Rupert Murdoch’s 21st Century Fox must must increase the funding of Sky News to at least £100m a year beyond 2030 as a precondition of taking full control of Sky, the culture secretary has said.
Matt Hancock has said he would approve Murdoch’s £11.7bn bid to take control of the 61% of Sky he doesn’t already own as long as Murdoch sells off Sky News to an appropriate buyer – and then underwrites its funding for another 15 years.
The budget condition represents a more than 10% increase on the estimated £90m annual budget Sky News currently has. The news unit, which employs about 500 staff, makes some money from sources including advertising. However, overall it makes losses of between £15m and £20m a year.
Hancock’s condition means that Fox will have to top up any shortfall in funding to keep Sky News’s budget at £100m for the next 15 years.
Disney, which has tabled a £39bn offer to buy most of 21st Century Fox including the Fox’s 39% stake in Sky, has already said it would buy Sky News to help Murdoch overcome media plurality issues that have tied the deal in red tape for the past 18 months.
Hancock also said on Tuesday that if Disney buys Sky News it must commit to operate and maintain the news unit for at least 15 years. During that period, Fox will cover any shortfall from a £100m budget.
If Disney ultimately proves to be the new owner of Sky News – Hancock has said the news unit could also be sold to an “alternative suitable buyer” – it will not be allowed to sell it for 15 years unless the culture secretary approves a deal.
“In my view, these revised undertakings … will help to ensure that Sky News remains financially viable over the long term,” said Hancock. “[Sky News will] be able to operate as a major UK-based news provider and is able to take its editorial decisions independently, free from any potential outside influence.”
The broadcasting regulator Ofcom has previously said the closure of Sky News could “present risks to plurality equal to or greater than those presented by the [Fox] transaction itself”.
A Fox spokeswoman said: “21st Century Fox welcomes today’s announcement by the secretary of state for Digital, Culture, Media and Sport that he intends to accept the final undertakings proposed by Fox and Disney with a view to clearing 21CF’s proposed acquisition of the remaining shares in Sky on media plurality grounds. We now look forward to a final decision clearing our transaction.”
Hancock has launched a 15-day consultation on whether the undertakings will solve public interest concerns that taking full control of Sky, and with it Sky News, would give Murdoch too much power over UK news media.
On Wednesday, 21st Century Fox’s board is to meet to discuss a rival $65bn (£49.3bn) bid for its assets – including the Sky stake – from US cable and entertainment group Comcast. There is speculation that the board may decide to withdraw its recommendation for the bid from Disney, which is expected to table a more lucrative deal to try to see off Comcast.
Separately, in April Comcast launched a £22bn bid directly for Sky, which has been given conditional clearance by the government.
Comcast, which has 1,300 employees in the UK in subsidiaries including the production company behind Downton Abbey, made a number of pledges at the time of the Sky bid, such as keeping Sky’s HQ in Osterley, south-west London, and guaranteeing the editorial independence and funding of Sky News for at least 10 years.
“We are determined to be responsible and trusted owners of Sky,” Brian Roberts, the chair and chief executive of Comcast, said. “We understand and appreciate the value of news and are committed to protecting the important role that Sky News plays in providing a high-quality impartial news service. Any news organisation needs to have independence and be protected to do its job. You want there to be independence.”
If Murdoch disposes of his entertainment assets he would be left owning a much smaller Fox business which would control a TV network and news channels including the rightwing Fox News, in addition to Dow Jones which runs the Wall Street Journal and publisher HarperCollins.
In the UK he would be left with his News UK business, which owns the Sun and the Times newspaper.