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British Government Puts $15 Billion Fox-Sky Takeover On Hold

Sep 13, 2017
Originally published on September 13, 2017 4:20 pm
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KELLY MCEVERS, HOST:

Media mogul Rupert Murdoch and his sons are learning the cost of scandal. The British government is putting up some serious obstacles to a $15 billion takeover the family had sought. The Murdochs, who own 21st Century Fox, had bid for full control of the giant European TV company Sky. NPR's David Folkenflik is with us now to talk about the deal that is now in peril and those scandals. Hello there.

DAVID FOLKENFLIK, BYLINE: Hey, Kelly.

MCEVERS: So just lay out what the British culture minister is doing and why she says she's doing it.

FOLKENFLIK: Well, it was always going to be the case that the Murdochs' bid to take over full control of Sky was going to trigger a review of whether it concentrated too much control of British and European media in one family, one corporation's hands. After all, they already control two of the most important newspapers in Britain.

What's new is she's saying, look; we got to look at how they do in terms of corporate governance at this place, and we got to look at whether or not they really believe in British broadcasting standards of fairness and accuracy. These are things that are mandated by law.

MCEVERS: And so how serious are these concerns that she has raised?

FOLKENFLIK: Well, she's flagged some pretty serious scandals. Let's start with the one at the British tabloids in 2011. It involved charges of corruption, of bribing public officials and also of hacking into computers and phones, including the mobile phone of a murdered young girl. That then goes to the sexual harassment scandals at Fox News which led to the ouster of the founding chairman Roger Ailes and of course of the star host Bill O'Reilly earlier this year, among others.

And then there's the Seth Rich story which we've been reporting on. Think of this. This is a 27-year-old young man. He's murdered last year and young aide to the Democratic National Committee. Fox News does a story in May accusing him of being the source of leak of thousands of emails. And they have to retract this story, and they have to say they can't support it. But they don't say what went wrong, and they don't apologize to the dead man's family. And this is serving as the backdrop for an uproar in Britain.

These aren't the only scandals. There's one that - in which they've had to pay almost a billion dollars to settle accusations of frauds and failure to meet contracts and other things in their marketing arm. But you know, in a bunch of their major units, there have been these scandals that have played out and in a relatively short amount of time.

MCEVERS: Well, what do the Murdochs and 21st Century Fox have to say about these concerns being raised by the British culture minister?

FOLKENFLIK: Well, they say that they're surprised. Regulators who had offered her some guidance had earlier said, you know, these are real concerns and yet seemed faint in terms of what it means for Sky. And they say, look; we took a lot of pains after the hacking and corruption scandal in the U.K. to make reforms that not only affected those properties but went company-wide in how we ran things and oversaw things. We put safeguards in place after the accusations came forward about Roger Ailes and Bill O'Reilly and others at Fox News to ensure that this would be a welcoming workplace for women - in fact for all employees. These are problems in our past. They - you know, we have a huge property. It doesn't amount to that much.

I've got to say. These are instances of scandal that in many cases implicate the top executives they've named to run some of their most important properties, their British tabloids which give them - what's not only the root of their fortune for many years but ultimately became a great source of political influence there - Fox News really the economic engine driving the Murdoch empire. It's impossible to evaluate the Murdochs and their governance without acknowledging these major episodes.

MCEVERS: So then how likely is it that this deal will ultimately go through?

FOLKENFLIK: Well, it was seen as a pretty clear shot when it was proposed. I mean this was scuttled actually after the hacking scandal back in 2011, but it came back up again. They'd done - do penance, they thought. They run Sky very well. People thought well of it. And yet, you know, now I would say subject to this further scrutiny, it's more like a half-and-half rather than about an 80-20 shot. I think that this is something that's going to cause the Murdochs to sweat.

MCEVERS: NPR media correspondent David Folkenflik, thank you.

FOLKENFLIK: You bet. Transcript provided by NPR, Copyright NPR.