02 March, 2016
Lord Puttnam Trade Envoy Trip
Film director and lawmaker David Puttnam is proposing measures in the UK's House of Lords aimed at frustrating Rupert Murdoch's £11.7bn (€13.69bn) plan to merge his US media company, 21st Century Fox, with pay-television broadcaster Sky.
The amendments to the proposed Digital Economy Bill would subject media acquirers to a so-called fit-and-proper test in order to hold a broadcasting licence. The test would look at any past criminal wrongdoing and corporate-governance failures - ensuring Murdoch and his son, James, who is chairman of Sky and ceo of Fox, would face new scrutiny over their handling of a hacking scandal that derailed an earlier offer for Sky.
Puttnam's proposals mark one of the first concrete moves by political opponents who argue the deal, which would unite the Murdochs' TV empire, would threaten UK media plurality.
British culture secretary Karen Bradley is under pressure from the opposition Labour party to have regulator Ofcom review the deal on public-interest grounds. Campaigners include Hacked Off, a media-accountability advocacy group formed during the phone- hacking scandal.
"These amendments would provide the necessary safeguards to ensure the public interest is protected as the bid for Sky by the Murdochs is scrutinised," Evan Harris, joint executive director of Hacked Off, said in a statement.
Fox already holds a 39pc stake in Sky. Uncertainty over whether it will succeed in buying the rest has led traders to discount Sky stock, which fell 0.2pc to £10.04 on Wednesday and remains about 6.6pc below the offer price of £10.75 per share.
The difference shows traders are concerned that political obstacles may block the deal, said Neil Campling, head of global tech, media and telecom research at Northern Trust Securities.
Officials at Sky and Fox declined to comment.
Puttnam also called for safeguards to protect editorial freedom in broadcast acquisitions, and restrictions related to influence over cultural expression.
Another clause widens the fit-and-proper test that would be conducted by Ofcom, asking the media regulator to look into past conduct, including corporate-governance failures.
"We don't think this is going to derail the bid at all," said Alice Enders, director of research at Enders Analysis, citing difficulties of getting the amendments passed through both houses of Parliament.
"It's not going to interfere with the process of regulatory clearance at the European Commission."
The Lords proposals, which Puttnam has secured cross-party backing for, are unlikely to be voted on until March. (Bloomberg)