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Sky: 21st Century Fox Takeover Bid

Volume 618: debated on Monday 12 December 2016

(Urgent Question): To ask the Secretary of State for Culture, Media and Sport if she will make a statement on 21st Century Fox’s bid to take over the remaining 61% of Sky.

As the House will know, Sky announced on Friday that it had received an approach from 21st Century Fox to acquire the 61% share of Sky that it does not yet already own. The announcement made it clear that the independent directors of Sky and 21st Century Fox have reached an agreement on price. However, the offer is subject to further discussion, and Sky has advised that there is no certainty at this stage that an offer will be made. The terms of any deal will obviously need to be agreed by the non-21st Century Fox shareholders of Sky. The announcement also said that under the takeover code, 21st Century Fox is required to set out its intentions by 6 January 2017.

The Secretary of State has powers to intervene in certain media mergers on public interest grounds, as set out in the Enterprise Act 2002. Government guidance on the operation of the public interest merger provisions under the Act indicates how the intervention regime will operate in practice and the approach that the Secretary of State is likely to adopt in considering cases. Any transaction will be looked at on its merits, on a case-by-case basis. The guidance makes it clear that the Secretary of State will aim to take an initial decision on whether to intervene within 10 working days of formal notification of the merger to the competition authorities, or of the transaction being brought to her attention. No such formal notification has yet been received.

The role of the Secretary of State is a quasi-judicial one, and it is important that she acts independently and is not subject to improper influence. It would be inappropriate for me or the Secretary of State to comment further on the proposed bid under the Act. 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. This will include guidance for other Ministers and officials on dealing with the parties to the bid or any other interested parties. We are of course aware of the wider interest of Parliament in these matters, and we will keep the House updated as appropriate within the legal framework.

I thank the Minister for his response. Late on Friday, a new bid for Sky was revealed. Five years ago, an equivalent bid was abandoned, after Rupert Murdoch and News Corporation were engulfed in the phone hacking storm. At that time the House was united behind a substantive motion calling on Rupert Murdoch to withdraw his bid. The concerns back in 2011 were not only about the serious wrongdoing being uncovered in the phone hacking scandal but about the concentration of media power and ownership in fewer and fewer hands. I have re-read the motion—which we all supported, on both sides of the House—and nowhere does it say that we should sit quietly for five years and come back when we have forgotten all about it. We have not forgotten about it, and we also have not forgotten that when the Prime Minister stood on the steps of Downing Street this summer she said to the people of this country:

“When we take the big calls we will think not of the powerful, but you.”

This is a big call, so we need to know whose side the Government are on.

Ofcom’s original assessment was that the deal may

“operate against the public interest”.

Will the Minister commit the Government, here and now, to issuing a public interest intervention notice and referring the bid to Ofcom? Remember that, back in 2012, Ofcom’s assessment was that the chief executive officer of Fox, James Murdoch,

“repeatedly fell short of the exercise of responsibility to be expected of him as CEO and chairman.”

The Prime Minister met Rupert Murdoch in New York in September. Was the bid discussed then? Did she give him any assurances about the bid, or discuss his future support for her and/or for her Government?

I understand that, as the Minister said, this is a quasi-judicial decision, and that the words he says today will be scrutinised by some of the highest-paid lawyers on at least two continents. Nevertheless, will he assure us that the Secretary of State is prepared to stand up to powerful interests and ensure that this deal is properly and independently scrutinised?

I am grateful for the acknowledgment by the Opposition Front-Bench team that, owing to the quasi-judicial nature of the decision, procedures have to be followed properly. That is what we fully intend to do. Formal notification of this proposal has not been received, and the Secretary of State cannot make a decision prior to that. As I said, the rules are that she should aim to take such a decision within 10 days of formal notification.

I thank the Minister for his answer. I also recognise the quasi-judicial nature of the decision the Secretary of State has to make. I have two technical questions. Since the bid in 2010, which was withdrawn, the Murdoch empire has been divided, with the newspaper operations separated from the broadcast and film operations. How much weight will the Secretary of State give to that separation in determining any questions of plurality in the UK media? Secondly, given that separation has happened, to some extent, how much weight will she place on it when determining whether to issue a public interest intervention notice?

The plurality rules are clearly set out, as the hon. Gentleman knows, and the Secretary of State will follow them very carefully in this determination.

Does my right hon. Friend accept that in the event of a bid there is a strong case for asking the regulators to provide advice about any concerns on competition or plurality grounds? Does he agree that this bid would essentially be an investment decision rather than an acquisition, as 21st Century Fox already has effective control of Sky? Does he also agree that 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?

The decision has to be taken in the context of the world as we find it. The situation, as we find it, in terms of ownership is that 21st Century Fox owns 39% of Sky, and the notification to the stock exchange on Friday was about the proposal to buy the other 61%. Those issues will be taken into account when the decision is made.

I understand the Minister’s complex position on these matters, but will he take into account the fact that when we compare the situation now with five years ago, when the House passed unanimously the motion saying that the bid should not go ahead, we see that we still have unresolved phone hacking issues in the courts and a system of self-regulation that has not satisfied the victims of phone hacking? Will he bear in mind this question—what has really changed since the House passed the motion five years ago? In my view, very little, which is why I believe the bid should be rejected.

It is enjoyable to be at the rerun of one of the right hon. Gentleman’s greatest hits. He says that my position today is complex, but actually it is very simple: we have not yet received a formal notification, and when we do, the Secretary of State will have 10 days to consider, under the Enterprise Act and other legislation, whether it is necessary to take action.

At this early stage, is the Department considering whether some of the conditions that Ofcom attached to the deal last time, such as the guarantee of editorial independence for Sky News, would be required this time around, given the restructuring of the Murdoch companies?

The notification was given to the stock market on Friday morning, but no formal notification to the competition authorities has been received, so it is fair to say that we are quite early on in the process, but all things that it is appropriate to consider will be considered.

What differences can the Minister see between this bid and the one referred to the competition authorities by Vince Cable in 2010?

It will be quite hard, until formal notification, to know the shape of the proposals. When we do, we will have a look at them.

I congratulate the shadow Minister on tabling the urgent question, and I completely understand the Minister’s problem of not wanting to judge an application of which notification has not actually been given, but will he take it from today that there is a concern across the House about this issue and will he undertake to keep the House fully informed? That is the message coming across.

Yes, of course, I would be delighted to keep the House as informed as is appropriate under the legislation the House has passed. I apologise to the House if some of my remarks sound a little reticent, but it will understand that this is a quasi-judicial decision. The Secretary of State does not want her position prejudiced—I do not want to do that—but all these considerations will be taken into account.

Of course, advice will be taken from officials in the Department, and procedures are being put in place to ensure that there are no conflicts of interest and that the decision is taken appropriately.

I would like to give the Minister a second chance to answer the question from my hon. Friend the Member for Cardiff West (Kevin Brennan). Did the Prime Minister discuss this deal with Murdoch back in September in New York?

Surely the only thing that really matters is the public interest. When one man controlled 40% of the newspapers in this country, including the largest daily newspaper and Sunday newspaper, and by far the largest broadcaster—by value—in the country, it poisoned the well of British politics. I urge Ministers, as they go through this business, in the quasi-judicial manner the Minister suggests, that they keep that close to the front of their minds.

I am grateful for the wisdom of the hon. Gentleman, who I know has taken a great interest in these affairs for a long time.

More than 8,000 people work at Sky’s headquarters in my constituency, and many will be concerned about this news, particularly those in journalism. Is the Minister at all concerned that through this deal one man would take 100% ownership of one of the UK’s biggest media outlets?

I want to make it clear that the Secretary of State’s decision relates to media plurality. Of course, there are competition and labour market issues, but the Enterprise Act rules are clear about the breadth of the decision she will take, and she will follow those procedures very carefully.

I echo what my hon. Friend the Member for Rhondda (Chris Bryant) said about the public interest in and concern about this issue. Phone hacking has not died in people’s memories, and anyone who watched the American elections would have had real concerns about the way in which Fox News operates. I urge the Minister to realise that in the public’s mind, this man is not a fit and proper person to have control of our media.

I can assure the hon. Lady that the Secretary of State is a fit and proper person to take this decision. Members of all parties have made their views clear, and we will operate carefully, with appropriate guidance in place for both Ministers and officials, to make sure that this decision is taken in the proper way.