Bigger media: Fox, Sky, Vivendi

21st Century Fox has now proposed a possible sale of Sky News to Disney as one of two possible remedies to secure approval of its planned acquisition of the 61% of the pay TV operator that it does not already own.

According to Sky, Disney has expressed an interest in acquiring the news channel even if its deal to acquire Fox as a whole does not go through.

As an alternative, Fox has suggested ring-fencing Sky News in a new company after the completion of its Sky takeover. Under this option Sky News would be transferred to the new company, which would have its own management and independent board.

Fox stated its belief that the “enhanced firewall remedies” it offered to safeguard the news service’s editorial independence go “above and beyond what Ofcom, the expert independent regulator on UK broadcasting, had stated would mitigate concerns around media plurality”.

Fox is keeping its eye on the prize: regulatory approval of its acquisition of Sky. The UK pay TV operator is a crucial element in the attraction of the Murdoch media empire for Disney. It is also sought after by Comcast, as discussed previously in Week in View.

If the Disney deal does not go through, acquiring Sky, a huge generator of revenues and cash flow, remains a key goal for 21st Century Fox.

Sky also features in another major news story this week – its deal with Mediaset in Italy. The pair have teamed up to combine their pay TV activities on satellite and digital-terrestrial TV.  Sky will make nine cinema and TV series channels from Mediaset Premium available to its satellite customers at no additional charge, along with a raft of on-demand content from Warner, Universal and Medusa. In a second phase, Sky will rent bandwidth from the DTT multiplexes operated by Mediaset-owned Ei Towers to deliver a DTT pay offering. From June 1, Sky and Mediaset will provide a combined DTT service with Mediaset’s cinema and series offerings sitting alongside Sky’s sports channels.

The deal is seen as beneficial to both parties, but particularly to Mediaset, which has been struggling to find a way forward for its struggling pay TV arm.

The agreement also leaves Mediaset’s estranged former would-be partner Vivendi out in the cold and deals a significant blow to the latter’s southern European strategy, as well as firmly establishing Sky as the dominant pay TV provider in Italy.

Vivendi has been struggling to fight battles on multiple fronts in Italy of late. Reports of attempts to resolve its differences with Mediaset came to nothing and plans for a JV between Canal+ and Telecom Italia, in which Vivendi is the leading shareholder, were also iced earlier this year.

Now, the intervention of activist hedge fund Elliott, which is attempting to oust Vivendi from management control of the telco, combined with a regulatory battle over Vivendi’s supposed control of a company seen as a national strategic asset, threatens to derail its plans completely.

What links these stories – Sky’s and Vivendi’s – thematically is that both are part of the ongoing struggle on the part of traditional media organisations to achieve sufficient scope and scale to compete in an increasingly globalized media business that seems set to be dominated by US-based internet giants.

The stories are also testament to the challenges faced by established players in overcoming local regulatory concerns – as well as the difficult business of establishing mutually beneficial collaborative business arrangements across national frontiers.

Regulatory concerns in a rapidly changing media landscape are real enough – and media concentration is a serious issue. However regulators also need to start thinking internationally – not to wave through big media mergers whose beneficiaries justify their plans by pointing to the growing power of the FAANG group, but on the contrary to look more seriously at the threat to plurality presented by those big tech companies as well.

If media companies believe their future depends on acting globally, the same is true of those who watch over them.

Read Next