The broadcast regulator is due to report back on 21st Century Fox’s takeover of Sky this week, with the deal looking more vulnerable after the General Election.
Ofcom has been investigating whether Rupert Murdoch’s Fox should pass a “fit and proper” owner test, and also whether the tie-up would harm media plurality in the UK.
Its report is expected to be passed on, privately, to culture secretary Karen Bradley, whose department will then make a public decision on how to proceed within weeks. This could result in the deal being waved through, remedies being discussed or a referral to the Competition and Markets Authority.
Fox agreed an £11.7bn deal to buy the 61 per cent of Sky it does not already own in December last year. A previous Sky takeover, by Mudoch’s News Corporation, fell through in 2011.
Confidence that a deal would go through was knocked after the Conservative party lost its majority at this month’s General Election. But analysts, including Liberum’s Ian Whittaker and Polo Tang of UBS, remain confident the deal will go through, albeit possibly with some delay.
But, with a weaker Conservative party, political figures who are opposed to the deal have become more hopeful it could fall through.
Former Lib Dem business secretary Vince Cable told City A.M. he believed that the General Election result my “embolden” Ofcom.
“There was always a suspicion that if the Conservatives had a big majority they would pull their punches,” he said. “I’ve now got complete confidence in the process, that they will produce a conclusion which is evidence-based and not driven by political sensitivities.”
Tom Watson, deputy Labour leader and shadow culture secretary, told City A.M.: “Next week Ofcom will announce their verdict on whether a total Murdoch takeover of Sky would be good for media plurality and media standards in this country. I hope their verdict is no.”
He added that Ofcom would not be able to have a “true understanding of the corporate governance failures inside the Murdoch empire” without a part two of the Leveson Inquiry. Labour pledged to force this through in its manifesto, while the Tories said they would drop it.
“What this election has made clear is that the Conservatives have absolutely no mandate to drop Leveson two,” Watson said.
“In fact, given the support for Leveson previously expressed by senior figures in the DUP, it is clear that there may now be a parliamentary majority in favour of commencing Leveson two.”
He added: “It remains to be seen what Ofcom’s judgement will be, but the government needs to be clear about the level of concern about this matter both among the public and in parliament.”