Finance

Analyst: Fox’s Sky Approval Could Come With Concessions

British regulators to decide on June 29 6/20/2017 11:19 AM Eastern
Telsey Advisory Group media analyst Tom Eagan

British regulators are scheduled to decide whether 21st Century Fox can fully consolidate satellite TV provider Sky next week, a move that will likely include at least some concessions, according to Telsey Advisory Group media analyst Tom Eagan.

The British Office of Communications (Ofcom) and the Competition and Markets Authority handed their recommendations on whether Fox will be allowed to purchase the remaining interest in Sky it doesn’t already own (about 61%) to culture minister Karen Bradley, who has the final say on the matter, on Tuesday. Bradley said she would make her decision public on June 29.

In a note to clients Tuesday, Eagan wrote that it is likely the British government will ask for at least some concessions if it approves the deal. But Eagan expects regulators to take a “middle-case” approach, perhaps independent governance of its Sky News operation.

Fox has been trying to consolidate its Sky stake for years. In 2011, it dropped its efforts to consolidate the company when it became apparent it would not be approved by regulators after its British tabloids were involved in a phone hacking scandal. The company earlier shut down its News of the World tabloid – the focus of the hacking investigation – and later separated its newspaper and television assets into two separate companies – News Corp. and 21st Century Fox. Fox has said the split was not connected to the phone hacking scandal. 

Fox’s latest scandal involves sexual harassment of female employees that led to the ouster of Fox News chief Roger Ailes – who died in May – and on-air personality Bill O’Reilly. Other executives left the company in the wake of the scandal, which some believe will weigh heavily on the British government’s decision.

Fox again proposed to take in the remaining 61% interest in Sky in December in a deal valued at about $14.5 billion. In April the European Commission approved the deal without conditions.

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