. “As the correspondence between DCMS and Ofcom makes clear, we do not believe that there are grounds for the secretary of state to change her previous position.”
However, Labour welcomed the prospect of an investigation on the grounds of broadcasting standards.
Tom Watson, the deputy leader, said: “I think it’s the first time a minister in the current government has ever stood in the way of what the Murdochs want, and frankly not before time, so, well done,” he said. “As they say in the Black Country, she’s [Bradley] a good ‘un.”
Ed Miliband, the former Labour leader, criticised Ofcom’s handling of the Sky deal as well as comments made by the regulator in a letter to Bradley that recent complaints about Fox News – including programmes covering its Seth Rich story – were not a breach of the broadcasting code because the shows in question were not news programmes.
“Ofcom is less alert about the danger of the Murdochs than the Conservative secretary of state,” he said. “They are far too credulous and gullible about the Murdochs.”
Ofcom said: “As an independent regulator we act without fear or favour, free from political or commercial influence. We provided independent and evidence-based advice, and it is then right for the secretary of state to use her statutory discretion to reach a decision.”
Fox News has become increasingly troublesome for the Murdochs as they
attempt to buy Sky and it was announced last month that it would no
longer be broadcast in the UK for “commercial reasons”.
A sexual harassment scandal at Fox News has led to a string of high-profile figures leaving, including the chairman Roger Ailes, who has since died, and leading presenter Bill O’Reilly. Critics of the Murdochs have also compared the Rich story with the News of the World hacking the phone of murdered schoolgirl Milly Dowler because of the distress it caused the victim’s family. Fox News denies colluding with the White House on the story.
