Should Murdoch be allowed to buy all of Sky?

It is understandable that people are fearful of Murdoch's power over the media, but there are no real grounds for Vince Cable to intervene in News Corp's takeover of BSkyB.

The drumbeat of concern over the degree of Rupert Murdoch’s control of UK media is getting louder. In the US, the focus is on his contributions to pro-Republican election funds, his employment of four leading Republican presidential candidates at Fox News, and the relentless Republican message that emanates from Fox News. In the UK, it is the phone-hacking scandal at the News of the World (also picked up in the US by The New York Times) which rumbles on, thanks to the role ex-NOTW editor Andy Coulson plays as chief government spin doctor.

The stakes have been raised by the proposal from Murdoch’s master company, News Corporation, to buy the 60.9% of BSkyB not already owned by News Corp’s subsidiary, News International.  There have been calls for Vince Cable, the Business Secretary, to use his special powers under the 2003 Communications Act to delay the deal whilst its implications for media plurality are assessed by Ofcom, the media regulator.

Key support for this call has come from a paper from Claire Enders, of Enders Analysis (and a speaker at our recent Public Service Broadcasting Symposium).  I deal at length with that paper in a separate post (here).  My conclusion is that the only basis for intervention, under the 2003 Act, is if plurality of news provision might be endangered. At the moment, Ofcom regulation requires Sky News to be impartial: but what if the new government were to remove that obligation?  Could we take the risk that a news service 100% controlled by Murdoch might turn into a UK clone of Fox News?

For those who have never seen Fox News, access to a satellite dish will reveal 14 different 24-hour news channels available here.  Alongside the BBC and Sky you will find four US news offerings (CNN, CNBC, Bloomberg and Fox), official or semi-official news from Russia, China, Japan, India, Iran and France, plus Al Jazeera and Euronews.  The foreign news channels are seemingly given more latitude by Ofcom on “impartiality”, presumably because they do not cover domestic politics.  Fox News has attracted almost no complaints here in the UK.

Few would deny that Sky News presently is both independent and well-respected (it has won the top news award at the Royal Television Society for three of the last four years). When a TV presenter (who happened to be one of Rupert’s daughters-in-law) last week announced the wrong result of Australia’s Next Top Model on a Murdoch channel, the full embarrassing news clip was carried on Sky News. It was the Head of Sky News, John Ryley, who campaigned relentlessly for the election leadership debates, when the BBC and ITN were keeping their heads down: yet the general wisdom is that the debates did few favours for the Murdoch-supported David Cameron.

Lord Puttnam has speculated that 100% ownership by Murdoch would put Sky News’ impartiality at risk. However, there was no evidence, during the two years when Sky News was launched and wholly-owned by Murdoch (February 1989-November 2000), of a desire to operate in a non-impartial fashion. If Sky News was not required by Ofcom rules to be impartial (quite why that requirement would be removed is not clear), would it change?  Given the very small audience share Sky News commands (less than 1% of all viewing), there would be little point in turning it into a propaganda machine, whilst in the process nullifying the present benefit of its halo effect for News Corp generally. The short life of the web-based 18 Doughty Street TV does not suggest that a Tory-biased Sky News would flourish in the way Fox News has. Murdoch is a businessman first and foremost.

But if, despite this, there remained a fear that impartiality rules might be changed, and that Murdoch would then Fox-ise Sky News, would that be grounds for an intervention by Cable? Presumably, if the impartiality rules were to change, by government choice, then the rules for intervention would also change: it seems somewhat illogical to assume one and not the other.

Opponents of the News Corp transaction say that it is not just regulatory requirements, but the presence of eight reputable non-executive directors on the BSkyB board, that helps keep Sky News honest, and they would disappear in the proposed transaction. The problem with this argument is that if the impartiality rules changed, there would be no basis for non-executive intervention – indeed, these opponents seem to forget that News Corp itself has reputable non-executives, who do not seem perturbed by Fox News!

Another flaw in the double hypothetical scenario is that if Murdoch were absolutely determined to push through the share purchase (by paying the 800p per share price the non-executive directors have stipulated), and there was a danger of a Cable intervention based on possible future mis-use of Sky News, then Murdoch could short-circuit the argument by using his current operational control of BSkyB to shut down Sky News (which, like any commercial 24-hour news service in the UK, faced by the licence-funded BBC News Channel, makes a loss – ITN’s version folded for that reason).

As my critique of the Enders paper tries to show, it is a mistake to confuse arguments over cross-media ownership (where separate statutory rules apply) with a narrow case for intervention on grounds of news plurality, especially if even that narrow case turns out to be thin and unconvincing.  There are strong commercial reasons for Murdoch wanting to own all of BSkyB which are nothing to do with Sky News.  If there are sound grounds, in competition law or cross-media ownership rules, for intervening, by all means use them. But a poorly-judged intervention that is bound to fail will do our competition regime – and desire to constrain Murdoch’s powerful position – no favours.

About the author

David Elstein is Chairman of openDemocracy's Board. He is also Chairman of the Broadcasting Policy Group. He is a director of Kingsbridge Capital Advisors, and a supervisory board member of two German cable companies.