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Fox-Sky Merger

Volume 627: debated on Thursday 20 July 2017

With permission, Mr Speaker, I would like to make a statement on the Fox-Sky merger. Three weeks ago, I came to the House to set out my initial decisions in relation to the proposed merger between 21st Century Fox and Sky plc. Having referred the bid for a phase 1 investigation by Ofcom and the Competition and Markets Authority in March, the decision before me was whether or not to refer the merger to a fuller phase 2 investigation by the CMA.

I told the House then that, following Ofcom’s advice, I was minded to refer the merger to the CMA on the grounds of media plurality, and minded not to refer on the grounds of commitment to broadcasting standards. At the same time, I confirmed that I had received a set of undertakings in lieu of referral from the parties and was minded not to accept them.

I also set out the steps that I would follow for the next phase of the decision. I said that, as required by legislation, I would allow the parties to the proposed merger the opportunity to make representations on my position on media plurality. In the interests of transparency and ensuring that all the evidence had been considered, I would allow all interested parties, including the public and parliamentarians, to have their say, particularly on the question of commitment to broadcasting standards. I set last Friday as the deadline.

As the House knows very well, decisions by the Secretary of State on media mergers under the Enterprise Act 2002 are made on a quasi-judicial basis. That means that I must take my decision only on the basis of evidence that is relevant to the specified public interests. I must act independently and follow a process that is scrupulously fair and impartial. I have sought throughout this process to be as transparent and open as possible, and I have kept the House informed at every available opportunity. In keeping with that spirit, I have come to the House today to give as full an update as I possibly can before it rises for the recess.

I can confirm that I have received detailed representations from 21st Century Fox and a letter from Sky, which I will aim to publish, subject to statutory and confidentiality requirements, once I have taken my final decision. I also received a letter from Lachlan and James Murdoch on Friday last week, and a further letter from 21st Century Fox this Monday, which it has since published.

The detailed representations from 21st Century Fox raise a number of points on Ofcom’s public interest test report and the analysis underpinning Ofcom’s recommendations, contesting Ofcom’s view that the transaction raises public interest concerns that justify referral to a phase 2 investigation by the CMA. Neither of the parties has offered any further or amended undertakings in lieu of referral. I have received a substantial number of responses in relation to my referral decision.

In coming to my decision on this case, I must take account of all relevant representations made to me. As a result, my final decision on referral can be made only after I have fully considered all relevant evidence on both the plurality and the commitment to broadcasting standards grounds. Given that the consultation closed only on Friday, there has not been time to consider all the representations, and I am not in a position today to make my final decision on referral.

What I can do, however, is confirm to the House that, having carefully reviewed the parties’ representations, and in the absence of further proposed undertakings, I am currently still minded to refer on the media plurality ground and still minded not to accept the undertakings in lieu of a referral.

To be clear, as I have said, I must fully consider all relevant representations before reaching a final decision, and I will take the time I need to look at the many I have received, balancing the need for careful consideration of relevant evidence with the merger parties’ legitimate need for a prompt decision. However, I have prioritised considering the parties’ representations and the detailed points they have made to me. While some of the points they have raised may benefit from closer examination by the CMA at phase 2 in the event that the merger is referred, there was nothing in their representations that, at this stage, has led me to change my mind about the appropriateness of referral. Unless new evidence from other representations changes my mind in the coming weeks, the bid will therefore be referred to a phase 2 review on at least one ground—media plurality. I thought it would be helpful to set out my current view to the House, given the public interest in this case, and also to the parties so that they can be as clear as possible about my intentions and the likely next steps for this bid.

Bearing in mind the obligation to act promptly as part of this quasi-judicial process, I expect I will be in a position to come to a final decision on referral, including in respect of the broadcasting standard ground, in the coming weeks, and potentially during summer recess. Should this prove to be the case, and as I did previously where stages of the merger have taken place outside of the House sitting, I will write to the parties informing them of my decision, as well as to the Leaders and Speakers of both Houses, to the hon. Member for West Bromwich East (Tom Watson) and to the Chair of the Culture, Media and Sport Committee, whom I was pleased to see reappointed last week.

As I have said previously, I trust that making this statement to the House gives another welcome opportunity to discuss this important issue, and further cements my undertaking to ensure openness and transparency. I commend this statement to the House.

Mr Speaker, good morning to you. As this is the last day before the recess, I thank you and your staff for the welcome you have given my new colleagues who were elected in the general election.

I thank the Secretary of State for her statement. I am grateful to her for returning to the House before the recess to update us on progress—even if there is not much progress to update us on. The last day of term is sometimes called “Take out the trash day”. Well, this appears to be “Keep the trash in the office day”. Nevertheless, this is one piece of Government indecision that we welcome. It is right that the Secretary of State has taken her quasi-judicial responsibilities seriously. She will be aware that, whatever decisions she makes, there is a strong possibility of judicial review by one side or the other. No doubt that has influenced her decision to tread carefully and slowly, and we respect her for that.

The lawyers at 21st Century Fox have already written a somewhat intimidating letter to the Secretary of State, trying to bounce her into a decision. We know that that aggression is the Murdochs’ modus operandi; we have been on the receiving end of it in this House, and we urge the Secretary of State to keep standing firm. In particular, there is absolutely no need for the Secretary of State to announce a decision during the summer recess. Parliament must have the opportunity to scrutinise any decision she makes. It is not her job to operate to 21st Century Fox’s corporate timetable; it has to abide by the parliamentary timetable. She should demonstrate to the company that she, as an elected representative of the people, is in charge, not 21st Century Fox.

Last time the Secretary of State came to this House, she said that she was minded to refer the bid to a phase 2 investigation on grounds of media plurality, as she said again this morning, but that she was not minded to refer on grounds of broadcasting standards. She then said that she had invited representations on both grounds by last Friday. It is right that a phase 2 investigation on media plurality grounds goes ahead, but the broadcasting standards investigation should go ahead too. Compelling arguments for that have been made by my right hon. Friend the Member for Doncaster North (Edward Miliband), the right hon. Member for Twickenham (Sir Vince Cable), and the right hon. and learned Member for Rushcliffe (Mr Clarke). Does the Secretary of State agree that that is as distinguished a cross-party alliance as anyone can imagine? Does she also agree that it is absurd that Ofcom is currently refusing to meet my right hon. Friend the Member for Doncaster North so that he can share his concerns with it?

The truth is that the Murdochs have a history of regulatory non-compliance and of corporate governance failure, and that calls their commitment to broadcasting standards into serious question. Ofcom itself says that there are significant concerns about Fox’s approach to ensuring Fox News content compliance with the broadcasting code. We saw in the phone hacking scandal that senior employees and executives at News International failed to comply with the criminal law, with acceptable standards of journalistic conduct, and, frankly, with basic human decency. We see the ongoing sexual and racist harassment at Fox News in the United States, where very senior employees behaved appallingly over decades and nothing was done—evidence of what Ofcom calls “significant corporate failure”.

Of course, the best way to get to the bottom of this corporate failure would be to proceed with the inquiry that has already been promised and that is specifically intended to look into it—part 2 of the Leveson inquiry. Will the Secretary of State undertake today to get on and just do it? I note that, although the Conservative manifesto promised not to go ahead with Leveson 2, a recent parliamentary answer to me indicated that the Government are still considering the consultation on it. I hope that this is another of the Prime Minister’s many dropped manifesto commitments. It is not too late for the Secretary of State to do the right thing, and if she does go ahead with Leveson 2, she will have our full support.

The influence of the Murdochs on this Government is still a matter of serious concern. Only this week, in a letter to me, the First Secretary of State refused to deny that Rupert Murdoch had asked the Prime Minister to put the right hon. Member for Surrey Heath (Michael Gove) back into the Cabinet. I expected the allegation to be denied. It was not denied. We will be drawing our own conclusions from that. I have consistently—persistently—asked the Secretary of State to publish the minutes of the meeting between the Prime Minister and Rupert Murdoch in the US in 2016. Will she commit to do that now?

The Secretary of State now has the opportunity to demonstrate that we live in a democracy, not a Murdochracy. Will she now undertake to prove who is in charge by not making any decision until the House returns in September?

The hon. Gentleman asks a number of questions and I will attempt to address as many as I can in the time that we have; there were a number of questions there—I am sure he would agree.

I think it is worth my repeating that I am acting in a quasi-judicial basis under the Enterprise Act. We are also reflecting, in our behaviour as a Government, the recommendations of Sir Brian Leveson in his part 1 report, where he was very clear about the way in which Government should operate in relation to media mergers. We have been cognisant of those recommendations throughout.

One of the things that I am required to do under the Enterprise Act is to act without undue delay, in the interests of all parties. That is why I am here today to say that nothing I have seen so far has changed my mind, but I am going to look at all the representations that I have received, which are in the tens of thousands. Many of them are identical, I have to say, but they all need to be looked at, and I will do so in order to see what evidence they provide.

I was also clear that the Ofcom report on the commitment to broadcasting standards test was clear. It was unequivocal. There were no grounds on which I could refer. I am therefore looking at whether new, substantive evidence comes to light following my statement. I will ensure that I consider all the representations. However, in the interests of all parties, I will have to make sufficiently speedy progress in making a decision to ensure that we can deal with these matters in line with the Enterprise Act. That may mean I have to make a decision before Parliament returns, which is why I am in the Chamber today being as open and transparent as I can be. I want to ensure that I am as clear as I can be with Parliament and with colleagues about the situation.

The hon. Gentleman asked a question about the right hon. Member for Doncaster North (Edward Miliband), whose letter I had sight of this morning. As I understand it, the right hon. Gentleman has asked for a meeting with Ofcom to discuss its report on the fit and proper test, and I am surprised that Ofcom is not able to meet him to do so. The fit and proper test is not part of what I have to look at—the test under the Enterprise Act is different: it is about the commitment to broadcasting standards, not the fit and proper test. Ofcom has to undertake an assessment of whether a company is fit and proper on an ongoing basis. I am surprised that it is not willing to meet the right hon. Gentleman and other parliamentarians, but I am sure it will have heard my comments on that matter in the House.

All Ministers’ meetings with journalists are minuted—sorry; recorded—and the meetings that they have had are in the public domain.

I will be as open and as transparent as I possibly can be, which is why I am in the Chamber today. I had hoped it would be possible to announce a firmer decision today, but the quantity and volume of the representations received mean that that simply has not been possible.

May I commend my right hon. Friend for not becoming a party to the socialist vendetta against the Murdoch family? When considering media plurality, will she bear in mind that there were four channels when Sky launched, but that there are now hundreds, and that the real opponent of media plurality is the bloated—taxpayer-funded—BBC, which likes to gives millions of pounds to presenters some of us have never heard of?

I know you do not want me to stray on to the BBC, Mr Speaker, so I will not respond to that point. The report that I asked Ofcom to prepare as part of the phase 1 inquiry found firm grounds for concerns about media plurality. In the absence of further representations with evidence that might change my view, it is important to say that I am still minded to refer the merger on the grounds of media plurality. Should I make the final decision to refer the merger for a phase 2 investigation, the Competition and Markets Authority will be able to flush out the evidence on all those points.

I want to join colleagues in wishing you, Mr Speaker, and your excellent staff in the House a very good summer recess. All SNP MPs wish you well for the summer recess. I also want to congratulate England’s women on their resounding win over Scotland last night. The 6-0 result was excellent. We put up a good fight, but unfortunately it was not enough on this occasion.

I thank the Secretary of State for advance sight of her statement. She will be aware of my specific constituency concern, given that Sky is the largest private employer there. My constituents who work at Sky will want to know that any deal is properly scrutinised and that their jobs will be secure.

Three weeks ago, the Ofcom report stated that the public had serious concerns about the concentration of media ownership in fewer and fewer hands. We share the public’s concern about that and about the dilution of the diversification of media content. At the time, we welcomed the fact that the Secretary of State was minded to refer this to the Competition and Markets Authority on the grounds of diminishing plurality in the UK media. We still believe that that would bolster public confidence, and we very much believe it should happen.

We welcome the fact that the Secretary of State has come to the House and delivered her statement, but we are very disappointed that there has been no final decision. We understand the need to examine representations from all parties, but the fact that a decision is likely to be made during the summer recess speaks to a developing pattern. As we saw during the election, there is a developing pattern in the making of major decisions, and it is not good governance. The decision has been kicked into the long grass, and Members of this House will not get an opportunity to scrutinise it. The Committees of the House have yet to sit, and there should be an opportunity for the relevant Committees to scrutinise any decision made. Plurality and transparency within the media should be one of the Secretary of State’s key motivations, but it seems that a decision will not be subject to maximum transparency when it comes to telling the House. Given that it looks as though she is running away from scrutiny, will she commit to making a decision when the House is back from summer recess so that we can properly scrutinise the deal?

I join the hon. Lady in congratulating England’s women. I am disappointed for her sake that the wearing of a football shirt did not produce the luck for which she hoped for Scotland’s women, but as an England woman I am delighted by the result.

The hon. Lady has a constituency interest, with Sky being the largest employer in her constituency. I, too, want to make sure that the merger is properly scrutinised and dealt with so that we have certainty for employees such as her constituents. She says that we have shied away from taking decisions with full scrutiny, but that is simply not the case. For example, I originally asked Ofcom to report to me on Sky in May, and I delayed the date of the report until after the election campaign so that I could come to the House. I had hoped to be here today making a final decision, but the sheer volume of representations—all of which I need to go through, even though a large number of them are identical campaign emails—means that I cannot make that decision today. I have to make the decision with due consideration of time, because it is important for the parties to the merger and all concerned that a decision is taken.

It is, I think, the Secretary of State’s first appearance at the Dispatch Box since the Wimbledon final last Sunday. I am sure she will want to congratulate the great Roger Federer on his new record—the latest of many records established by the great man over the last 14 years.

I thank the Secretary of State for the openness and transparency at the heart of the statement. Media plurality is vital, and transparency is vital. On pay within the media, would she like to remind all employers that we have equal pay laws which state that people from all backgrounds doing the same job should be paid equally?

Of course I will join you, Mr Speaker, in congratulating Roger Federer. I was lucky enough to see him play on Friday, and I know you were there as well. I should also congratulate Lewis Hamilton. I was, unfortunately, not able to be at the Wimbledon final because I was at the grand prix, where I was able to congratulate Mr Hamilton personally on his great success. Four British grands prix in a row is a fantastic achievement. I am sure the whole House will join me in celebrating what is turning into the most incredible summer of sport for Britain and British athletes—and Roger Federer. I think he is almost an honorary Brit at this stage.

I agree with my hon. Friend the Member for Eastleigh (Mims Davies); I think Wimbledon is one of the places that have equal pay for men and women. I want to see gender disparity removed from all employers, and I was as surprised as she was by yesterday’s annual report.

The Culture Secretary has just shown us why she has an enviable job in Government. She is the Minister for tickets, as well as for many other things. May I wish you—and your staff, as seems to be the fashion—a happy summer, Mr Speaker?

I welcome what the Secretary of State said about plurality and the fact that she is minded to refer on plurality grounds. I welcome what she said to Ofcom about meeting me and colleagues regarding the fit and proper issue. She needs to make the decision on broadcasting standards in a timely way, but she needs to look at some detailed issues. When she invited representations, she said in her statement to the House that she wanted new evidence, or evidence on Ofcom’s approach. My argument, and that of my right hon. and hon. colleagues, is that Ofcom’s approach is flawed and that she needs to do what it did not, which is to look at the evidence—including the evidence about Fox and the News of the World—on the basis of the right legal threshold; look at the evidence about James Murdoch, which she asked it to do and it failed to do; and, indeed, look at the wider concerns about Sky News becoming like Fox News. I think that that will take a bit of time.

On those grounds, as well as those of parliamentary accountability—she has shown a desire all along to be accountable and open to Parliament on this issue—the Secretary of State can come back at the beginning of September, after having a good summer and scrutinising these issues, and tell us her decision. That is the right thing to do, and she should not, as my hon. Friend the Member for West Bromwich East has said, give in to the old tricks of the Murdochs, which are to bully people into making wrong and rushed decisions.

I should wish you a happy summer, Mr Speaker, as it appears that that is the order of the day. [Interruption.] And Roger, of course.

I have been as transparent as possible. As I said in my statement, I may make a decision over the course of the summer recess, but it may take longer. I am taking the time to consider all representations, including the right hon. Gentleman’s, those of the right hon. Member for Twickenham (Sir Vince Cable) and those of my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), who is not in his place. I will look at the evidence and make a decision on that basis.

In my right hon. Friend’s previous statement, she emphasised that it was indeed the evidence that she would look at, and she mentioned quality not quantity. She has said in today’s statement that part of the reason for the delay is the volume of communication she has received; she mentioned tens of thousands of items. What percentage of those tens of thousands of items were roughly original evidence and what was simply 38 Degrees or similar emails, which are all identical and not original?

I am not able at this stage to give precise figures, but of the more than 10,000 responses that have already been coded and looked at, a very large number were identical. I said in my previous statement that I would look not at those who shouted loudest but at those who provided the evidence. It is a shame that I opened my inbox one morning to find 10,000 unread messages on this matter, almost all of which were identical. That gets in the way of my being able to be a constituency MP; constituents’ messages could simply get lost in those many tens of thousands. Clearly, however, I have to look at all those representations, but it is a shame that people who, in good faith, want to have their voice heard get drowned out by those who simply press a button and send an automatic message.

Can the Secretary of State reassure the House that she will not proceed to a decision until she has received a report from the Information Commissioner that the 13 million datasets that will be handed over to Fox as a result of the takeover cannot be misused or misapplied for political purposes? She will know that that concern was raised recently by senior Members of another place.

I am aware of those concerns. The right hon. Gentleman will know from his previous role as Secretary of State for Business, Innovation and Skills, which has been replaced by the Department for Business, Energy and Industrial Strategy, the terms of the Enterprise Act 2002 on the pieces of evidence I can look at. On the public interest test, it is very clear about what evidence I can look at.

Does the Secretary of State agree that British broadcasting regulations mean that even a hypothetical Fox News UK would be a very different broadcaster from the US version?

Broadcasters in the United Kingdom have to comply with the broadcasting code. There are very strict rules and regulations. They are regulated by Ofcom and the broadcasting landscape is very different from that of other countries.

This is the second urgent question today in which the issues have been openness, transparency and trust. The importance of obtaining that public trust and buy-in to the decision that the Secretary of State is going to make means that it is absolutely essential that it comes back to Parliament. May I also remind the House that the BBC has never been investigated for phone hacking or other breaches of honesty and decency?

Just to be clear, I have come here of my own volition—this is a statement, not an urgent question—to be as open and transparent as I can. I wanted to be able to make a decision before the House rose for the summer recess, but it simply has not been possible. I will now take time to look at the representations and ensure that we make the right decision. However, my “minded to” decision, about which I came to talk to the House three weeks ago, has not changed.

I thank the Secretary of State for her statement. Does she appreciate the great concern about the supposed impartiality of the media, which is fostered by independent news stations? That concern is felt by many, if not all hon. Members. Will the Secretary of State take the opportunity to allay those fears about impartiality in the media?

All broadcasting, including the BBC now, is regulated by Ofcom. There is an obligation on all broadcasters to be impartial. I suggest that the hon. Gentleman alerts Ofcom to instances in which he feels that that has not been the case, and I would be happy to be copied in so that I am aware of his concerns.

There is a great deal of disappointment that the Secretary of State has not yet committed to come back to the House to explain matters to Parliament and allow the scrutiny and transparency that she says are so important. The need for speed should not undermine the democratic process, so will she reassure us that she will not allow that to happen?

I have been as transparent as I possibly can within the confines of the parliamentary calendar. However, the parliamentary calendar cannot be allowed to dictate what I do in my quasi-judicial role as Secretary of State. I will continue to be as open and transparent as I can and I will ensure that Parliament is fully informed of any decisions I make. I am always happy, when Parliament is sitting, to come to the Chamber and for my decisions to be scrutinised.

I thank the Secretary of State, certainly for the first part of the statement, which was about deferring the decision to refer. If she is having problems with her emails, such as getting 10,000 from 38 Degrees, I will happily take her ticket for Wimbledon so that she can spend more time in the office.

I echo the comments of my hon. Friend the Member for West Bromwich East (Tom Watson) and my right hon. Friend the Member for Doncaster North (Edward Miliband). The issue is very serious for us all, and certainly for the public. There is clear evidence of significant corporate failure and—dare I say it?—systemic operational problems with corporate governance. That takes much more time to tackle. Given the gravity of the matter, we cannot rely on just receiving a summer postcard notifying us of the decision. I urge the Secretary of State to wait six weeks and have the decency to announce the decision to the House.

As I have said, commercial decisions, a quasi-judicial process and the terms of the Enterprise Act 2002 are not defined by the parliamentary calendar. If I make a decision before Parliament returns, I will go through the process, as I have done previously, of notifying the Leaders and Speakers of both Houses, the Chair of the Select Committee on Digital, Culture, Media and Sport and the hon. Member for West Bromwich East. It may be the case that I make the decision when we return; I simply do not want hon. Members to expect one thing or the other.

First, I should have welcomed the right hon. Member for Twickenham (Sir Vince Cable) back to the Chamber—my apologies for not doing so. My decision so far is that I am minded to refer on the basis of media plurality. I have not moved on that, but I have not yet made a final decision.

Although I appreciate the Secretary of State’s offer of sending me a letter during the recess if she makes a decision, I am sure that she understands that it is never the same as seeing her in person. Will she commit to making herself available to appear before the Select Committee, perhaps in September if it is formed, to discuss her handling of the matter if she has made a decision by then?

I congratulate my hon. Friend on his re-election as Chair of the Digital, Culture, Media and Sport Committee. Of course, I am always happy to be called by the Select Committee to give evidence.