In a statement outlining her decision on the proposed takeover of Sky plc by 21st Century Fox, Inc., Secretary of State for Culture Karen Bradley announced this morning that she is “minded-to refer to a Phase 2 investigation on the grounds of media plurality”.
You can watch the full video of the statement here.
Broadcasting Standards and Corporate Governance
Bradley added that “based on the Ofcom report – I am currently minded-not-to-refer to a Phase 2 investigation in relation to a genuine commitment to broadcasting standards”, ignoring the substantial evidence CPBF submitted to Ofcom (pdf) explaining in detail the dire risk of the “Foxification” of Sky News. Media Matters for America and Avaaz in the US similarly argued and presented evidence that “the Sky takeover could poison Britain’s public debate” (pdf) and the Financial Times has warned that we should not take “the UK’s tradition of impartial broadcasting for granted”.
Hacked Off condemns the Secretary of State’s failure to refer the bid on commitment to broadcasting standards grounds, given the Murdochs’ appalling record of corporate governance failures. Ofcom would have been able to recommend referral on those grounds if the Government had not delayed and blocked the second half of the Leveson Inquiry, which was established to investigate the mounting evidence of misconduct against James Murdoch and those with which he worked. The Secretary of State must now begin Leveson Part Two immediately, and allow that Inquiry to report before considering this merger further.
In a statement in response to the announcement the Media Reform Coalition said:
we are troubled that no substantive concerns have been raised in respect of either broadcasting standards – which includes reference to corporate governance – or in Ofcom’s fit and proper license test. This is clearly out of step with mounting evidence of an on-going culture of racism and misogyny in Murdoch newsrooms on both sides of the Atlantic
Fit and Proper
concluded that behaviours alleged at Fox News in the US amount to ‘significant corporate failures’. However, these did not in its view demonstrate that the merged company would lack a genuine commitment to broadcasting standards
As such – based on the Ofcom report – I am currently minded-not-to-refer to a Phase 2 investigation in relation to a genuine commitment to broadcasting standards.
So what happens next? UILs or ‘undertakings in lieu’
Bradley went on:
Under the process set out in the Enterprise Act, it is open to the parties to propose undertakings in lieu of a reference to the CMA for a more detailed investigation. In other words, the parties may seek to avoid a Phase 2 reference by proposing remedies to address the public interest concerns that have provisionally been identified.
In an somewhat unusual move, Fox/ Sky had already proposed a set of undertakings to Ofcom and Bradley said these:
centred around Fox maintaining the editorial independence of Sky News by establishing a separate Editorial Board – with a majority of independent members – to oversee the appointment of the Head of Sky News and any changes to Sky News Editorial Guidelines. They also include a commitment to maintain Sky branded news for five years with spending at least at similar levels to now
Ofcom commented on these proposals saying they would go some way to mitigate the serious media plurality public interest concerns and also suggested that the remedies could be further strengthened.
This will all sound very familiar to those who remember what happened the last time the Murdochs bid for full control of Sky back in 2010-11. This is what happened then:
- 24 Jan 2011: draft UIL provided by News Corp
- 25 Jan: then Sec State Culture Jeremy Hunt said he was minded to refer bid to Competition Commission (now CMA) in the absence of any specific UIL
- 27 Jan: formal letters were sent by then Sec State Culture Jeremy Hunt both to Ofcom and the Office of Fair Trading for their views and advice on the proposed UIL
- 11 Feb: Ofcom (see here) and OFT (here) respond to Mr Hunt recommending stronger UIL
- 15 Feb: Jeremy Hunt wrote to James Murdoch essentially issuing an ultimatum: accept these new improved UIL in the next 24 hours or I’ll refer the bid
- 16 Feb: James Murdoch replied saying he was willing to agree to the suggested changes and enclosed draft amended UIL
- 17 Feb: Hunt wrote to OFT and Ofcom again asking them to agree a set of UIL with News Corp and
Sky so he could make a final decision
- 1 March: Ofcom (here) and OFT (here) reply saying they are basically happy with the revised UIL
- 3 March: statutory consultation on UIL launched
- 21 March: consultation closes. It received over 40,000 responses
- 22 June: OFT (p147 here) and Ofcom (p165 here) then issued further advice based on their review of the responses received. Both advised strengthening the UIL based on suggestions made in consultation responses
- 30 June: Hunt decided to accept the new improved UILs (for summary details of these see p265-271 here) and launches another statutory consultation for the minimum length possible – 7 days. But just 4 days later…
- 4 July: evidence emerged that News Corp newspaper News of the World hacked into the phone of raped and murdered teenager Milly Dowler, listened to and deleted voicemail messages, giving false hope to her parents
- 6 July: then Prime Minister David Cameron promised phone hacking inquires
- 7 July: News of the World announces it will close down
- 10 July: last ever edition of News of the World published
- 11 July: News Corp withdraws the UIL (p283 here)
- 11 July: Hunt said (p282 here) he’ll now refer to Competition Commission, reiterates David Cameron’s promises that they’ll be a two-part phone hacking inquiry (“Second, a separate inquiry to look at the culture, the practices and the ethics of the British press”) and writes again to Ofcom and OFT asking if their views were changed by these latest events.
12 July: Avaaz (p292 here) and Ivan Lewis MP (who was Shadow Culture Sec at the time, p300 here) wrote legal letters saying given the hacking scandal they are concerned Competition Commission will only look at plurality and not fitness and asking for a new EIN that included broadcasting standards as well as plurality
- 13 July: Lord Justice Leveson appointed to lead the phone hacking inquiries
- 13 July: bid formally referred to Competition Commission
- 25 July: the Commission formally cancel the inquiry having “received satisfactory assurances from News Corporation that the proposed acquisition has been abandoned”
In short, after months of negotiations and consultations, revised, improved and strengthened undertakings in lieu of a full phase 2 investigation were finally agreed, only to be withdrawn by News Corp when the phone hacking scandal blew up in the final hour.
But what would’ve happened had the UIL not been withdrawn and the deal had gone ahead? As both Tom Watson and Ed Miliband pointed out in their responses to Karen Bradley’s statement today, there is strong evidence to suggest UIL from the Murdochs are “are not worth the newsprint they are written in”.
Tom Watson said:
Let me tell the Secretary of State the problem with Murdoch’s undertakings in lieu—not just these undertakings in lieu, but any undertakings in lieu that have ever been offered by the Murdochs. They are not worth the newsprint they are written in. Ask Harold Evans or James Harding about the guarantees of editorial independence at The Times and The Sunday Times. Can the Secretary of State name any undertakings in lieu that the Murdochs have ever made that have been respected?
Ed Miliband added:
I welcome the Ofcom report recommending a referral to the CMA on grounds of plurality, and I urge the Secretary of State not to do a grubby deal with the Murdochs. We know their history. As my hon. Friend the Member for West Bromwich East (Tom Watson) who spoke from the Front Bench said, they break every undertaking they make, from The Times to The Wall Street Journal.
Indeed, in his testimony to the Leveson Inquiry (pdf), Sir Harold Evans, who was editor of The Sunday Times from 1967 to 1981, says of the “five guarantees” Murdoch agreed to when purchasing The Times:
In Good Times, Bad Times, the chapter “The Guarantees” describes the meeting on 21 January 1981 in which Mr. Murdoch willingly agreed to the five conditions crucial to editorial independence.
Good Times, Bad Times sets out the evidence of how, within twelve months, Mr. Murdoch broke all these promises. According to his biographer, Thomas Kiernan he did not believe them even as he was making them.
“You tell these bloody politicians whatever they want to hear, and once the deal is done you don’t worry about it. They’re not going to chase after you later if they suddenly decide what you said wasn’t what they wanted to hear. Otherwise, they’re made to look bad, and they can’t abide that. So they just stick their heads up their asses and wait for the blow to pass” (Citizen Murdoch, 1986, page 238)
To conclude, as the Media Reform Coalition wrote in their response:
Undertakings promised by Rupert Murdoch in the past have either been breached or proven completely useless in keeping him at arm’s length from his newsrooms. James Murdoch himself has stated that he does not expect approval of this merger to require ‘meaningful’ undertakings, implying that anything he proposes will be, by his own account, meaningless.
We nevertheless welcome the opportunity to submit further evidence in regard to both plurality and undertakings which support our view that there are no grounds on which this deal should be cleared in the public interest.