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Sky/Fox Update

Volume 635: debated on Tuesday 23 January 2018

I am here in my capacity as the quasi-judicial decision maker on the proposed merger between 21st Century Fox and Sky to update the House on the interim report issued today by the Competition and Markets Authority.

The decision-making role is one that my right hon. Friend the Member for Staffordshire Moorlands (Karen Bradley) discharged, having met her commitment, which was given many times in this House, to the greatest possible transparency and openness allowed by the process. Although I come fresh to this, I intend to follow that approach of being as open as possible while respecting the quasi-judicial nature of the decision.

As the House well knows, after the proposed acquisition was formally notified to the competition authorities last year, my right hon. Friend issued an intervention notice on media public interest grounds, namely of media plurality and the genuine commitment to broadcasting standards. That triggered a phase 1 investigation, requiring Ofcom to report on the specified public interest grounds and the CMA to report on jurisdiction.

Having received advice from Ofcom and the CMA, in September 2017, my right hon. Friend referred the proposed Sky/Fox merger to the CMA for a phase 2 investigation on both grounds. The original statutory deadline for the final report was 6 March 2018, but the CMA has today confirmed that it will be extended by a further eight weeks and that the revised deadline is 1 May.

Once I have received the final report, I must come to a decision on whether the merger operates or may be expected to operate against the public interest, taking into account the specified public interest considerations of media plurality and genuine commitment to broadcasting standards. Following receipt of the final report, I will have 30 working days to publish my decision on the merger, so if I receive the CMA’s report on 1 May, I will have until 14 June to publish my decision.

To be clear, the publication today is of the CMA’s provisional findings. I have placed a copy in the Library. On the need for genuine commitment to broadcasting standards, the CMA provisionally finds that the merger is not expected to operate against the public interest. On media plurality grounds, the CMA’s provisional finding is that the merger may be against the public interest. It cites concerns that the transaction could reduce the independence of Sky News and would reduce the diversity of viewpoints available to, and consumed by, the public. It also raises concerns that the Murdoch family trust would have increased influence over public opinion and the political agenda.

The CMA has identified three remedy approaches and seeks views from interested parties on them. The remedy approaches are: first, to prohibit the transaction; secondly, to undertake structural remedies—to recommend either the spin-off of Sky News into a new company, or the divestiture of Sky News—and thirdly, behavioural remedies, which could include, for example, enhanced requirements relating to the editorial independence of Sky News.

The CMA recognises that the proposed acquisition of Fox by Disney could address concerns set out in the provisional findings. However, the uncertainty about whether, when or how that transaction will complete means that the CMA has also set out potential approaches that include introducing remedies that would fall away subject to the Disney-Fox transaction completing. The CMA has invited written representations on the provisional report’s findings, and the potential remedy approaches, with 21st Century Fox, Sky and other interested parties, before producing a final report.

As such, and given the quasi-judicial nature of the process, I hope that the House will understand that I cannot comment substantively on the provisional report and must wait for the final report before commenting. However, I am aware of the keen interest across the House in this important matter, and I know that Members will be closely scrutinising the CMA’s provisional findings and will have views on them. The CMA’s investigation will continue in the coming weeks. It has set out the process for making representations on the remedy options outlined, and on the provisional findings, with deadlines of 6 and 13 February respectively. I am sure that today’s debate will provide helpful context for that work.

What I am able to confirm today is that I will undertake to keep the House fully informed and to follow the right and proper process, considering all the evidence carefully when the time comes to make my decision on receipt of the CMA’s final report. I commend this statement to the House.

I thank the Secretary of State for advance sight of his statement. This proposed merger has gone on for longer than the Murdochs ever expected, and for that I want to pay tribute to the Secretary of State’s predecessor, the right hon. Member for Staffordshire Moorlands (Karen Bradley). She could have done what the Murdoch family expected by clearing a path for the bid to go ahead, but she took her quasi-judicial responsibility seriously. I hope that the new Secretary of State will have as strong a regard for his responsibilities and for the public interest as his predecessor. I can assure him that if he does the right thing, he will have the support of the Opposition.

The CMA says that if the Sky/Fox merger went ahead as proposed, it would be against the public interest. It would result in the Murdoch family having too much control over news providers in the UK, and too much influence over public opinion and the political agenda. Does the Secretary of State accept that assessment?

The CMA says that it is not concerned about the proposed merger on broadcasting standards grounds, but in order to reach a proper assessment of that we need to look at corporate governance issues through part 2 of the Leveson inquiry. The Government have not yet published their response to the consultation on that, so can the Secretary of State tell the House when they intend to do so, and will he give us plenty of notice?

The previous Secretary of State said last June that she was minded not to accept undertakings offered by Fox and Sky that were intended to safeguard the editorial independence of Sky News, which they put forward to mitigate Ofcom’s media plurality concerns. Does the new Secretary of State share his predecessor’s view of those undertakings? In November, Sky threatened to shut down Sky News if it proved to be a plurality obstacle in its bid. Will the Secretary of State reject any attempt by the Murdochs to blackmail him or the regulator by threatening Sky staff?

Just this weekend, “friends” of the Secretary of State were quoted in the newspapers as hinting at the outcome of a separate Department for Digital, Culture, Media and Sport review of gambling stakes and prizes. Will he undertake, in his quasi-judicial role, not to speak to his “friends” about his views on the takeover, and to discourage them from talking to the press about them?

When the Prime Minister took office 18 months ago, she stood on the steps of Downing Street and spoke directly to the country, saying:

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

This ambitious, thrusting new Secretary of State now has the opportunity to put her words into action. He can stand up to the rich and powerful, stand up to the Murdochs and act in the public interest. I hope that he will do the right thing.

I think that is the most cheerful response I have had from the hon. Gentleman, so I thank him for that. I will try to answer his questions in as much detail as possible. He asked a number of questions about the process. I am clear that we will follow due process; we will follow our statutory responsibilities and respect the quasi-judicial nature of the decision. My predecessor acted with great solidity and integrity in that regard, and I intend to do the same. In my previous role as Minister for Digital, I was outside the Chinese walls that the Department has on this subject, and therefore not involved in the internal discussions of the earlier stages. I will therefore follow the process by considering the CMA’s final report, once it is published, and all the relevant evidence and information, and then I will make the decision.

The hon. Gentleman also mentioned Leveson. Although we will no doubt have debates on the future sustainability of the press in the coming months, this is a separate process under existing law in which I have a quasi-judicial role; it is not intertwined with the debates that we will have on the primary legislation that was just passed by the other place and received its First Reading in this House this week. Those two questions are separate. The question before us today is one in which I will operate fully in my quasi-judicial role, as I am required to do by law.

The Secretary of State rightly raised Disney’s proposed takeover of Fox. If Disney wholly acquired Sky, Sky would of course be completely separate from the Murdoch family trust and in the ownership of a completely different company. However, does he believe that the Fox takeover of Sky must first be considered on its own merits, and that the future acquisition of Fox by Disney is a separate matter?

The CMA’s report does address the fact that the proposed takeover by Disney is uncertain, and it sets out some details of potential options, given that uncertainty. Anybody can make written representations in the next three weeks, based on that interim report, and I will consider the question when I see the full report in the months to come.

I thank the Secretary of State for advance sight of his statement. I have said many times in this place that plurality and diversity are vital components of an independent media, and therefore I welcome today’s findings by the CMA, which have put on the record the valid concerns that many people have about the further concentration of media ownership in fewer and fewer hands. Although the CMA has said that the deal, as it currently stands, does not meet the public interest test, I am pleased that it references a number of possible remedies.

We have heard reports that the owners of Sky might look to close down Sky News if it becomes an impediment in the takeover deal, with the possible loss of 500 jobs. Can the Secretary of State confirm that he will not allow employees of Sky to be used as pawns in any takeover when the final decision comes before him? If the takeover deal between Disney and Fox is likely to be green-lit, what impact will that have on his final decision, given Disney’s reported lack of interest in news broadcasting?

It is a matter of law that while consideration of the proposal is ongoing, Sky News cannot be shut down in advance of a decision—I can give the hon. Gentleman that assurance. He also made points about his views on the report published today; I shall reserve my judgement, see the final report and come to a conclusion based on that.

I welcome the Secretary of State’s keeping the House informed, but of course he currently has no role. When the CMA presents the final report and he comes to address this matter, will he bear it in mind that, to date, no regulator that has carried out any objective assessment has found any reason to block the merger on the grounds of commitment to broadcasting standards, and also that the greatest disaster that could befall the plurality of the media in this country would be for Sky News, which is after all a loss-making enterprise, although extremely good, to be closed by its new owner?

Both those points are covered in the CMA report that was published today. If my right hon. Friend the former Secretary of State wishes to make to the CMA any further comments like those he just made, he has three weeks in which to do so, after which I will consider the final report in full.

I warmly welcome the CMA’s strong set of findings on plurality. The CMA says explicitly that the deal would give the Murdoch family trust

“too much influence over public opinion and the political agenda.”

I pay warm tribute to the Secretary of State’s predecessor, the right hon. Member for Staffordshire Moorlands (Karen Bradley), because we would not be here had she not had the guts to stand up and say that this matter should be referred to the CMA. We all owe her a debt of gratitude for having done that.

I very much hope that the new Secretary of State, whom I welcome to his place, follows his predecessor’s lead. He can do that by doing two things. First, it is important that he and the CMA should not allow a back-door attempt by the Murdochs to get control of Sky through the so-called remedies process. The simple way to stop the deal going ahead is to prohibit it, not to have some carve out or complicated process. Secondly, it is relevant to the context, so I think the Secretary of State was wrong to attack the other place for what it did on Leveson 2, which was promised by David Cameron, by me and by people from all parts of this House to the victims of phone hacking. If the Secretary of State is to stand up to the Murdochs, he has to allow Leveson 2 to go ahead to get at the truth, because that is what the victims were promised.

It was enjoyable to hear a rendition of the right hon. Gentleman’s greatest hit on Leveson, but on the points relevant to today’s statement and the decision on this deal, I intend fully to exercise my quasi-judicial decision-making role by taking into account all relevant considerations, based on the CMA’s final report. It is in that straightforward and reasonable way that I intend to proceed.

May I say to the Secretary of State that this is personal? This is basically about lefties—particularly the Labour party—who do not like Murdoch. If this involved any other media organisation, the shadow Secretary of State and the Labour party would have nothing at all to say. This is personal, and the Secretary of State should bear that in mind. After all, Ofcom is there to make sure that Sky News is impartial in its coverage, and I am sure that Ofcom can be trusted to deliver on that. In the light of this provisional judgment, can we now expect the CMA to call for the BBC to be broken up, given its dominance over news output in the UK?

The report does go into detail on the different level of media dominance of different parties and sets that out clearly, but obviously I will take forward the views of the CMA’s final report when it is published. My hon. Friend—like the former Secretary of State, my right hon. Friend the Member for Maldon (Mr Whittingdale)—has the opportunity to let the CMA know his views in writing in the next three weeks.

As the CMA acknowledges the importance of Sky News to media plurality, as well as the risks and threat of a forced closure, might the Secretary of State conceivably have a role in facilitating white-knight investors?

The most important thing that we in the Government can do is to execute on the law as it stands. The law has clear constraints and must be operated properly, above board, with integrity, in the quasi-judicial capacity that it sets out.

The BBC’s audience share is the biggest, ITN is second and Sky is smaller than that. The details of that are covered in the report, which I am sure my hon. Friend’s constituents will find illuminating.

I am honoured to have Sky and Sky News based in my constituency. Despite very serious instances of sexual and racial harassment at Fox News, the CMA has concluded that none of that, and none of the industrial-scale phone hacking at Murdoch’s UK papers, is relevant to broadcast standards. Does the Secretary of State really agree with the CMA and think that none of that is relevant to how companies that are completely controlled by the Murdochs behave?

My position is not to agree or to disagree with the CMA; it is to consider the final report that the CMA produces in a couple of months’ time.

Given the fact that Sky’s audience share is dwarfed by that of both the BBC and ITV, will the Secretary of State confirm that the Government are committed to the high-quality journalism and the world-class British broadcasting sector that we know and love?

Yes. As my hon. Friend the Member for Kettering (Mr Hollobone) alluded to, the report does describe the market shares of the different broadcasters, including, of course, the BBC, which is the biggest. We are fully committed to ensuring a sustainable future for high-quality journalism. That is a policy question, and it is also a question of legislation that we will no doubt debate when the Data Protection Bill comes before the House, but it is separate from this decision, which is to be taken specifically within the rules and the law as it stands.

Five years after the phone hacking scandal broke, some civil cases regarding alleged criminality in the Murdoch empire are still ongoing. There will be victims who were very disappointed with the Secretary of State’s response to my right hon. Friend the Member for Doncaster North (Edward Miliband). The commencement of Leveson part 2 would be in the public interest, because it would finally reveal the full scale of hacking and the relationship between the press and the police. When will the Secretary of State follow the CMA’s lead and act to protect the public interest by commencing Leveson part 2?

These two questions are separate. We have a consultation on the Leveson issues. In policy terms, I really care about making sure that we have a sustainable future for high-quality journalism, but that is separate from this quasi-judicial decision, which has to be done within the existing law, and that is how I will take it.

I welcome the Secretary of State to his position and congratulate him on the transparency with which this process is being conducted. Does he agree that it was sensible to refer the merger of Sky and Fox to the CMA to avoid making it party political? Given the Government’s commitment to high standards in broadcasting, will the Secretary of State assure my constituents in Taunton Deane that the Government will continue to maintain high standards in broadcasting and journalism? I have a vested interest as a former broadcaster, but it is also what the people on the street want.

I am not sure that the high-quality journalism of “Farming Today” will ever be the same again without my hon. Friend. Undoubtedly, the importance of high-quality journalism, with a sustainable business model to fund it and plurality around it, are incredibly important policy questions. We will no doubt debate that in future, but it is a commitment to which I stick firmly.

Of course, “Farming Today”’s loss has been Taunton Deane’s gain, as we are all conscious.

In his statement, the Secretary of State said that he will consider “all the evidence carefully” in his quasi-judicial role. How is it possible for him to consider all the evidence unless he goes forward with Leveson 2—thereby honouring the promise given by a Conservative Prime Minister—and hears the evidence that remains unheard so that he can properly judge the Murdochs’ capability and competence for governance?

As I think I mentioned earlier, the question that the hon. Gentleman raises is not relevant to what we are discussing, because the latter is about exercising a quasi-judicial decision within the law as it stands. As I might have mentioned already, I intend to exercise that quasi-judicial decision-making role very clearly within the process as laid out in the law as it stands.