Sky bid: Broadcasting grandee warns of Sky News closure risk

David Elstein, chairman of openDemocracy.net and a former head of programming at BSkyB, has written a powerful – and 5,000-word – analysis piece for openDemocracy and examining the possible outcome of the Fox bid for Sky, and paying particular attention to the prospects for Sky News.

The UK’s Culture Secretary, Karen Bradley has set this coming Friday (July 14th) for closing submissions to her on the merits – or otherwise – of the Fox acquisition. She will then subsequently decide whether to approve the bid – perhaps with fresh undertakings from 21st Century Fox – or refer it to the Competition and Markets Authority (CMA).

Elstein reminds readers that UK regulator Ofcom continues to lump together Rupert Murdoch’s News Corp-owned publishing assets, as well as those of his entertainment-based assets (and where Sky sits), notwithstanding the formal separation of the two businesses some three years ago. “The regulator took the view that the Murdoch Family Trust’s (MFT) position in each of Fox and News Corp gave it material control, and so the two companies should be looked at together (which the Ofcom report says conforms with previous regulatory practice),” says Elstein.

“Remarkably,” adds Elstein, “when the Murdochs made a similar bid for Sky in 2010 (that time through News Corp), the independent directors suggested closing Sky News if that would allow the deal to go through. It was the Murdochs who spent six months trying to find a structure for Sky News that would satisfy OFCOM and keep the service alive: only for the Milly Dowler revelation to force News Corp to withdraw the bid.”

Elstein continues: “To the best of my knowledge – and I was Head of Programming at Sky for four years – no-one from the MFT has ever tried to influence the output of Sky News during the 29 years it has been on air. Indeed, the only influence the MFT has brought to bear is an insistence on Sky accepting the on-going financial losses incurred by Sky News (cumulatively, at least £500 million).”

He says that Fox could employ what he describes as the “nuclear” option, and close Sky News, and “thus removing all the media plurality issues in one ironic stroke… But Fox will not want to spend months on such a process when it can be highly confident that a CMA investigation would clear the bid, requiring as it does a much higher threshold – probability, not possibility, as with Ofcom – of evidence that the transaction would damage the public interest.”

Elstein concludes: “We must all at least hope that the independence and financing of Sky News are robustly established in any undertakings given, and then properly enforced. To lose or damage Sky News, especially by miscalculation on the part of those responsible for monitoring the bid, would be a serious setback: not least to the need for media plurality, which is ostensibly the issue at stake.

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