Will Karen Bradley Refer SKY-FOX to the Competition and Markets Authority?

by Damian Tambini

It’s the Politics, Stupid

I am in Italy so I am going to make Machiavellian assumptions. When it comes to media mergers, like Machiavelli’s Prince, politicians act on the basis of moral considerations or the ‘public interest’ only to the extent that failing to do so entails political cost.

Machiavelli’s advice would be that the Prince, to strengthen his grip on power, should curry favour with the Murdoch Kingmakers. The paradigm case of this with respect to media mergers was the Times/Sunday Times deal of 1981 when the Thatcher government accepted an undertaking from the companies to set up a board to protect editorial independence – and then enjoyed more than a decade of support from the papers. We can expect the current decision where the minister is considering endorsing a similar board, to be just as political. Whilst the Murdoch press is less powerful than it was then, and the public a bit wiser, it is also the case that the government is terribly weak. Ministers will be desperate for political support from anyone that will give it, particularly the media.

So my assumption is that the Government wants the deal to go through. Of course, the minister also acts within legislative constraints. The decision is supposed to be ‘quasi-judicial’ meaning that it could be judicially reviewed if it doesn’t follow basic fair procedures. But the procedures set out in the Enterprise Act merely impose a choreography requiring the minister to fairly take and publish evidence and set out reasons for decisions. Its fairly easy to meet the procedural standards.

Reasons why Bradley will want to approve the deal now

Timing.

Why let the open sore of a decision like this drag on, when you can rush it through over the summer when Parliament is in recess, and everyone else is on the beach.  With elections possible at any time; this would also have the virtue of being before, but as far as possible from, the next national vote.

Political Cover.

The fact that the Ofcom found Fox to be ‘fit and proper’ to uphold ‘broadcasting standards’ has removed some of the potential barriers. Ofcom also –surprisingly– has indicated that the (astonishingly weak) proposed undertaking to set up an editorial board mitigates the media plurality concerns they found. It was interesting that the Government effectively slapped down Ofcom for commenting on the undertakings saying that these are an issue for the Secretary of State alone, but the endorsement is nonetheless there.

The original undertakings were pathetically weak and I am shocked that Ofcom has indicated that they mitigate the plurality concerns, particularly when they did not have to advise on this. Short term, five-year commitments to Sky, and an offer of an “independent” board that is appointed by Fox from nominations by Sky. For the Minister, the proposal of such flimsy undertakings has the additional virtue of permitting Bradley to present any further concessions as a ‘victory’ for her ‘tough negotiations’. If Ofcom has indicated that the undertakings mitigate concerns, but Bradley heroically negotiates a ‘stricter deal’, then she is in the clear. Whilst there will still be a storm of protest, it might nonetheless be better – at least for Prince Bradley – than the alternative.

Better than the alternative?

The Secretary of State has in fact given an indication that she may refer the merger. If this is the case, what happens next is that the Competition and Markets Authority (CMA) will conduct a phase 2 review of this merger. The CMA review would last around six months – likely to be some of the more volatile and unpredictable months of UK political history. Elections may be held in this period, the distraught process of Brexit negotiation will continue and there are likely to be multiple Parliamentary reversals for the government on various matters, including the potential for debate on implementation of the proposals the Leveson Inquiry.

If the CMA do conduct a full review, this will give time and space to the campaigners, and if it adds anything can only question Ofcom’s position. Some aspects of the CMA procedure are unclear, but they will involve more public consultation and even potentially hearings. More opportunities for protesters, at a time where Government will be sensitive and Parliament will be jittery,  MP’s paranoid about losing their seats.

There is no guarantee that the CMA will follow the Ofcom methodology. Given the scope for discretion on what constitutes evidence on media plurality, they may add significant new data points and further research the role of online and the relationship between wholesale and retail provision, as well as key controversies such as news flow between different platforms. Again, this can only undermine Ofcom, which has effectively advised their concerns are addressed by the undertakings.

 Finally, waving it through now avoids the potential for further Parliamentary involvement.

Parliament, in contrast to the government, generally has a very low, and sinking regard for the Murdochs and for deals on undertakings. If they debate it, this could spell trouble for the Minister.

The House of Lords Communications Committee reported in 2008 on the issue of media ownership. It was scathingly sceptical about undertakings, citing the case of the deal brokered in 1981 when the Times was allowed to purchase the Sunday Times on the condition that Independent National Directors would be appointed to protect editorial independence:

It is questionable how effective the Independent National Directors have been, even with the increased powers that Rupert Murdoch agreed to give them. The system was strongly criticised by Harold Evans who was Editor of The Sunday Times when Rupert Murdoch bought it, and who was then appointed as Editor of The Times. Mr Evans had fought for the increased powers of the Independent National Directors but in practice, he found they provided him with no effective protection. In his autobiography he wrote that none of the guarantees that Rupert Murdoch gave to safeguard editorial independence “are worth the paper they are written on—unless the proprietor shares the spirit of them. If he does, they are merely ornamental; if he does not, they are unworkable … Internal freedom cannot be acquired by external rules”[91]. Andrew Neil, Editor of The Sunday Times from 1983 to 1994, agreed “It was a conceit invented … to allow Mr Murdoch to take over these papers in the first place, and it was put in place for that reason. It was not really put in place to protect the independence of the editors” (Q 1689).

The Committee therefore recommended:

220.  We do not believe that an internal company structure can be an adequate substitute for competition law and statutory regulation in ensuring that no single voice becomes too powerful.

Whilst Ofcom in contrast reached the view that structural remedies or refusing a deal could result in Sky becoming unsustainable and therefore a reduction in plurality, no one believes that editorial boards, particularly those that are as weak and captured as those proposed in this case, would work. They simply cannot offer any guarantees against the overwhelming power of owners to impose editorial influence.

Public interest – or ministerial interest?

Whilst in my personal opinion it would be a very big step in the wrong direction for a huge chunk of the UK news media; the deal currently on the table is better for the Murdochs, and in all likelihood better for the short term interests of the Government than anything to be achieved by a referral.

So, Karen Bradley: political cunning, opportunism and short term political self-interest demand that you approve the merger now. Let’s see how Machiavellian you are.

This post gives the views of the author and does not represent the position of the LSE Media Policy Project blog, nor of the London School of Economics and Political Science.

This post originally appeared on the LSE Media Policy Project blog and is reproduced with permission and thanks