21st Century Fox’s proposed £11bn takeover of Sky “would raise no competition concerns” according to European Commission competition authorities.
In December the US movie and TV giant, which owns 39% of Sky, announced its ambition to buy the rest of the pay-TV giant and fold it into its own operations.
The bid follows a 2011 takeover attempt which was dropped in the wake of the phone hacking scandal that led to the closure of The News of the World.
Since then News Corporation has been split into two separate businesses, the TV and movie studio 21st Century Fox, and News Corporation which retains its predecessor’s newspaper, magazine and publishing assets.
Sky has also transformed itself by taking control of its Italian and German namesakes, buying up a string of independent production companies, launching a low-cost, contract-free streaming TV service and offering its own mobile phone service.
More widely the UK’s entertainment market has also changed drastically since the earlier bid, thanks to increased competition from Amazon and Netflix, as well as UK rival BT with which Sky competes for sports and which is making its own forays into premium drama.
Despite the changed landscape, the proposed takeover is opposed by some media activists and politicians concerned about further concentrating ownership of the UK’s media sector.
In addition longterm opponents of Rupert Murdoch, Fox’s major shareholder, are keen to stop the media mogul increasing his influence and have successfully called on the Government and telecoms regulator Ofcom to review the deal.
The UK authorities’ final verdict is expected in May, however in the meantime the Commission has made it clear that officials will not seek to block the takeover at a European level.
A statement issued on Friday said: “Based on the results of its market investigation, the Commission concluded that the proposed transaction would raise no competition concerns.”
According to the statement, the Commission’s assessment focused on whether, as a result of the proposed transaction:
- Fox would be able to prevent or significantly limit access by Sky’s competitors to its films and other TV content, as well as to its TV channels. The Commission concluded that these possible concerns were not founded. This is because the parties’ audience shares remain limited and pay-TV distributors would continue to have access to content from Fox’s competitors and alternative channels with comparable programming and audiences in the relevant Member States.
- Sky would have the incentive to cease purchasing content from Fox’s competitors. The Commission found that this was unlikely as it would reduce the quality of Sky’s product offering.
- Sky could prevent competing channels from accessing its platform. The investigation found that the merged companies’ ability to shut out Fox’s rivals was significantly mitigated by existing regulations in the UK, Germany and Austria. In addition, competitors that could have been targeted for exclusion are either contractually protected for a sufficient period of time or are not dependent on Sky’s retail platform in the relevant Member States.