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BSkyB

Consolidated Fund (Appropriation) (No.2) Bill – in the House of Commons at 3:00 pm on 3rd March 2011.

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport 3:00 pm, 3rd March 2011

With permission, Mr Speaker, I should like to make a statement about News Corporation’s proposed acquisition of BSkyB. I start by thanking both the Office of Fair Trading and Ofcom for their detailed, thorough and independent analysis, which has been produced to a challenging time scale. My decision today relates to the plurality of news provision, not competition or market power issues, which were ruled on by the European Commission on 21 December 2010.

Earlier this morning, I announced that the independent media regulator, Ofcom, had advised me that undertakings in lieu offered by News Corporation would address the plurality concerns that Ofcom had identified in its report to me of 31 December 2010. I also announced that the OFT considered the undertakings to be practically and financially viable for up to 10 years. In the light of this independent advice, I propose to accept such undertakings instead of referring the matter to the Competition Commission.

As the Enterprise Act 2002 requires, I have today published these undertakings for public consultation. For the sake of transparency, I have also published all the advice that I have received from Ofcom and the OFT, together with correspondence between myself and News Corporation and a time line for the process I have followed, including details of all meetings I have held. I hope that hon. Members will have time to study these undertakings during the formal consultation that will start today. However, it may help if I outline the main points.

The undertakings would ensure that Sky News is spun off as an independent public limited company. The shares in that company would be distributed among the existing shareholders of BSkyB in line with their existing shareholdings. News Corp would therefore retain a 39.1% stake in the new company, although it will not be allowed to increase this shareholding for 10 years without the Secretary of State’s permission. In other words, even if the proposed News Corp/Sky merger goes ahead, News Corp’s shareholding in Sky News will remain the same as at present.

The new company would have a 10-year carriage agreement and a seven-year renewable brand licensing agreement with the newly merged News Corp/Sky so as to ensure its financial viability. Unlike the board to which Sky News currently reports, the chairman would be required to be an independent director. Unlike at present, the board would have a corporate governance and editorial committee to ensure compliance with the principles of editorial independence and integrity in news reporting. For the first time, the requirement for the company to adhere to Ofcom’s broadcasting code would be enshrined in the new company’s articles of association.

In short, the editorial independence of Sky News will be better protected not only than it would have been had Sky News formed part of the buy-out of Sky shares, but even than it is right now. The principles of the arrangements are clear and set out in the proposed undertakings. There are still some detailed provisions of carriage, brand licensing and certain operational agreements that need to be finalised, and the terms ensure that such agreements need to be approved by me. In deciding whether or not to approve them, I will again take the advice of Ofcom and the OFT as appropriate. The merger cannot, of course, go ahead until I have been satisfied on all these matters.

I also want to draw the House’s attention to the long-term sustainability of these undertakings. The OFT has said that the undertakings are likely to be practically and financially viable in the short and medium term, but expressed concerns about whether they would be viable over the longer term. It stated, however, that the appropriate time frame in this market was for me to decide, with Ofcom’s advice.

Ofcom has considered the impact of a 10-year carriage agreement in the context of the media industry, and it has expressed the view that, in a rapidly changing media and technological environment, a carriage agreement of 10 years is a long-term measure. I agree with its independent view about the difficulties of predicting with any certainty how the plurality issues will develop over a longer time frame. However, I will of course reach a final conclusion on that and other aspects of the undertakings only after the consultation is complete.

Consequently, on the basis of the independent advice I have received, I have concluded that a referral to the Competition Commission would not be merited at this stage, and instead I propose to consult on the undertakings in lieu, the final version of which has also been placed in the Libraries of both Houses and on my Department's website.

In line with the legislation, I am opening a consultation period, during which time all interested parties will be able to express their views on the undertakings. Once I have considered representations, I will reach a decision on whether I still believe that the undertakings should be accepted in lieu of a referral. If, after consultation, I am still of the view that the undertakings address the concerns about media plurality, I will accept them and not refer the merger to the Competition Commission.

I should add that, quite separately to my consideration of the merger, I have carefully noted Ofcom’s point that there is a potential weakness in the current public interest test with respect to media plurality—namely, that it can be applied only when there is a commercial transaction to consider. That wider question is one that I intend to consider in the context of the forthcoming review of communications regulation which I announced earlier this year.

Throughout the process, I have been very aware of the potential controversy surrounding the merger. Nothing is more precious to me than the free and independent press for which this country is famous the world over. In order to reassure the public about the way in which the decision has been taken, I have sought and published independent advice at every step of the way, even when not required to by law. After careful consideration, I have followed that independent advice. The result is that, if the deal goes ahead, Sky News will be able to continue its high-quality output with greater protections for its operational and editorial independence than those that exist today. For those people who have concerns about the plurality of news provision, I hope that that will be a welcome step forward. As such, I commend this statement to the House.

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Photo of Ivan Lewis Ivan Lewis Shadow Secretary of State for Culture, Media and Sport

Four weeks ago, the Secretary of State said he was minded to refer News Corp’s acquisition of BSkyB to the Competition Commission. Today, it is clear that he has changed his mind. Hon. Members and many people outside the House will want reassurance that the right hon. Gentleman has not put the perceived interests of his party and career ahead of the public interest. Imagine what they would have said if we had made that decision, in that way, in the same week as we had put a former Labour party chairman in charge of the BBC.

Until we get some straight answers to straight questions, doubts will persist. The process has exposed an arrogant Government, cavalier about their responsibility to be impartial and contemptuous of the importance of transparency in circumstances where there is already a high level of public cynicism.

On 21 December, the Business Secretary was stripped of his responsibility for the media and digital economy, because of poor judgment and a lack of impartiality following his boast that he would declare war on Mr Murdoch. The Secretary of State for Culture, Olympics, Media and Sport was given responsibility for this quasi-judicial process, despite being on the record as saying that he did not see a problem with News Corp purchasing BSkyB.

Two days later, on 23 December, the Prime Minister attended a private dinner with James Murdoch in the middle of a quasi-judicial process. That, from a Prime Minister who wrote in the foreword to his own ministerial code:

“In everything we do—the policies we develop and how we implement them, the speeches we give, the meetings we hold—we must remember that we are not masters but servants. Though the British people have been disappointed in their politicians, they still expect the highest standards of conduct….We must be…Transparent about what we do and how we do it. Determined to act in the national interest”.

Can the Secretary of State tell us whether he has had any discussions about the acquisition with the Prime Minister since 23 December—to be clear, not whether he has consulted him, but whether he has had any discussions? If yes, were officials present at these discussions? Does he think that it was right for the Prime Minister to attend that dinner in the middle of this process?

With regard to News Corp’s proposals to float off Sky News as a listed company, I have a number of initial questions. Who will appoint the new Sky News board chair and the board? Will the chair be independent? What proportion of board members will be News Corp representatives? What steps would News Corp have to take if it wanted to change the Sky News governance arrangements or News Corp’s shareholding? Will Sky News be solely dependent on News Corp for finance over the next decade? Who will hire and fire Sky News editorial staff? Will the Sky News board be expected to prevent the bundling of information from News Corp’s newspapers and Sky News? Who will be responsible for monitoring the independence of Sky News over the next decade? What assessment has the Secretary of State undertaken of News Corp’s approach to undertakings given in the past following the purchase of The Times and The Sunday Times in 1981 and The Wall Street Journal in 2007? Can the Secretary of State confirm that broadcasting news impartiality rules will remain in place? Why has he not consulted UK media organisations opposed to this acquisition during the past month?

I welcome the Secretary of State’s commitment to examining the public interest test in the context of a new communications Act, but the rapidly changing digital age means that our media organisations need a modern regulatory framework sooner rather than later. Will he work with me to bring the legislation forward from 2015, as the Government propose, to 2012 or 2013 at the latest?

Media ownership and control is integral to our democracy. The integrity of our democracy depends on news being provided from a variety of sources with no one voice being dominant. As we have said all along, the decisions about this acquisition must be determined in the public interest via the due process laid down by Parliament, not through political deals. In the days ahead, I will engage with interested parties before deciding whether we believe that referral to the Competition Commission remains the most appropriate course of action. My party will apply the public interest test without fear or prejudice.

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

I am afraid that what we heard from the shadow Culture Secretary displays absolutely blind ignorance of a process that his own Government, when they were in power, set up under the Enterprise Act 2002. He talked about putting the interests of party first. Apart from asking him why the former News International-employed Labour party director of communications sent an e-mail round to all Labour Front Benchers asking them to back off from criticisms of this deal, let me just say this. I have been absolutely scrupulous in making sure that independent views were commissioned, expressed and published at every stage of this process, precisely because I wanted to reassure the public that this decision was not being taken on the basis of party interest. Those documents have been published today so that people can see for themselves that not only did I ask for that independent advice, and not only did I publish that independent advice, but, after careful consideration, I accepted that independent advice.

Let me go through some of the other things that the hon. Gentleman said. He partially quoted something that I said about this deal before I was even part of the process, but he did not read out the end of that quote, which he will have known full well, where I said that I would not second-guess the regulators. I have not second-guessed the regulators. I have listened to the independent regulators and I have accepted their advice.

The hon. Gentleman asked whether the chair of the new company that is proposed to be set up will be independent. It is written in undertaking 3.13 that the chairman will be completely independent. There will be a board with majority independent directors. He asked what proportion of the new company’s revenue will be dependent on Sky. As things stand at the moment, it would be about 65%, but I think that any independent board of directors would be likely to want to reduce that dependence over a period of time, and they will have a 10-year carriage agreement with guaranteed income over that period in which to address that issue.

The hon. Gentleman asked who will be responsible for hiring and firing those who are responsible for the operation of Sky News. Again, it is clearly written in the undertakings that have been published today, in undertaking 3.16, that that decision will be the responsibility of the independent board. He talked about The Times and The

Sunday Times, but I gently point out to him that this case is different because we will have an independent company that will be floated independently on the stock market with an independent board and an independent chairman—that is a huge difference.

The hon. Gentleman asked me to confirm whether the impartiality rules will remain in place. It is the Government’s policy that they should. On top of that, for the first time in this country, the new company will have in its articles of association that it must respect the broadcasting code, which includes the impartiality requirements. That is set out in undertaking 3.12.

The hon. Gentleman asked when I would consult other media organisations. What I am launching today is a 17-day consultation in which those media organisations will be consulted. This is a consultation and I will listen to what they say. The extraordinary thing in what he said today was the utter cowardice of a party that listens to a statement, criticises a process that it set up, and then refuses to get off the fence and say whether it agrees with what I have done. Last time, he criticised me for not following Ofcom’s advice. In fact, I did follow Ofcom’s advice then, and I am following it now. Does he agree with what Ofcom has said? If he is not prepared to say whether he agrees, no one will take any of his criticisms the remotest bit seriously.

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Photo of Don Foster Don Foster Liberal Democrat, Bath

Many members of the public are concerned about the potential for growing influence and control over news and current affairs in this country. Will the Secretary of State confirm that if this deal goes ahead, Rupert Murdoch, James Murdoch and News Corporation will have less influence and control over news and current affairs in this country?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

My right hon. Friend makes a very important point. The detail that has been published today shows that News Corporation and James Murdoch have had to surrender a significant degree of control over Sky News to purchase the rest of the Sky shares. That involves the things that we discussed earlier, such as the independent chairman. At the moment, James Murdoch is non-executive chairman of Sky. That will change, with Sky News having an independent chairman. The detail includes the broadcasting code being written into the articles of association and that there must be a majority of independent directors. There is a whole range of safeguards that were negotiated not by me, but by Ofcom, which is the expert regulator in the field, precisely because it wants to ensure that there is not an over-concentration of media ownership in this country. That is fundamental in a free society.

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Photo of Gerry Sutcliffe Gerry Sutcliffe Shadow Minister (Home Affairs)

The Secretary of State said that he used the procedures of the Enterprise Act 2002, but he has also told us that he looked at the decision based on plurality. He will know that had he used the Enterprise Act—I speak as a former competition Minister—there would have been concern, which I am sure he will hear about in his consultation period, that Sky’s retention of 39% of the ownership of Sky News negates all the guarantees that he has given. Will he look again at the detail of the Enterprise Act? If he considers it on that basis, as I am sure the Secretary of State for Business, Innovation and Skills would have done, he will see that this is clearly a competition issue.

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

The Enterprise Act 2002 has a public interest test that can be invoked not on issues of competition, but on issues of media plurality, national security and, as it happens, the security of the banking system. What we are talking about is media plurality. It does not allow Ministers to intervene on competition grounds. Competition grounds were looked at extensively by the European Commission, which reported on 21 December that in its view the deal would not lead to a decrease in competition.

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Several hon. Members:

rose —

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Photo of John Bercow John Bercow Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Speaker of the House of Commons

Order. I gently remind the House that right hon. and hon. Members who came into the Chamber after the start of the statement should not expect to be called. That is a long-established tradition of the House.

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Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset

May I indicate a family interest, although not a personal one?

I congratulate the Secretary of State on his excellent statement. It is tremendously important that business is allowed to get decisions quickly, so that it can carry on. He has ensured that the pace of government has run at the pace of business, which is hugely to be welcomed.

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

I thank my hon. Friend for his comments, and I agree that it is important for Government to act as fast as possible. However, in this particular case I made it very clear to Ofcom and the OFT that they should take as long as they needed to come to the right recommendation for me to consider. I gave them as long as they needed, but they have worked to a very tight deadline and been able to ensure a much quicker turnaround than is normally the case.

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Photo of Tom Watson Tom Watson Labour, West Bromwich East

The Government could have asked Ofcom to report on News International’s commitment to broadcasting standards. I now believe that evidence exists showing that journalists currently employed on The Times and The Sunday Times were involved in phone hacking, and that damaging revelations were printed in The Sun from information possibly collected by illegal hacking. We are told that the BBC has been bullied into delaying the broadcast of an edition of “Panorama” showing more sinister forms of illegal surveillance. If the Metropolitan police show the Secretary of State that evidence, will he change his mind?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

First, the issue of phone hacking is extremely serious and very important, and someone has been sent to prison for it, but there is a judicial process and it is not appropriate for me to involve myself in it. As to whether I can ask Ofcom to examine those issues, my understanding is that legally, I am not able to do that at this stage.

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Photo of Caroline Nokes Caroline Nokes Conservative, Romsey and Southampton North

Many constituents have expressed concerns to me about the deal. Can the Secretary of State inform the House as to how the corporate governance arrangements of the new company compare with those of other media organisations in the UK?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

First, there are provisions with respect to corporate governance in undertaking 3.18. The board is required to set up a corporate governance and editorial sub-committee, which will be run by someone who has expert experience of what editorial independence is all about. To my knowledge, this is the first time that a media company in this country has had such corporate governance requirements enshrined in its articles of association. There will be a tougher requirement on it to adhere to those requirements than there is on other companies, because other companies are required to comply with the corporate governance code or explain why they are not complying, whereas this company will simply be required to comply with it.

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Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

Is the Secretary of State aware that the most likely, probably inevitable, outcome of his statement is that within 10 years, and perhaps in a much shorter period, News International will own 100% of both BSkyB and Sky News? Is he aware that the only way in which he could avoid that, and give his statement some shred of credibility, would be to have a clear, cast-iron undertaking by News International, in the articles of association or elsewhere, that it will not be allowed to regain 100% control of Sky News?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

Undertaking 6.1 states that News Corporation is not allowed to buy additional shares in Sky News without the consent of the Secretary of State. Even after 10 years, when that agreement expires, were it to wish to acquire new shares in Sky News, it would have to go through potentially exactly the same process that it has gone through this time. The Secretary of State would have the option of asking Ofcom to examine the matter and referring it to the Competition Commission. All those safeguards will remain in place.

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Photo of Nicola Blackwood Nicola Blackwood Conservative, Oxford West and Abingdon

I thank the Secretary of State for his assurance that the new company will have to adhere to a stricter governance regime than any other UK media company, but given the distinct lack of public confidence in the process, what assurances can he give the House that that governance system will actually be adhered to?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

First, there are provisions in the undertakings that give the Secretary of State powers to ensure that compliance happens, so I have some sanctions.

With respect to the approach to the decision that has been taken, today I have published 14 documents, including the ones that I am statutorily required to publish and many that I am not. I am not aware that any Minister involved in a similar decision has ever published so many documents. They include a timeline with details of every meeting that has taken place as part of the process. We will publish the minutes of those meetings at the end of the process. I hope that that commitment to transparency, and the fact that I have sought, published and, after consideration, accepted independent advice at every stage of the process, will reassure my hon. Friend’s constituents of the total probity with which we have approached the decision.

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Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

I have to disappoint the Secretary of State, because many people will think that we have reached a new low in

British politics today, as the Conservative party, which was backed by Rupert Murdoch before the election, has delivered this deal within months of being elected. To ignore the 250,000 constituents who signed petitions and e-mailed him to oppose this deal is to ignore the democratic wishes of the population. He could have reassured them by referring the matter to the Competition Commission, and he can still do so. I therefore urge him, in the interests at least of the probity of British politics, to refer the matter, because nobody believes that the undertakings given by Murdoch will be adhered to in the long term.

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

We have not ignored the hon. Gentleman’s constituents. They were concerned about an over-concentration of power over the British media in the hands of one or two people. The measures that I have announced today make Sky News more independent than it is.

On referral to the Competition Commission, I have sought independent advice from the expert regulator, Ofcom, which had a number of concerns—similar to those expressed by the hon. Gentleman’s constituents—about the risks of the concentration of power of ownership of the media. It has said—this is in writing and I have published it today—that it is satisfied that all those concerns have been addressed.

Finally, I remind the hon. Gentleman that The Sun supported Labour in 1997, 2001 and 2005. The Conservatives did not complain then of dodgy deals, so Labour Members should not complain either.

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Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

For those of us who have constituents who are unhappy about this proposed acquisition, can the Secretary of State tell us how members of the public can best take part in this consultation to let their views be known?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

We are happy to hear all views, whether they agree or disagree with the proposals. There is an e-mail address on my departmental website to enable anyone to contribute. I encourage members of the public—whatever their views—to take part in the consultation, and indeed I encourage all hon. Members to do so.

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Photo of Dennis Skinner Dennis Skinner Labour, Bolsover

Whatever spin is put on this business today, there is no doubt that this is a disastrous day for democracy. The Murdoch empire—a political organisation—has now decided to gobble up this Government like it has gobbled up Governments before, which means that elected Members of Parliament have to play second fiddle to it. Is it not remarkable that Murdoch also operates the hereditary principle, and hands down power like a middle eastern despot from father to son?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

In which case Mr Murdoch would not agree with my view on reform of the House of Lords. If the hon. Gentleman cares about freedom and democracy and looks at the details of the deal, he will find that if it proceeds—if I accept it after 15 or 17 days’ consultation—it will make Sky News more independent than it is at the moment. That strengthens media plurality, which should reassure the many people who are understandably concerned to ensure that no one person has too much control. If James Murdoch wanted more control over news media in this country, he would not have proceeded with this deal. It is in order to buy the shares in the rest of Sky that he must cede significant control in Sky News.

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Photo of Tony Baldry Tony Baldry The Second Church Estates Commissioner

Will my right hon. Friend confirm that he has been engaged in not a political process but a quasi-judicial process under the Enterprise Act 2002, and that if now, or at the conclusion of the consultation process in 17 days, when he eventually makes a decision, anyone thinks that he has failed in that process, their remedy lies in judicial review?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

My learned hon. Friend is absolutely right. In reality, we have to assume, because there are so many interests at stake, that any side that is disappointed with this decision will attempt judicially to review it. For that reason, at every stage of the process, we have sought to be completely transparent, impartial and fair, which is why today we are publishing all the documents relating to all the meetings—all the consultation documents, all the submissions we received, all the exchanges between my Department and News Corporation. People can thereby judge for themselves whether the process has been completely fair, impartial and above board.

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Photo of Caroline Lucas Caroline Lucas Leader of the Green Party

How does the Secretary of State respond to the literally hundreds of constituents in Brighton, Pavilion who have contacted me to express their concern about this deal and their belief that the so-called Sky News remedy is no more than window dressing? They also ask how it can be right to support a takeover that will give News Corporation even more power at a time when Rupert Murdoch already exerts such an unhealthy influence on our media landscape.

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

If the hon. Lady’s constituents are concerned to ensure that there is not an over-concentration of power over news media in too few hands in our country, I agree with them. I think that it is fundamentally extremely important. However, I would urge them to look at the outlines of what has been announced today. If they do, they will see that it actually strengthens the editorial independence of Sky News in a way that is completely unprecedented for any media organisation in this country. The second issue she raised, on the market power of News Corporation, is not one that I can consider in this quasi-judicial process, because this is about plurality in the provision of news. The market-dominance and competition issues in this country are decided not by Ministers, but at arm’s length. In this case, the EU had jurisdiction, and it made its ruling on 21 December 2010.

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Photo of Duncan Hames Duncan Hames Liberal Democrat, Chippenham

I recognise the Secretary of State’s commitment to transparency. In the light of the Government’s experience of this case, however, does he welcome the burdens placed on Secretaries of State in such cases, or does he see merit in the wider application of automatic triggers relating to market share, for example, in order to address issues and concerns about news media plurality?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

My hon. Friend asks a very important and pertinent question. The Ofcom report sent to me on 31 December 2010 pointed out that Ministers’ ability to intervene in the public interest on grounds of news plurality can be triggered only when there is a corporate transaction. It cannot be triggered when, for example, a news organisation grows its market share organically. That is different from competition law, under which it is possible, through the Office of Fair Trading, to trigger a Competition Commission inquiry. It is reasonable to ask whether we should look at whether we have the triggers we need for this very important issue. I said in my statement that I will do that as part of our review of communications regulation for potential inclusion in a new communications Act this Parliament.

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Photo of Chris Bryant Chris Bryant Shadow Minister (Justice) (Political and Constitutional Reform)

I am sorry, but I think that this is a particularly shabby deal, and I think that it has been brought to us by a Secretary of State who made his mind up a long time ago. I say that because he told me so in East Grinstead last September, before this process even started. What would he say to my constituents in the south Wales valleys who suffer from Murdoch’s virtual monopoly in broadcasting, particularly in respect of certain channels in south Wales, and in the provision of many channels and sporting opportunities? They are deeply concerned that the guarantees that have supposedly been given are no stronger than those made in relation to The Sunday Times and The Times, and will not stand the test of time.

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

It is not a question of what I think as much as what independent regulators who have been involved in every stage of the process have said, and whose advice I considered before making my decision. I not only considered their independent advice, but, as it happens, followed it. It has been extremely important to do so, because in this decision, of all decisions, people are understandably suspicious of the motives of politicians. That is why I have involved independent people at every stage of the process. I would say to the hon. Gentleman’s constituents that it is very important that we have a competitive market in the media. It is very important that we have competition, and we want to ensure that that is the case. We have a competition regime to ensure that it happens, and we will continue to police that regime diligently.

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Photo of Julian Smith Julian Smith Conservative, Skipton and Ripon

I welcome the Secretary of State’s comments about sanctions. Will he say a little more about the monitoring procedures for the new company?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

In the undertakings published today the Secretary of State has the right to intervene to ensure full compliance with all the undertakings that have been made, and it is important that that should be the case. It is impossible to predict every situation that might arise in a market landscape that is changing as rapidly as the media market. The issue has been looked at carefully by independent experts—they are far more expert than I am—who are confident that, in so far as it is possible to envisage all future situations, those undertakings will secure the independence of Sky News for the 10-year period of the carriage deal.

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Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

Since the news broke this morning, I have had a significant number of e-mails from constituents. One says:

“The promises made by Mr Murdoch are not worth the paper they are written on”.

Another says:

Rupert Murdoch will still have directors on the board of Sky News, he’ll still control the flow of cash to Sky News and the distribution network…It’s smoke and mirrors, and media plurality is still under threat.”

It is clear that they are not reassured by the Secretary of State’s professions that the process has been strictly impartial and fair. What else can he tell me to reassure them, because, to be honest, I do not think he can?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

Let me address the two points that the hon. Lady raises. First, the majority of the directors of the new company will be independent, as will the chairman. That is different from the situation now, where the non-executive chairman of Sky is James Murdoch. The second issue that she raised was the flow of cash from News Corp. That is part of the 10-year carriage agreement that is negotiated at the very start of the process. In a way, it is like the licence fee negotiations with the BBC, in that it secures the new organisation’s cash flow for 10 years. Sky cannot get out of supplying that cash except in extreme conditions, and where there is a dispute about it there is a dispute resolution procedure involving independent arbitration, so the new organisation will be as sure of that cash flow over the 10-year period of the carriage agreement as anyone could be.

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Photo of Oliver Colvile Oliver Colvile Conservative, Plymouth, Sutton and Devonport

I should also declare an interest, in that I have a brother, Charles, who is a cricket correspondent for Sky television and, I am told, can be seen nightly presenting the world cup highlights.

Can the Secretary of State confirm that should the deal not go through for some reason, the Murdoch family would not have to dispose of their interest in Sky News to such an extent?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

I am trying to make sure that I have understood that question. If the deal does not go through, we remain with the status quo, which is that Sky will be 39.1% owned by News Corporation. On the other hand, the independent safeguards and guarantees for Sky News envisaged in the deal would not be put in place.

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Photo of Chuka Umunna Chuka Umunna Labour, Streatham

I, too, have received a huge amount of correspondence from constituents on this issue. Independence is clearly key, but in practice it will be extremely difficult to achieve. Does the Secretary of State really think that it will be possible for the board to sit aside, independently of its biggest shareholder and biggest customer? Will he also say whether News Corp-Sky will be permitted to buy advertising air time on the new Sky News channel, and, if so, whether that revenue stream is included in the 65% figure he gave earlier?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

The 65% figure is based on the carriage agreement, which is the fee that Sky would pay to Sky News for providing the news service that would be broadcast on the Sky platform. It does not involve any advertising to my knowledge. That is the first point. The second point that the hon. Gentleman mentioned—

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Photo of Chuka Umunna Chuka Umunna Labour, Streatham

But is it actually possible in practice?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

I thank the hon. Gentleman for kindly reminding me of the first part of his question. There is no doubt that someone with a 39% shareholding in a company has significant influence in the way it is run. For example, ITV has a 40% shareholding in ITN. However, the independence that the new board will have is unprecedented. It is enshrined in the articles of association of the company in a way that the independence of ITN, for example, is not. Despite the fears of many people, Sky News has been run with pretty sound editorial independence for the past 20 years while under a much greater degree of potential control by News Corporation than has in fact been exercised. So it is possible to have confidence that Sky News will continue to be run with proper, full editorial independence. I thank the hon. Gentleman for his forbearance.

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Photo of Amber Rudd Amber Rudd Conservative, Hastings and Rye

Given that Ofcom initially believed that it would need to refer this case, due to concerns about plurality, will the Secretary of State tell us what elements of these arrangements convinced it that it should not do so?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

Yes, I am happy to do so. There are a number of things, but I shall outline the main thing that has reassured Ofcom since its first report, which was delivered on 31 December. That report stated that, under the original deal proposed by News Corporation, Sky News would cease to exist as an independent media entity. That will not be the case under the new structure that has been proposed and published today. Sky News will be a separate company. It will not be majority owned by News Corp, and it will have an independent chairman. A huge number of safeguards will be put in place to secure the editorial independence that has been a key part of its success to date and that needs to be protected in the future for reasons of news plurality.

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Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Innovation and Skills)

I, too, have received a huge volume of correspondence from constituents who are concerned about the plurality of the media following this deal. I should declare an interest: up until the election, I worked for Ofcom. I am therefore very familiar with the real difficulties involved in monitoring and policing behavioural undertakings of this kind. The Secretary of State said that he gave Ofcom the time that it needed to make its recommendation. Will he promise to give the public the time that they need to gain confidence in these undertakings?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

If the hon. Lady used to work at Ofcom, she will understand that there is a big difference between behavioural remedies and structural remedies. We are talking here about structural remedies. They are not a promise of good behaviour; they are remedies concerning the structure, the articles of association and the board of directors of a new company. They involve obligations that are legally enforceable, and they are therefore much stronger. Ofcom has said that it is happy that the requirements are strong enough to satisfy its concerns. Of course we want this to be a full consultation—it is very important that we do that—but I am satisfied that the 17 days will give people enough time to look at the deal and voice their objections. We have already had a number of e-mails on the issue, as I am sure the hon. Lady has. We will consider fully all the opinions that are expressed to us before coming to a final decision.

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Photo of Bob Blackman Bob Blackman Conservative, Harrow East

Having spent 12 years of my life before being elected to the House working in regulatory compliance, I know that the monitoring arrangements are critical in cases such as these. Will my right hon. Friend tell me who will be responsible for the monitoring of these undertakings and, specifically, who will monitor the share dealings for the new Sky News company to ensure that neither Rupert Murdoch nor his nominees purchase shares in the company in order to acquire a monopoly within the 10-year period?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

My hon. Friend makes an important point. It is written in black and white that they are not allowed to purchase any additional shares in the new company without the consent of the Secretary of State. Were they to be in breach of that, they would threaten the entire deal that, if it goes ahead, will allow them to purchase the remaining shares in the rest of Sky. So the sanctions are very considerable indeed, and we will monitor the deal very carefully to ensure that there is compliance. My hon. Friend will see, when he looks at the undertakings, that they contain a number of explicit provisions to ensure compliance. Those provisions have satisfied the Office of Fair Trading and Ofcom, and that is why I have confidence in them as well.

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Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

The deal that Mr Murdoch really wants—the buy-out that gives him control of BSkyB—might well have happened by the time that the circumstances described have taken place, so where is the real sanction? Might it not be better from the public point of view if it were not the Secretary of State but an independent person who had any say on further buy-out shares?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

I recognise the hon. Lady’s concerns. When she has a chance to look in detail at the undertakings, she will find that many of them have to be delivered before the purchase of the Sky shares is allowed to go ahead. We have been very strict on the timelines and want to ensure that as much of it as possible is delivered as quickly as possible. As for who should be the final decision maker, all I will say is that because I have been so conscious of the public’s worries about the motivations of politicians in these kinds of decisions, I have sought independent advice at every stage before taking the decisions in this process, and if I am required to make any similar decisions I will continue to seek independent advice in the future.

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Photo of Andrew Bridgen Andrew Bridgen Conservative, North West Leicestershire

Will the Secretary of State explain what will happen if, at some time in the future, News Corporation wants to cancel the carriage arrangements for the licensing deal after the transaction has taken place?

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

If News Corporation were to do anything like that, a dispute resolution procedure is specified in the undertakings, which it would be obliged to follow.

In the end, if it is followed through, it leads to independent arbitration, so I am satisfied that it will have to be good for its money and honour the spirit of the carriage and brand licensing agreements as laid out in those undertakings.

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Photo of Tom Watson Tom Watson Labour, West Bromwich East

On a point of order, Mr Speaker. Members on both sides of the House were disappointed that a statement of such importance was taken in the middle of the afternoon, but out of respect for our Ulster Unionist friends we have tolerated that decision. What I believe is intolerable is the fact that the Secretary of State saw fit to parade around TV studios before making the statement to the House. Has he availed himself of the opportunity to ask whether he can apologise to you, Mr Speaker, and to the House for this discourtesy?

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Photo of John Bercow John Bercow Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Speaker of the House of Commons

The short answer to the hon. Gentleman’s question is no. The timing of the statement is not quite what Members had expected, which was evident during earlier exchanges in the presence of the Leader of the House. The circumstances that led to the timing of this statement were explained: there is a balance of considerations, and it was felt important to protect the Democratic Unionist party’s half-day debate. When I became aware of the situation, it seemed to me that such protection must be guaranteed. I confess, however, that I had rather expected—and had indeed been led to expect—that although announcements to the stock exchange would be made, no media interviews would be undertaken before a statement was made to the House. I was led to expect that and the Secretary of State knows very well that I was led to expect that, so the fact that interviews have taken place is a notable disappointment and it might be regarded by some as a discourtesy to the House. In those circumstances, I feel sure that the Secretary of State will want to be aware of that discourtesy and will take the opportunity to express his regrets to the House.

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Photo of Jeremy Hunt Jeremy Hunt The Secretary of State for Culture, Media and Sport

I am, of course, prepared to apologise if there is any element of procedure that I have not followed correctly. I would like to explain that I did one clip under embargo and the deal I made with the media organisations was that they should not use it until after the statement had been made. However, because the issue was referred to in oral questions earlier today, some of those media organisations took that to mean that the issue had been addressed in the House and went ahead and broke that embargo. I made the position very clear and I did no media interviews other than that one clip under embargo. I want to make that clear so that the House can understand what happened.

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Photo of John Bercow John Bercow Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Speaker of the House of Commons

I thank the Secretary of State for the explanation that he has kindly offered to the House. There is no doubt that the situation had not been fully anticipated and has not been the subject of the range of internal exchanges that would ordinarily be expected. I know he is aware of that, and what he has said is courteous. I am happy to leave it at that.

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Photo of Chris Bryant Chris Bryant Shadow Minister (Justice) (Political and Constitutional Reform)

Further to that point of order, Mr Speaker. Does that not show that undertakings made by media organisations are not necessarily all that helpful or reliable?

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Photo of John Bercow John Bercow Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Speaker of the House of Commons

Very good point. I am sure that the hon. Gentleman will accept, however, that I am not responsible for such undertakings, which is probably as well. I think I will leave it at that.

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