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Murdoch Buying Murdoch - Should We Care?

15/05/2014 12:45 BST | Updated 14/07/2014 10:59 BST

When information leaked out last weekend about BSkyB's proposal to buy 21st Century Fox's share of pay-TV channels Sky Italia and Sky Deutschland in order to build a Sky Europe brand, there was a flurry of interest in the business press. Given that Rupert Murdoch's Fox owns 39% of BSkyB, 57% of Sky Deutschland and 100% of Sky Italia, you might have thought that this would raise some concerns amongst regulators, politicians and media commentators about potential anti-competitive behaviour and a lack of pluralism in a growing sector of European broadcasting. But you would be wrong.

There has been none of the fuss that marked Murdoch's attempt to take full control of BSkyB, a hugely contentious initiative that had, thanks to some particularly supportive politicians, had cleared all its regulatory hurdles. Despite fierce opposition both from civil society and from sections of the press, Murdoch's long-standing ambition to use BSkyB as a battering ram inside the UK media environment was on the verge of being realised. The deal was scrapped only when the revelations of News Corp involvement in the phone hacking crisis led to a political firestorm back in July 2011.

The relatively relaxed response from commentators to this new deal is not entirely surprising. Murdoch has learned his lessons and made it clear that Fox would not, at this stage, be seeking to increase its stake in BSkyB thus making it hard for UK regulators to intervene. Indeed, the proposed acquisition has been presented simply as an administrative restructuring of a section of the European pay-TV market leading to 'efficiencies' and potential benefits to shareholders. While the acquisition would certainly fall under the remit of the European Commission's competition authorities, financial analysts have been quick to insist that this might not be needed. As one UBS analyst argued, 'Sky Europe would not change pay-TV market share in any of the individual markets' so why bother with a full investigation?

This is incredibly short-sighted. The Murdochs have long made it clear that Fox's minority share of BSkyB is, in the words of Fox chairman James Murdoch, 'not optimal' and that there is a need to 'resolve' the company's pay-TV strategy in Europe. A consolidated Sky Europe run by BSkyB would be in much stronger position to head off challenges by rival broadcasters and content intermediaries and to secure the sports rights that are so essential to its business model. Bear in mind, for example, that both Sky Italia and Sky Deutschland currently own rights to leading domestic and European football competitions. Sky in the UK is under real pressure from BT in this area and a European powerhouse would only strengthen its negotiating position.

Do we really believe that, in this context, that the Murdochs will not seek to come back with another attempt to take control of BSkyB, particularly a bigger and stronger version? This is what the Lex column in the Financial Times argued:

This has the feel of a Murdoch master plan. He may want to unify the European TV companies within BSkyB, then bid for the rest of BSkyB itself. His last try at the whole of BSkyB petered out three years ago. Or maybe he plans to bulk the company up in the face of growing competition from the likes of BT as the TV, internet and telecoms businesses blur.

Murdoch may not want to risk a political backlash right at this moment but there is every reason why his lobbyists and political friends might want to launch a campaign to smooth the path for a take over following the next general election.

The deal has its own problems. It has already aroused opposition from some shareholders and would burden BSkyB with a significant amount of debt, perhaps reducing its capacity to reward investors in the short-term. But Fox has a huge amount to gain in the long-term from creating a European Sky giant and then manoeuvering itself into pole position to lead the company once memories of phone hacking and political collusion have died down.

This may appear to be a marginal business transaction but it is a deal that is simply not in the public interest, not in Germany, Italy nor in the UK. Politicians in this country privately recognize the dangers of a concentrated media but they are dragging their feet because no politician wants to alienate a powerful proprietor in the run-up to an election.

This means that civil society groups together with ordinary viewers, listeners and readers need to apply pressure to force media pluralism onto the political agenda. We should not stand idly by while analysts and executives cobble together a deal that will strengthen the position of an already dominant BSkyB in the UK and we should not stand idly by while power, wealth and influence is concentrated into fewer and fewer hands.

Sign the petition to stop BSkyB controlling Sky Italia and Sky Deutschland and also sign up to the European Initiative for Media Puralism's campaign for a diverse and accountable media.