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Mergers & Acquisitions

Government will be ‘scrupulously fair’ in handling of takeover bid for Sky, minister says

The Government will be "scrupulously fair and impartial" in its handling of Rupert Murdoch's attempt to gain full control of Sky, a minister has said.

Labour has raised objections to the takeover, and in an urgent question in the Commons said Prime Minister Theresa May must show she will stand by her promise to stand up to powerful interest groups.

Culture minister Matt Hancock said robust procedures are being put in place to ensure Culture Secretary Karen Bradley - who can intervene in the deal on public interest grounds - is impartial.

Mr Murdoch's 21st Century Fox made a stock market announcement on Friday revealing it has tabled a takeover bid for Sky, valuing the broadcaster at £18.7 billion - which equates to £10.75 per share.

It comes five years after Mr Murdoch was forced to abandon his last attempt to take full control of the satellite broadcaster, amid the political fallout of the phone-hacking scandal.

Mr Hancock told MPs: "In the light of Friday's statement and given the role of the secretary of state, the department is putting in place procedures to ensure that her decision-making process is scrupulously fair and impartial should a decision be necessary."

He confirmed the Government has not yet received formal notification of the proposed takeover, and Ms Bradley will decide whether to intervene after that.

Mr Hancock also said: “The role of the secretary of state here is a quasi-judicial one and it’s important she acts independently and is not subject to improper influence.”

He added guidance is being drawn up for ministers and officials for dealing with interested parties in the bid.

Shadow culture minister Kevin Brennan raised concerns that a takeover will concentrate media power in the hands of the few.

He said MPs of different political parties across Parliament united in calling for the bid to be withdrawn five years ago and Labour has “not forgotten” about that commitment.

Mr Brennan also asked if Mrs May discussed the proposed takeover when she met Mr Murdoch in New York in September – something which Mr Hancock later denied in response to a separate question.

Conservative former culture secretary John Whittingdale said there is a “strong case” for asking the regulators to provide advice over any competition or plurality concerns should a bid develop.

He also said: “This essentially would be an investment decision rather than an acquisition since 21st Century Fox already has effective control of Sky.”

Mr Whittingdale added: “Since the last bid, which was approved by Ofcom subject to certain remedies, there has been a considerable increase in competition in the pay-TV market.”

Mr Hancock said the decision has to be taken in the context of the “world as we find it”.

Former Labour leader Ed Miliband recalled that MPs unanimously rejected the previous bid, adding: “We still have issues of phone-hacking unresolved in the courts and we still have a system of self-regulation that has not satisfied the victims of phone-hacking.”

Tory MP Peter Bone said there is “concern across the House” over the issue.

Sky’s independent directors are facing pressure from shareholders to push for a higher price from Mr Murdoch and not sell the broadcaster on the cheap.

Investors have questioned the value of the deal and raised concerns about the involvement of Mr Murdoch’s son – James Murdoch – who is Sky’s chairman and Fox’s chief executive.

Thomas Moore, investment director at Standard Life Investments, told the BBC that the role of James Murdoch in the two companies means “this can’t be an arms-length deal”.

On Friday, 21st Century Fox and Sky said talks would continue and there was no certainty that a deal would be struck.

The bid represents a 40% premium on Sky’s share price on Tuesday December 6. Including all debt, the proposed deal values Sky at £25.3 billion.


Photo © Iain Watson (CC BY 2.0). Cropped.