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Murdoch lobbies watchdogs to put the brakes on Comcast's raid on Sky

A Murdoch backlash against the ?22bn bid by Comcast to gatecrash the takeover of Sky has begun with public calls for regulators to intervene on 21st Century Fox’s behalf. 
Fox is urging regulators in Brussels and London to pursue in-depth investigations of Comcast’s broadcasting and competition compliance record, and the unusual structure of its bid, in the hope it will put the brakes on its challenge.
John Nallen, Fox’s chief financial officer, told an investor conference in New York this week that Comcast’s proposed offer for Sky should face lengthy scrutiny. Murdoch family control of it has meant Fox’s bid has been under investigation for more than a year.
Mr Nallen said Comcast “has the characteristics of a global news organisation, where influence and conduct need to be looked at” over “violations of the broadcast standards code including sanctions from Ofcom”.
Fox’s bid for the 61pc of Sky share it does not own has been subjected to investigations by Ofcom and the Competition and Markets Authority (CMA) over whether broadcasting standards or media plurality are threatened.
The CMA has concluded that untrammeled Murdoch control of Sky News would give the family too much sway. Fox is currently in negotiations over protections including an independent board for the channel and a 10-year guarantee to cover its losses.
Mr Nallen said scrutiny of Comcast’s rival approach “should be equally serious and equally thorough as they look at any bidder that has relevance to their areas and their mandates”.
However, a source close to Comcast said: “Fox’s regulatory approval process is unique to its ownership, the plurality of its media assets and standards of governance.
"We do not share these issues and believe that it is the shareholders in Sky that deserve the chance to consider a higher offer for their shares.”
Murdoch lobbies watchdogs to put the brakes on Comcast's raid on Sky

Comcast chief executive Brian Roberts is seeking a swift green light from regulators

Credit:
Elijah Nouvelage/Reuters
Fox is lobbying for a thorough investigation of Comcast’s proposed bid in order to slow down the regulatory process.
Comcast, which is the biggest cable operator in the US and owns the broadcast network NBC, is racing to win approval as quickly as possible so that Sky shareholders would not have to wait longer for cash than under the Fox takeover. It has already begun the “pre notification” stage of merger approval in Brussels.
If Comcast can match the Murdoch timetable then Sky’s independent directors, led by Standard Life Aberdeen joint-chief executive Martin Gilbert, would be likely to recommend its bid, according to analysts at Square Global Markets. Comcast's offer is also 16pc higher than Fox's, at ?12.50 per share.
Despite Mr Nallen’s intervention, few observers believe Comcast faces regulatory hurdles as high as Fox.
Whereas the Murdoch family control several major UK newspapers and radio stations, Comcast’s financial news channel CNBC Europe operates in a tiny niche. NBC-owned channels such as the showbiz specialist E! have been fined by Ofcom for on-screen violations including a breach of the watershed in recent years. Fox is arguing they should be as thoroughly re-examined as its own compliance failures have been.
Comcast carries none of the political baggage of the phone hacking scandal, however. It was a major factor in the Government decision to trigger the Ofcom and CMA investigations of the Fox takeover.
Murdoch lobbies watchdogs to put the brakes on Comcast's raid on Sky

Comcast's ownership of Universal could come under scrutiny

Credit:
John Raoux/AP
If UK authorities are not asked by ministers to launch an in-depth probe of Comcast's offer, Fox would rely on Brussels to sow doubt among Sky shareholders. Fox believes that as well as regulatory battles in the US, the unusual structure of Comcast’s bid will raise questions for competition watchdogs in Brussels.
Comcast has said it would be content to control Sky via a simple majority shareholding of 50pc plus one share, making it possible that Fox will remain a large minority owner on 39pc. The Murdochs have agreed to sell their Sky stake on to Disney, which could mean Sky would have shareholder links with three of the six major Hollywood studios as Comcast owns Universal.
Fox is expected to lobby for an in-depth investigation of the potential effects on competition, although its own takeover of Sky was approved in Brussels under the fast-track “phase 1” process that can take as little as 25 days. Comcast is likely to argue that it would have sole control of Sky, and that Fox or Disney would have no direct influence over the running of the company.
Timing is crucial. Fox aims to seal its takeover of Sky by the end of June, but if Comcast can win approval quickly the chances of the Murdoch bid going ahead at its current price of ?10.75 per share will be further reduced.
Fox is in some ways a pawn in the battle, as its deal with Disney requires it to seek permission to take on more debt to increase its bid for Sky.
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