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In the News

Sky/Fox merger and public interest

Jonny Clark

23rd January 2018

It seems like the proposed merger between Sky and Fox has been on the cards for ages and plenty has been written about the subject, including on this website.

However, today's intervention from the Competition and Markets Authority reminds me that the case may be a particularly good example for A level students when discussing competition and the way that markets operate.  In this instance, the CMA gives us an unusual example of a possible meaning of 'public interest' and several suggestions for how to keep the market 'competitive'.

The detail

The interesting detail from the CMA's statement on the Fox/Sky merger is that they say that it does not pose an issue with regards to a reduction in the 'standard of broadcasting'.  This suggests that the CMA expects the quality of the news provision to remain the same - Sky would continue to offer genuine competition to the BBC and ITN for news broadcasting that includes analysis and tele-visual elements.  Unlike other markets, this merger does not impact on the supply of the product nor its quality, nor the amount of competition.  In that sense, it can not be compared to, say, a merger between two of the big supermarkets.

Loss of media plurality

However, the negative impact on public interest comes from the possible reduction in 'media plurality'.  The suggestion here is that, as the Murdoch family would now have an increased control of the merged company they could directly influence the editorial slant of Sky (by, for example, choosing a editor with a particular political bias).  As the Murdoch's already control the News International Group (which includes the Times and the Sun newspapers), the merger could reduce the degree of 'balance' in news broadcasting in the UK which, of course, can impact on election results and democracy in the UK.

Remedies

The CMA's possible solutions to the problem also offers some good examples for students.  The merger could go ahead, for example, but the Sky News arm could be sold off or allowed to operate as a stand alone entity.  Also. a series of 'behavioural remedies could be put in place (more detail here) which basically attempt to place a 'firewall' within the Sky News network to reduce the editorial impact of the owners.  What a great example that would be in an essay on intervention into markets - 'behavioural remedies'!

Jonny Clark

Jon Clark has been teaching economics and business studies for over 25 years primarily in the Further Education sector. Before joining tutor2u, he was a senior manager at South Cheshire College in Crewe.

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