In a last-ditch effort to win over wary British regulators, 21st Century Fox Inc. promised Tuesday that Rupert Murdoch and his sons, James and Lachlan Murdoch, would not meddle in Sky News — if Fox is allowed to acquire the European satellite television giant Sky.
Alternately, Walt Disney Co. has offered to buy the Sky News channel to help clear the way for regulators to approve Fox’s hard-fought takeover of the prominent pay-TV service.
The moves are designed to ensure editorial independence for the prestigious 24-hour Sky News channel. Fox also offered to set up Sky News as a separate company with an independent board to ensure its journalistic integrity, according to its regulatory filing.
Fox’s latest offer to regulators, including the Disney twist, suggests that Fox’s $16.5-billion acquisition of the London-based pay-TV company may be in deep trouble. Fox has tried for more than a year to secure approval for its purchase of Sky, which has 22 million subscribers in Britain, Ireland, Germany, Austria and Italy.
Britain’s Competition and Markets Authority — the third regulatory group in Britain to review the Sky deal — said in late January that the Fox takeover did not appear to be in the public interest. It worried that the deal would give Rupert Murdoch and his family too much control over media in Britain. The Murdochs also control the publishing company News Corp., which owns the Times of London, the Sunday Times and the Sun tabloids.
Fox has been trying to alleviate such concerns about its influence, including the latest offer to ensure editorial independence for Sky News. The CMA is expected to issue its decision by May 1.
“We have worked diligently with the CMA throughout its extensive review,” Fox said Tuesday in a statement. “In fact, we believe that the enhanced firewall remedies we proposed to safeguard the editorial independence of Sky News addressed comprehensively and constructively the CMA’s provisional concerns.”
Much has changed since late 2016, when Fox offered to buy the 61% stake in Sky that it currently does not own.
Last December, Disney offered $52.4 billion to buy most of Fox, including its Century City movie and television studio, FX cable channels, regional sports channels and Fox’s 39% stake in Sky. Disney said Tuesday that it is willing to purchase Sky News separately.
“Disney would buy Sky News and agree to sustain the operating capital of Sky News and maintain its editorial independence,” Disney said in a statement. “The divestment of Sky News to Disney is separate from, and not conditional on, Disney’s acquisition of Fox.”
Wells Fargo Securities analyst Marci Ryvicker said the Disney offer could help Fox win approval for its Sky bid.
“While we don't know exactly how this will be perceived by the CMA, we have to believe this does help better position Fox from a regulatory standpoint,” Ryvicker wrote in a research note.
Meanwhile, Philadelphia-based cable company Comcast also is circling Sky, promising shareholders that it would pay considerably more for the television service than Fox offered in late 2016.
Fox’s quest marks the second time the company has tried to consolidate Sky. Rupert Murdoch co-founded the satellite TV service in the late 1980s, and it has become one of the world’s leading pay-TV companies with popular entertainment and sports channels, which have valuable soccer rights.
Fox previously proposed a separate editorial board to insulate Sky News. In March, Fox sweetened the offer by proposing a 10-year funding guarantee for Britain’s oldest 24-hour news service.
On Tuesday, Fox’s offer to legally separate Sky News from the rest of Sky came with an enhanced guarantee of 15 years of independence.
Nearly a decade ago, the Murdochs tried to buy all of Sky. But they had to abandon that bid in 2011 because their media company was engulfed in a scandal over cellphone hacking carried out by operatives of the Murdochs’ London tabloids.
This time around, several high-ranking Labor Party members — and an activist group — have been campaigning against Fox’s takeover of Sky, pointing to the phone hacking scandal, Rupert Murdoch’s long involvement in British politics and the sexual misconduct scandal at New York-based Fox News. They have alleged the Murdochs would turn Sky News into a European version of the right-leaning Fox News.
“We are aware that a group of politicians that is opposed to the transaction is seeking to influence the CMA and is making a number of unsupported and fanciful assertions,” Fox said in its filing. It encouraged the CMA not to “accept at face value these assertions.”
Fox also made a commitment that Rupert, Lachlan and James Murdoch would not “influence or attempt to influence the editorial choices made by the head of Sky News,” the company said in a statement. “We offered this even though the record before the CMA shows that, over the course of nearly 30 years as Sky’s founding shareholder, neither 21st Century Fox, nor the Murdoch Family Trust, have ever sought to influence the editorial direction of Sky News.”