Finance

ALEX BRUMMER: 21st Century Fox disappointed Secretary of State is minded to send Sky deal to Competition & Markets Authority

At 21st Century Fox they’re getting more than a little irritated with the Government’s attitude towards its £11.7bn bid for Sky.

Earlier this week City lawyers Allen & Overy invited Secretary of State Karen Bradley to ‘dismiss flagrant political attempts’ organised by Ed Miliband to interfere in the regulatory process.

In the latest missive Fox said it was disappointed Bradley is minded to send the deal to the Competition & Markets Authority (CMA) on grounds of media plurality.

Big news: At the start of the bid the greatest threat to the deal looked to be the ‘fit and proper’ test aimed at Fox chief executive James Murdoch who is also Sky chairman

At the start of the bid the greatest threat to the deal looked to be the ‘fit and proper’ test aimed at Fox chief executive James Murdoch who is also Sky chairman.

Ofcom gave the Murdoch family a clean bill of health in spite of the lingering smell of a cover-up at Fox News over sexual harassment allegations.

With that behind it Fox clearly believed a path had been cleared. It rightly claims credit for the contribution that Sky has made to Britain’s creative economy with a £700m investment in production in the last year and more than £5bn invested in Europe. It promises Osterley in west London will remain ‘our flagship UK presence’.

Even though control of the Murdoch media outfits in Britain is now split between two companies, News Corp and Fox, they are all but one and the same in terms of ownership and control.

So the CMA will have little choice but to aggregate the newspaper interests of the Times titles and The Sun with Sky News.

The reality is that, in comparison with the dominance of the BBC, the Murdoch hold over the UK media is as nothing.

It must be the case that if Fox does win control over Sky then the centre of gravity will over time move to the US as production budgets are consolidated. There will also be concerns that the scrupulous neutrality of Sky News could be sacrificed on the altar of Fox’s conservative agenda.

The biggest question of all is whether this is a good deal? The value of Premier League football rights, key driver of Sky’s growth, is under threat from streaming.

Entertainment broadcasting is being disrupted by Netflix and Amazon.

By the time the CMA has conducted its review the whole value proposition may have changed. Then what happens?

Unilever power

Unilever looks to be doing more than enough to keep the marauders at bay should Kraft Heinz be cheeky enough to come back with a second bid for the Anglo-Dutch group.

A fresh bid for the Persil-to-Ben & Jerry’s powerhouse would be hugely expensive. At the last time of asking Kraft bid £110bn.

Since then Unilever has upped it game and the market value of the group has advanced to £131bn or so. To be tempting to investors another 20 per cent or so premium would have to be added to the price and there would be even bigger questions as to whether any deal could be done without destroying jobs, culture and innovation.

Those who might have doubted the determination of chief executive Paul Polman to deliver Unilever a strong performance are being confounded.

In spite of tough conditions in key markets including Brazil, India and Indonesia earnings climbed 20 per cent in the first half. Profit margins widened as cost reductions have been delivered.

Unilever is promising a further push to improve margins and profitability by 2020.

What is really working for Unilever are its upmarket ice cream products built around Ben & Jerry’s and Magnum. It is also using its purchase of Dollar Shave Club to get a better grip on the ecommerce platform.

The financial challenge on the horizon is getting a decent price for the Flora margarine and spreads business. Unilever may have missed out on the French’s Mustard and hot sauce disposals by Reckitt Benckiser but will draw comfort from the hefty £3.2bn paid by McCormick in the US.

It shows that there is still a healthy market for strongly branded packaged food.

If the sale price is strong enough there could be nice little earner for investors.

Loose speech

Carsten Kengeter, chief executive of Deutsche Boerse (DB), had expected by now to be running a merged DB and London Stock Exchange.

Just days after DB indicated a settlement would clear Kengeter of insider trading allegations the Frankfurt public prosecutor said the probe is ‘open’ and ‘proceeding’.

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