Disney's $52bn (£37bn) takeover of parts of 21st Century Fox increases the chances regulators will ultimately give Rupert Murdoch’s takeover of Sky the green light.
The Competition and Markets Authority (CMA) today released its preliminary findings on two specific counts relating to Fox’s $15bn acquisition of the 61 per cent of Sky it does not already own.
The Fox takeover of Sky would exert too much influence over public opinion and news providers in the UK – known as media plurality – the CMA said. But in relation to a “genuine commitment to broadcasting standards”, regulators said the merger is not expected to operate against the public interest.
Addressing MPs after the CMA report was published, culture secretary Matt Hancock said last December’s Disney deal with Fox “could address concerns set out in the provisional findings”.
“However the uncertainty about whether, when, or how, that transaction will complete means the CMA has also set out potential approaches which include introducing remedies which would fall away subject to the Disney/Fox transaction completing,” he added.
A final draft of the CMA report will be published on 1 May.
“Deal was almost done”
Sky shares rose more than two per cent in the wake of the preliminary findings, with analysts split on the implications.
Brokers from Citi concluded the provisional findings suggested a “deal was almost done”.
Jefferies analyst Jerry Dellis added: “Had the CMA provisionally raised public interest concerns on the grounds of broadcasting standards, we believe that finding practical remedies would have been much more challenging. An acceptable framework for spinning out Sky News appears to us quite attainable and the CMA is showing flexibility.”
However, analyst duo Roddy Davidson of Shore Capital and Liberum’s Ian Whittaker were less bullish. Concessions – over and above what had been expected – would need to be made, they said.
“The CMA’s language in its remedies suggests a greater risk of the deal not occurring,” said Whittaker.
Meanwhile, Fox “welcomed” the CMA’s findings on broadcasting standards but was “disappointed” on the media plurality interim conclusion.
Assuming Hancock receives the final draft of the CMA report on 1 May, he will have until 14 June to make his final decision on the takeover.