Murdoch’s Sky takeover bid: here is what is likely to happen

The good news for anti-Murdoch campaigners is they’ve got their independent inquiry. The slightly less good news is that it is very likely that Ofcom will fail to find sufficient grounds to block the deal.

If Labour MP Tom Watson appeared on Mastermind there is no doubt what his special subject would be – Rupert Murdoch and the phone-hacking scandal.

Without his dogged work on the subject it would be difficult to imagine him as deputy leader of the Labour Party. He was the man who took on Murdoch and won.

Watson is entitled to credit for highlighting a genuine press scandal, though one that spread beyond Murdoch and the News of the World to Labour-supporting Mirror newspapers.

Sometimes, however, it appears that Watson dwells a tad too long and too lovingly on his special subject and the attack line is usually personal.

“The company names may have changed since the previous bid for Sky was withdrawn in 2011, but we are still dealing with media plurality, misconduct and the Murdochs,” Watson said in the Commons debate this week.

The Labour politician, who is also Shadow Culture Secretary, is perfectly entitled to push for a thorough investigation by Ofcom on the issues of both corporate governance and media plurality surrounding the £11.7 billion takeover bid for Sky for the 61 per cent slice of Sky it does not already own.

Indeed he is now pushing at an open door. Culture Secretary Karen Bradley made it clear in the debate she was “minded” to refer the bid and will almost certainly do so next week. The issues that will be looked at include both media plurality and editorial standards.

Meanwhile, online campaigning groups 38 Degrees, Avaaz, and of course Hacked Off, have petitions calling for a referral. The petition by 38 Degrees collected 37,000 signatures in two days and may have as many as 250,000 before it goes to the Culture Secretary at the end of this week.

It is entirely proper that the deal should be sent to Ofcom for a thorough investigation, not least because Bradley would be vilified for a political stitch-up if she were to review the evidence and decide off her own bat to give approval.

In such circumstances you can be certain that Watson and all the others would allege that somehow old Rupe had got in by the backdoor to pollute the decision making process in return for political services.
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The good news for Watson, 38 Degrees, Avaaz, Hacked Off and anti-Murdoch campaigners everywhere, is they’ve got their independent inquiry. The slightly less good news is that it is very likely that Ofcom will fail to find sufficient grounds to block the deal.

A reminder of some of the facts might help.

The bid also has to be cleared by Brussels on competition grounds. But as the original bid in 2011 was approved, as was the Sky takeovers in Germany and Italy, it would be strange if it were to be blocked this time given that competition has increased since the original bid.

There is also the fact that in 2012 Ofcom found that Sky remained a “fit and proper” organisation to hold a UK broadcasting licence despite the phone-hacking scandal which scuppered the deal first time around.

Ofcom did, however, criticise James Murdoch and his current chairmanship of Sky could now turn out to be a problem. Against that the younger Murdoch is no longer involved with newspapers, an industry he did not very well understand anyway, and you would have thought he has had a harsh lesson on the perils of poor corporate governance.

The attack on Sky, because of what happened at the News of the World, was always a crude attempt to smear by association.

There has never been any evidence that executives at Sky either knew anything about, or were involved with, the phone hacking scandal in any way. The gap between Sky and the newspapers is even greater now following the creation of a separate company for the print – more than just changing the name.

Likewise, on issues of editorial plurality there has never been evidence of any interference in the editorial independence of Sky News by the Murdochs. If there had been any interference of substance you can be sure it would have leaked long ago.

Indeed it is far from clear what difference complete Fox ownership of Sky would make to the independence of Sky News given that Rupert Murdoch has effectively controlled the Sky group with 31 per cent ownership all along.

Last time round the Murdoch side proposed turning Sky News into a separate company with an independent editorial board. By all means do that again if you must, although have a care for the funding of that company and its long-term viability.

The ultimate irony would that the pursuit of media plurality would lead to the collapse of Sky News in the absence of Murdoch support. That would present the BBC with a monopoly of 24-hour television news. Plurality indeed.

If by any chance Sky News was the deal-breaker in the bid to own all of Sky, no prizes for guessing which way Murdoch would jump.

Be careful what you wish for.

The biggest reason why the Sky deal will probably be investigated and equally probably approved, is the vast change to the market since 2011.

Those years have seen the dramatic rise of Facebook, Google and Amazon, which could afford to do almost anything they chose to do in the television domain.

In the UK, Sky faces increasing competition from the Liberty Global-owned Virgin Media and the rise of BT, which has just spent £1.2 billion to extend and expand its grip on the European Champions League for a further three years.

Far from being all-conquering, Sky could ultimately have its business undermined by the crippling battle with BT for Premier League rights.

By agreeing to such a European Championships deal, which also gives BT rights to the broadcast highlights as well as live games, UEFA has demonstrated that it is more interested in money even than the sport it promotes.

For £1.2 billion UEFA is prepared to make the European Championships virtually invisible in the UK and has shown utter contempt for football fans.

Perhaps once Tom Watson has got his Ofcom investigation into the Sky deal he could start calling for an investigation into television sports rights and in particular BT’s role.

Watson is, after all, Shadow Secretary for Culture, Media and Sport.