Sky-Fox Update

Lord Keen of Elie Excerpts

Tuesday 23rd January 2018 Lords Chamber

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, with the leave of the House, I will repeat a Statement made in the other place by my right honourable friend Matt Hancock, the Secretary of State for DCMS. The Statement is as follows:

“Mr Speaker, I am here in my new capacity as the quasi-judicial decision-maker in relation to the proposed merger between 21st Century Fox and Sky Plc to update the House regarding the CMA’s interim report that it has issued today. The decision-making role is one that my right honourable friend the Member for Staffordshire Moorlands discharged, having met her commitment—given many times on the Floor of this House—to the greatest possible transparency and openness the process allows. And while I come to this fresh, I intend to follow the process of being as open as possible while respecting the quasi-judicial nature of the decision.

As this House well knows, after the proposed acquisition was formally notified to the competition authorities last year, my right honourable friend the Member for Staffordshire Moorlands issued an intervention notice on media public interest grounds; namely, of media plurality and genuine commitment to broadcasting standards. This triggered a phase 1 investigation of the merger, requiring Ofcom to report on the specified public interest grounds and the CMA on jurisdiction. Having received advice from Ofcom and the CMA, in September she referred the proposed Sky-Fox merger to the CMA for a phase 2 investigation on both grounds.

The original statutory deadline for the final report was 6 March, but the CMA has today confirmed that this will be extended by a further eight weeks and that the revised deadline is 1 May. Once I have received that final report, I must come to a decision on whether, taking into account the specified public interest considerations of media plurality and genuine commitment to broadcasting standards, the merger operates or may be expected to operate against the public interest. Following receipt of the final report, I will have 30 working days in which to publish my decision on the merger, so if I receive the CMA’s report on 1 May that would be 14 June.

To be clear, the publication today is the CMA’s provisional findings. I have placed a copy in the House Library. With regards to the need for a genuine commitment to broadcasting standards, the CMA provisionally finds that the merger is not expected to operate against the public interest. On media plurality grounds, the CMA’s provisional finding is that the merger may be against the public interest. It cites concerns that the transaction could reduce the independence of Sky News and would reduce the diversity of viewpoints available to, and consumed by, the public. It also raised concerns that the Murdoch Family Trust would have increased influence over public opinion and the political agenda.

The CMA has identified three remedy approaches and seeks views from interested parties on them. These remedy approaches are: first, to prohibit the transaction; secondly, to undertake structural remedies either to recommend the spin-off of Sky News into a new company, or to recommend the divestiture of Sky News; and thirdly, behavioural remedies that could, for example, include enhanced requirements around the editorial independence of Sky News.

The CMA also recognises that the proposed acquisition of Fox by Disney 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.

The CMA has invited written representations on the provisional report’s findings and the potential remedy approaches with 21st Century Fox and Sky—as well as other interested parties—before producing a final report. As such, and given the quasi-judicial nature of this process, I hope the House will understand that I cannot comment substantively on the provisional report before us and I must wait for the final report before I comment. I am, however, aware of the keen interest of the House in this important matter. I know that right honourable and honourable Members will be closely scrutinising the CMA’s provisional findings and will have views on them.

The CMA’s investigation will continue over the coming weeks. It has set out the process for making representations on the remedy options outlined and on the provisional findings, with deadlines of 6 February and 13 February respectively. I feel sure that today’s debate will provide helpful context for that work.

What I am able to confirm today is that I will undertake to keep the House fully informed and follow the right and proper process, considering all the evidence carefully when the time comes to make my decision on receipt of the CMA’s final report. I commend this Statement to the House”.

My Lords, that concludes the Statement.

--- Later in debate ---

[Lord McNally (LD)]

My Lords, I associate myself with the points made by the noble Lord, Lord Stevenson, about the second stage of Leveson and also the remedies that have already been put forward on media regulation. I welcome this Statement and the ongoing commitment of the Secretary of State to keep both Houses informed. I also appreciate the continuing interest of the Minister in this House, the noble and learned Lord, Lord Keen, in the matter. Like the noble Lord, Lord Stevenson, I would welcome a continuation of that informal dialogue. We welcome the interim findings concerning the public interest not being served in terms either of diversity or the influence of the Murdoch Family Trust.

On the commitment to broadcasting standards, I share the concern and puzzlement of the noble Lord, Lord Stevenson. I find it odd that in terms of commitment to broadcasting standards, the proposed merger does not operate against the public interest, echoing an earlier and very disappointing finding by Ofcom. In three continents over 60 years—in Australia, the UK and the USA—Mr Murdoch has been a major factor in lowering standards in both print and broadcast media. I am pleased that the Secretary of State is taking his time to think and consider. Frankly, he has been a little too eager to shoot from the hip in his first few days in office, so this more considered response is welcome.

I still believe that a healthy media ecology rests on a mantra of quality, diversity and choice. All three are threatened by an extension of Murdoch power. It is important to defend the integrity of Sky News, where the lack of 100% control has mitigated against the Murdoch effect. But the Secretary of State needs to go further and consider carefully how we protect our public service broadcast news on the BBC, ITV and Sky News. We need to review the protection of news sources in the light of the impact of new technologies. Here again, Ofcom needs to be proactive in reviewing and bringing advice on these matters.

We must also keep an eye on the implications of the Disney takeover of Fox. Does the Minister have a timetable or guesstimate about how soon the US authorities will come to their conclusions? For we must make sure that any remedies to protect the public interest are real and effective, not simply fig leaves to cover up a surrender to big media power. This is a welcome Statement but it is not the end of the matter. We need a robust Secretary of State to defend the public interest but, on that, I am afraid the jury is still out.

[Lord Keen of Elie]

I am obliged to the noble Lords for their observations. I note that the noble Lords, Lord Stevenson and Lord McNally, would both like to see a continuation of the informal all-party meetings that have taken place. I will of course pass that to the new Secretary of State for his consideration.

I cannot comment upon the terms of the provisional report and I know that Members of this House would not expect me to do so. The final decision will be a quasi-judicial decision for the Secretary of State, one which he will make in the light of the final report and in respect of which he will give reasons. With regard to the Fox-Disney transaction, both Disney and 21st Century Fox have stated clearly that the intention is for 21st Century Fox to continue with its bid of December 2016 before the Disney acquisition is completed. But I am not in a position, any more than any other of your Lordships, to determine when that final process will be completed. It will be subject to procedural issues in the United States of America, quite apart from anything else.