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21st Century Fox Takeover Bid for Sky

Volume 777: debated on Monday 12 December 2016


With your Lordships’ leave, I will repeat as a Statement an Answer given in another place by my right honourable friend Matthew Hancock. The Statement is as follows:

“As honourable Members know, Sky plc announced on Friday 9 December that it had received an approach from 21st Century Fox to acquire the 61% share in Sky plc which it does not already own. The announcement made clear that the independent directors of Sky plc and 21st Century Fox have reached 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 plc. The announcement also said that under the takeover code, 21st Century Fox is required to set out its intentions by 6 January 2017. The Government have had no prior information from either of the parties, and there has been no contact with either Sky plc or 21st Century Fox about the possibility of the bid.

The Secretary of State has power to intervene in certain media mergers on public interest grounds, as set out under the Enterprise Act 2002. Government guidance on the operation of the public interest merger provisions under that Act gives an indication of how the intervention regime will operate in practice and the approach the Secretary of State is likely to adopt in considering cases. However, the important point is that each transaction will be looked at on its merits, on a case-by-case basis. The guidance makes clear that the Secretary of State will aim to take an initial decision on whether to intervene on public interest grounds within 10 working days of notification of the merger to the relevant competition authority or the transaction being brought to her attention, whichever is later.

The role of the Secretary of State here 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 this proposed bid. In the light of Friday’s Statement, and given the role of the Secretary of State is a quasi-judicial one, the department is putting into place procedures to ensure that the Secretary of State’s decision-making process is scrupulously fair and impartial. These will include guidance for other Ministers, special advisers and officials on dealing with the parties to the bid or any other interested parties to ensure representations are made only through proper channels, the designation of named officials who will support the Secretary of State in her decision-making process and guidance on how they should conduct themselves, ensuring no one who has a potential conflict of interest is involved in the process.

We are, of course, aware of the wide interest from Parliament given the issues raised by the 2010 bid by News Corp for Sky and the advice DCMS received from Ofcom in December 2011. However, if a formal bid is made by 21st Century Fox and accepted by the Sky plc shareholders, then the bid will need to be considered on its merits and in accordance with the legislation. At this stage we cannot comment further”.

My Lords, I thank the noble and learned Lord for repeating the Statement made in response to an Urgent Question in another place. I think a lot of people were concerned to hear last Friday that 21st Century Fox had struck a deal for the total takeover of Sky. Five years ago, a similar bid was abandoned after the Murdoch family and their friends and News Corporation were engulfed in the eye of the phone-hacking storm.

The concerns of 2011 were not just about the serious wrongdoing that was being uncovered by the phone-hacking scandal. They were also about the concentration of media power in fewer and fewer hands. I note that the noble and learned Lord has confirmed that the Secretary of State has power to intervene in certain media mergers on public interest grounds, as set out in the Enterprise Act 2002, and we look forward to having further details about that. I further note that the guidance makes clear, as the noble and learned Lord said, that the Secretary of State will aim to take an initial decision on whether to intervene on public interest grounds within 10 working days of formal notification of a merger to the relevant authorities and such formal notification has yet to be received. We will see how this matter transpires.

There is also the question of whether James and Rupert Murdoch—if they are to acquire the balance of Sky—are fit and proper persons to be licence holders of a regulated television service such as Sky. This is a matter for Ofcom. Last time round, had the bid not been withdrawn, I am sure the noble and learned Lord would agree that it is highly unlikely James or Rupert Murdoch would have passed this test. A lot of water has passed under the proverbial bridge since then, including confirmation of illegal activity, illegal payments and phone hacking in organisations controlled by them. Will the Minster confirm that this fit and proper person test is urgent and that Ofcom needs to attend to it forthwith?

My Lords, we too want to see public interest and fit and proper investigations before any merger is given the go-ahead. We certainly do not want to see an American-style Fox News in the UK. We also need to know what the Government are up to to ensure that they are—as the Minister said they intend to be—scrupulously fair. I have one simple question. Given the numerous meetings that have taken place between government Ministers and Murdoch executives and the recent meeting between the Prime Minister and Rupert Murdoch, do the Government now agree that they should implement Lord Justice Leveson’s recommendations 83 and 84 immediately so that minutes are kept of such meetings and the content of the matters discussed made public?

My Lords, I will respond first to the noble Lord, Lord Stevenson of Balmacara, on the fit and proper person test. Under the Broadcasting Act 1990, Ofcom needs to be satisfied that a holder of a broadcasting licence is a fit and proper person. That is entirely a matter for Ofcom. On a change of control, Ofcom may consider the issue but will do so only once the transaction has been completed.

With respect to the points raised by the noble Lord, Lord Foster of Bath, of course the process of dealing with this transaction will be fair and will be carried out, as I indicated before, by the Secretary of State discharging a quasi-judicial function. There is no present intention to deal with the matters in Leveson that the noble Lord refers to. As regards his suggestion of a recent meeting between the Prime Minister and Rupert Murdoch, I point out that the only recent meeting was in September, when the Prime Minister was attending a meeting with certain journalists and correspondents from the Wall Street Journal and Mr Murdoch arrived unannounced, as it were, at that meeting. I can advise the noble Lord that there was no discussion at that time of the present transaction.

On the Ofcom adjudication on the fit and proper person, will my noble and learned friend the Minister confirm that the Government will make no recommendation of their views either for or against?

As I indicated before, the matter of determining fitness to hold a broadcasting licence is entirely a matter for Ofcom.