Has anyone in Downing Street actually realised that Rupert Murdoch’s 21st Century Fox has lodged a bid for Sky? If you trawl through newspapers and the internet looking for comments from the government about the proposed £11.7bn deal, you will not find much.
Matt Hancock, the junior culture minister, appeared in the Commons to answer an urgent question from Labour on the matter early last week, and that was it. “Any transaction will be looked at on its merits, on a case-by-case basis,” he said. How insightful.
Theresa May, Philip Hammond and Greg Clark, the business secretary, have been silent on the matter. Karen Bradley, Hancock’s boss and the culture, media and sport secretary, was apparently unavailable to answer the urgent question in parliament.
This all rather surprising when you consider that other investments in the UK from other overseas companies since the vote to leave the European Union have led to swift comments from the prime minister and chancellor praising their commitment to the country. The boss of Softbank, the Japanese company that bought technology group Arm for £24bn, even posed for photos with Hammond outside 11 Downing Street.
Now, the government’s silence on this issue may be because Sky shareholders have yet to vote on the proposal, or because it wants to leave the matter to Ofcom and other regulators. Hancock told MPs that the government must be “scrupulously fair and impartial” and that Bradley’s role is “a quasi-judicial one and it’s important she acts independently and is not subject to improper influence”.
But that hasn’t stopped the government before. Softbank’s trip to Whitehall came on the day its bid was revealed, before the shareholder vote and before any regulator had cast an eye over the transaction.
Instead, the government’s silence looks like an attempt to distance itself from the Sky deal and depoliticise it. May has not even made a clear, public pledge to properly analyse the transaction.
In contrast, Gordon Brown, Vince Cable, Tom Watson and plenty of other politicians outside government have had lots to say about the proposal – mainly that May must ensure that Ofcom conducts a public-interest test on the deal, seriously consider whether the Murdochs are fit and proper people to control Sky and its news operations, or even simply block the proposal.
The government’s silence is further evidence that the deal could be railroaded through by 21st Century Fox and Sky before any opposition is allowed to build up a head of steam.
Supporters of the takeover claim that much has changed since Murdoch last tried to buy Sky in 2011. His business has been split in two, with newspaper brands such as the Sun and the Times held within News Corp and the TV and film assets run through Fox. Also, Google and Facebook now dominate the digital advertising market, transforming the outlook for news and content providers.
But both of these defences are easily dismantled. Firstly, splitting News Corp and Fox does not change the fact that one family could end up with extraordinary influence over British media. Take a look at the boards of News Corp and Fox – Rupert and Lachlan Murdoch are the co-chairs of both, while James Murdoch is chief executive of Fox, on the board of News Corp, and chair of Sky.
Secondly, recent changes in the media industry simply reinforce the importance of the established news providers emphasising their independence, credibility and quality. If the public question the veracity of what they read in newspapers or see on TV news, then it simply pushes more people to Facebook, Google and fake news.
The government must not sleepwalk its way through this issue. The Fox-Sky deal must be rigorously tested, and the Murdochs should be called to appear in front of MPs to make guarantees about the future of the brands they could control.
A short-term boost for US
In the weeks since the US presidential election, financial markets have had a change of heart about Donald Trump’s victory over Hillary Clinton.
The knee-jerk reaction when the result came in was to assume the worst. Trump’s programme was sketchy but seemed worrisome. He was threatening to get tough with China. He talked about protectionism. He had made minatory noises about the Federal Reserve. Put simply, Trump meant uncertainty, so markets sold off.
This mood did not last long. Wall Street bulls quickly discovered a silver lining: Trump’s plan to cut taxes and increase spending on America’s creaking infrastructure.
Dealers in New York think looser fiscal policy means stronger US growth, which in turn will lead to higher profits for companies quoted on Wall Street. Hence the surge in the Dow towards the 20,000 mark.
The upbeat mood was only briefly interrupted by the Fed’s interest-rate announcement last week. Wall Street quickly shrugged off the quarter-point rise in borrowing costs and the indication that 2017 would see three further increases.
There were two main reasons for this. First, recent form suggests the Fed might not go ahead with next year’s monetary tightening. When it raised rates a year ago, it hinted at four increases in 2016. Only one was actually delivered: the one last week. Second, Wall Street thinks that even if the Fed does go ahead, the economic impact will be modest.
In the short term, at least, both assumptions seem reasonable. The Fed is certainly not trigger-happy when it comes to rates and Trump’s fiscal policy should guarantee growth next year. But investors need to be wary. Most of the fiscal boost is going to come through tax cuts, which will inject both demand and inflation into an economy already running up against capacity constraints. At some point in 2017 the Fed will adopt a more aggressive stance. Shares will suffer as the economy slows down.
Tech v Trump? Could be interesting
Rarely can so much wealth and power have gathered around one table. In a meeting at Trump Tower last week the president-elect of the United States, Donald Trump, held talks with a group of technology bosses that included Tim Cook of Apple, Jeff Bezos of Amazon, Sheryl Sandberg of Facebook, Larry Page and Eric Schmidt of Google’s owner Alphabet, and Elon Musk of Tesla.
The executives left claiming it had gone well: Bezos even said he was “super-excited” about the prospect of working with an “innovation administration”. But photos of the meeting show a different story. Bezos looked grim, even frightened at times.
This is hardly surprising. Trump waged a war of words with Bezos throughout the election, pledging to cause “problems” for Amazon. He has also criticised Apple for its factories in China. The dynamics between Trump and tech – which will involve issues of trade, security and manufacturing – promises to be fascinating.
