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Sky shares unmoved by CMA ruling

This morning’s decision by the Competition and Markets Authority (CMA) to announce that the £11.7bn Fox/Sky deal isn’t in the public interest seems like a strange one given the recent developments with respect Disney’s bid to buy 21st Century Fox for $60bn.

The regulator has stated that the deal is not in the public interest because it would give Rupert Murdoch and his family too much control of Britain’s news media.

Given events over the last few years this will always likely to be an obstacle, however the Disney bid is likely to render this reasoning somewhat moot.

This would suggest that this decision could well be down to sequencing given that the Disney deal hasn’t as yet been completed and needs to be reviewed and approved by US regulators, and this is by no means certain.

Until that happens Sky may well have to look at the potential spin-off of its Sky News channel to assuage regulator concerns of undue influence, though this also presents problems as it would probably require significant investment in new standalone technology systems.

A final decision isn’t due to be made until later this year, which in the absence of further progress with respect to the Disney/Fox deal could mean that it would be difficult for UK authorities to make a definitive decision in the event the Disney Fox deal breaks down.

If the deal completes the Murdoch concerns largely go away but UK authorities would need to be convinced that the Disney/Fox deal has a decent chance of being completed as expected.

Under normal circumstances that probably wouldn’t be a problem, however with Donald Trump in the White House and the intervention by the US Department of Justice in the AT&T/Time Warner deal that is by no means a given, with US authorities citing anti-trust and monopoly concerns.

The question arising with respect to Disney and 21st Century Fox is whether this deal might be derailed or delayed by similar concerns.

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