Rupert Murdoch offers to sell Sky News to Disney to appease regulator

Posted April 04, 2018

Walt Disney has waded into the years-long dispute over Rupert Murdoch's influence in United Kingdom media by offering to buy Sky News, a move aimed at easing political and regulatory fears that Fox's acquisition of the TV outlet would deepen the media mogul's dominance in Britain.

"We believe that the enhanced firewall remedies we proposed to safeguard the editorial independence of Sky News addressed comprehensively and constructively the CMA's provisional concerns", Fox said in a statement on Tuesday.

Alternatively, The Walt Disney Company has expressed an interest in acquiring Sky News, with a view to adding it to Disney's existing portfolio of television channels. It faces regulatory problems after the Competition and Markets Authority found the £11.7bn (€13.4bn) deal was not in the public interest.

In a preliminary finding earlier this year, United Kingdom antitrust authorities said Fox's full ownership of Sky and its Sky News operations would give Fox Executive Chairman Rupert Murdoch too much influence in British media. They argue that Mr Murdoch and his family, who also control News Corp, owner of The Sun and The Times, as well as Talksport radio, have too much influence over the United Kingdom media market. Comcast launched its own $31 billion offer for Sky in February.

The regulator is expected to consider both proposals as it explores the latest remedies and what they mean for its stance on the deal.

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Under Fox's first proposal to address those concerns, the US group would establish Sky's loss-making news business as a distinct company within the wider group, with a "fully independent" board and guaranteed funding from Fox for 15 years. "These enhanced remedies went above and beyond what Ofcom, the expert, independent regulator on United Kingdom broadcasting, had stated would mitigate concerns around media plurality".

In this scenario, Disney would end up acquiring Sky News whether or not its purchase of Fox's entertainment assets goes ahead.

Disney owns ABC News and therefore could be seen as a good fit for Sky News.

Disney is already trying to take over many parts of Fox.

Disney has made a bid for the TV assets of 21C Fox. Sky shares rose 1 per cent at 8:14 a.m.in London.

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Fox already owns 39 percent of the European pay-TV group and they are regularly facing competition for control of the business from Comcast (Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.).

The authority has until May 1 to make a final recommendation to the United Kingdom government, which then must decide whether to back the Fox-Sky deal, approve it with conditions or reject it.

A Statement from 21st Century Fox said: "We have worked diligently with the CMA throughout its extensive review".

Disney would guarantee to continue funding the loss-making Sky News for five years at the present level and for a further five years at a level "not materially different" from now.

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