Enders warns against News Corp’s planned takeover of Sky
News International and Sky will control 50% of the newspaper and television markets by somewhere between 2015 and 2020, according to media analyst Claire Enders.
Speaking to MediaGuardian, Enders said: “They will have a force de frappe which none of their competitors can match, while the BBC’s income will be negotiated downwards, and ITV simply lives with the ebb and flow of the advertising market.”
Enders claims that nothing is growing, aside from News International and BSkyB. Like many others, Enders also expressed concerns over News Corp’s planned takeover of Sky, which came under scrutiny at this year’s MGEITF.
The culture secretary Jeremy Hunt claims that Vince Cable will ultimately make the decision, although News Corp hopes to gain approval from the European Commission before it even reaches Cable’s ‘things to do’ pile. Hunt certainly believes that the current UK ownership rules are sufficient enough: “We have rules in place and there is no need to change them,” he said.
However, delegates at the festival were less than satisfied with Hunt’s response. “There is a reason why competition laws don’t apply to Sky. It is wrong for Murdoch to have a dominating position in the TV market,” John Mayer said, also pointing out that this kind of takeover would not be allowed in the USA or Australia.
News Corp has offered 700p a share for the remaining 61% of Sky, which values the company at about £12.25 billion. The buyout is being treated purely as a business deal – something which Rupert Murdoch and Sky’s independent directors need to battle out and then agree on. However, Enders believes it is much more than a transaction. So much so, in fact, that she has written to Cable herself, warning that a combined News Int and Sky will lead to a “reduction in media plurality to an unacceptably low level”.
Enders analysis shows that News Int’s four newspapers currently control 37.3% of the UK press market, while Sky holds 80% of the pay TV market and 16% of television advertising – perhaps a sign that Murdoch already dominates too much of the UK media industry?
However, Enders points to the implications of such a takeover – namely that News International newspapers and BSkyB channels will merge in to one stream of fact and opinion – therefore dominating the news agenda.
She also comments on News Corp’s potential to exploit its position, by bundling newspaper and Sky subs, for example. As it stands, lots of people enjoy Sky (9.8 million to be precise), but they might not all want to read The Sun or The Times. As a result, “long-held reader loyalty to titles such as the Mirror, the Daily Telegraph and even the Daily Mail could be severely tested,” says Enders.
Enders isn’t the only one calling on the government to sit up and take note. Speaking to the Observer, Lord Puttnam, who chairs the joint parliamentary scrutiny committee for the Communications Act 2003, added: “The desire of News Corporation to buy the 61% of pay-TV operator Sky, which it doesn’t already own goes straight to the heart of arguments about media plurality in a modern democracy.
“The scope for ensuring that news is manipulated to reflect a particular viewpoint, across different media is very considerable. Especially since, if the other shareholders were driven out, News Corporation would for the very first time have untrammelled control of Sky News.”