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21st Century Fox Must Wait for U.K. Decision on Bid for Sky

The British government said that it would not make a decision on 21 Century Fox’s takeover bid for Sky before Parliament breaks for summer Thursday but added that a decision could be announced “within weeks.”

Culture secretary Karen Bradley said she could reach a decision during Parliament’s summer recess and, having not received any new information or concessions from the parties involved, remains “minded to” refer elements of the deal concerning media plurality to British competition authorities, and to waive the element about whether the Murdochs are “fit and proper” owners of a merged group.

“There was nothing in their representations that, at this stage, has led me to change my mind about the appropriateness of referral,” Bradley told Parliament. “Unless new evidence from other representations changes my mind in coming weeks, the bid will therefore be referred for a Phase 2 review on at least one ground: media plurality.”

Bradley confirmed that she had received submissions from Fox and Sky before the latest consultation period closed last Friday, but that neither had offered any further concessions. She added that she had hoped to present Parliament with a decision Thursday, but the “tens of thousands” of submissions received by the government before last Friday’s deadline meant she needed more time to weigh the deal.

“I wanted to be able to make a decision before the House [of Commons] rose for the summer recess, but it simply hasn’t been possible,” she said. “I am now going to take time to look at representations and make sure we make the right decision, but my ‘minded to’ decision that I told the House about three weeks ago has not changed.”

Fox acknowledged the latest development. “We respect the importance of regulatory scrutiny, and we continue in our commitment to work constructively with authorities as we have done since this process began,” a statement read. “In light of the transaction’s benefits to the U.K. creative economy, we would urge the Secretary of State to complete the regulatory process expeditiously.”

Fox has already received European Union approval for its proposed £11.7 billion ($15.2 billion) deal for the 61% of pay-TV giant Sky it does not already own. Britain’s approval is the final green light the deal requires. If it is referred in whole or part to the Competition Markets Authority, that body would have 24 weeks to conduct its review.

Bradley’s statement to lawmakers came shortly after James and Lachlan Murdoch warned that some of their company’s U.K. investment decisions were on hold while British authorities mulled over Fox’s bid for Sky. James is CEO of 21st Century Fox and Lachlan the executive chairman. In a letter sent to Bradley last Friday, the Murdochs called the case a test of the government’s claim to be “open for business” post-Brexit.

“We have remained willing to work constructively with the regulatory authorities, and will continue to do so in the event of referral to the CMA on plurality grounds,” the letter said. “While we await the outcome of the regulatory process, important investment decisions will inevitably need to be deferred.”

How the Fox-Sky takeover is handled would be scrutinized by other major businesses in the wake of the British vote to leave the European Union and, if handled badly, could threaten investment into the U.K., the Murdochs warned.

“There is also the broader risk of a potential harmful effect on other companies’ inward investment decisions currently under consideration in the U.K.,” the letter said. “As one of the first, and the most significant investment to be proposed following last year’s referendum on exiting the EU, our proposed transaction will be carefully scrutinized by others keen to gauge the Government’s commitment to creating a climate conducive to investment, or in the words of the Prime Minister and several of your fellow ministers, ‘open for business.'”

Tom Watson, a lawmaker with the opposition Labour Party and a critic of the merger, condemned the Murdochs’ comments as “a somewhat intimidating letter to [Bradley] trying to bounce her into a decision. We know that aggression is the Murdochs’ modus operandi.”

Watson urged Bradley not to hurry the process and to wait to issue a decision after Parliament reconvenes Sept. 5. “There is absolutely no need for [her] to announce a decision during the summer recess. Parliament must have the opportunity to scrutinize any decision she makes,” he said. “It is not her job to operate to 21st Century Fox’s corporate timetable. They have to abide by the parliamentary timetable.”

In the wake of Bradley’s latest address, global activism group Avaaz warned that the British government faces legal action if it does not implement a deeper probe into both the plurality and media ownership elements of the Fox-Sky deal, alleging media regulator Ofcom did not carry out its duties properly.

“The Government should use the newly-announced delay to Rupert Murdoch’s Sky takeover bid to examine failings in Ofcom’s investigation into corporate governance and broadcasting standards assessment of 21st Century Fox, and could face legal action if they don’t launch a new probe,” Avaaz said.

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