Comcast Corporation & Sky plc

Prepared by the Department of Communications, Climate Action and Environment

www.dccae.gov.ie

Comcast Corporation & Sky plcPhase One Examination Report

1/8/18

Media Merger – Comcast/Sky; Examination - i -

Table of Contents Table of Contents ...................................................................................................... i

1. Background ........................................................................................... 1

The Purchaser: ..................................................................................................... 1

The Target: ........................................................................................................... 1

Media Sector ............................................................................................................ 1

The Purchaser: ..................................................................................................... 3

The Target: ........................................................................................................... 4

2. Application of the Relevant Criteria & s. 28D (2) of the Competition Act 5

Significant Interests ................................................................................................. 5

The Purchaser: ..................................................................................................... 6

The Target: ........................................................................................................... 6

Other Interests of Significant Interest Holders: ............................................. 7

Impact: .................................................................................................................. 8

Relevant Media Assets ............................................................................................. 9

The Purchaser: ..................................................................................................... 9

The Target: ........................................................................................................... 9

Impact: ................................................................................................................ 10

Ownership and Control .......................................................................................... 10

Relevant Media Assets: ..................................................................................... 10

Regulatory Oversight: ....................................................................................... 11

Proposed Changes: ............................................................................................ 11

Impact: ................................................................................................................ 12

Market Share .......................................................................................................... 12

The Purchaser: ................................................................................................... 13

The Target: ......................................................................................................... 16

Media Merger – Comcast/Sky; Examination - ii -

Brand & News Reach: ....................................................................................... 17

The Views of the Parties ................................................................................... 17

Impact: ................................................................................................................ 18

Governance and Editorial Management ................................................................20

Compliance and Ethics ..................................................................................... 20

Editorial Ethos ................................................................................................... 20


Impact ................................................................................................................. 21

Content – Diversity ................................................................................................ 21

The Purchaser .................................................................................................... 22

The Target .......................................................................................................... 23

Impact ................................................................................................................. 25

Financial ................................................................................................................ 25

The Purchaser: ................................................................................................... 25

The Target: ......................................................................................................... 26


Impact: ................................................................................................................ 26

Impact on the Irish Language ................................................................................ 27

Impact: ................................................................................................................ 27

The scale and reach of RTÉ and TG4 ..................................................................... 27

Impact: ................................................................................................................ 28

The Views of the European Commission ............................................................... 28

The Views of the Undertakings Involved ............................................................... 29

3. Summary of the Application of the Relevant Criteria & s. 28D (2) of the

Competition Act ............................................................................................. 30

4. Conclusion........................................................................................... 35

Media Merger – Comcast/Sky; Examination - 1 -

1. Background

1.1 The proposed media merger involves the acquisition of Sky plc (the

Target) by Comcast Corporation (the Purchaser) through the purchase

of the entire issued and to be issued share capital1 of the Target.2 In this

document the Purchaser and the Target are collectively referred to as “the

Parties”.

1.2 The proposed transaction is to be implemented pursuant to the terms of a

“Recommended Superior Cash Offer” published by the Purchaser on 13

July 2018.3 This offer is subject to certain express conditions, including,

amongst others, regulatory clearance in the State.4

The Purchaser:

1.3 The Purchaser is an established multinational company headquartered in

the Commonwealth of Pennsylvania in the United States of America.5 The

Purchaser is active in the Broadcasting and Internet Media sectors in the

State through the operation of a number of television channels and a

number of online news offerings.

The Target:

1.4 The Target is an established multinational company headquartered in

England in the United Kingdom.6 The Target is active in the Broadcasting

and Internet Media sectors in the State through the operation of a number

of television channels and a number of online news offerings.

Media Sector

1.5 Media Mergers, as defined in s. 28A of the Competition Act 2002 (as

amended) (the Competition Act), refers to those undertakings which

1 Whilst it is the Purchaser’s objective to achieve 100% ownership of Sky, the offer is conditional upon the receipt of valid acceptances in respect of the Target’s shares which, together with the Target’s shares that the Purchaser has acquired or may agree to acquire (pursuant to the offer or otherwise), carry in aggregate more than 50% of the voting rights normally exercisable at a general meeting of the Target. The offer is thus conditional on a minimum acceptance condition of 50 per cent, plus one share. The Purchaser might in practice, therefore, acquire less than 100% of the Target’s shares. 2 Comcast & Sky, Media Merger Notification Form, p. 1 3 Comcast & Sky, Recommended Superior Cash Offer, 13 July 2018 4 Ibid, pp. 40-41 5 Comcast & Sky, Media Merger Notification Form, p. 10 6 Ibid


“carry on a media business” in the State. A “media business” is defined in

the Competition Act as follows:

‘media business’ means the business (whether all or part of an

undertaking’s business) of—

the publication of newspapers or periodicals consisting (a)

substantially of news and comment on current affairs, including

the publication of such newspapers or periodicals on the internet,

transmitting, re-transmitting or relaying a broadcasting service, (b)

providing any programme material consisting substantially of news (c)

and comment on current affairs to a broadcasting service, or

making available on an electronic communications network any (d)

written, audiovisual or photographic material, consisting

substantially of news and comment on current affairs, that is under

the editorial control of the undertaking making available such

material;

1.6 In addition, the current Guidelines on Media Mergers (the Guidelines)

provides the following supplementary definition of a “media sector”:

‘media sector’ means one of the following (and ‘media sectors’ (a)

means one or more of the following collectively):

Publishing – publication of newspapers or periodicals consisting (b)

substantially of news and comment on current affairs and the

production of content for same.

Broadcasting – transmitting, re-transmitting or relaying a (c)

broadcast service including radio or television and the production

of content for same.

Internet Media – making available on an electronic (d)

communications network any written, audio-visual or

photographic material consisting substantially of news and

comment on current affairs.


1.7 Furthermore, the Guidelines also note a number of sectors, these being

television, radio, print media, internet, [and] other media interests, on

the basis of which cross-media interests can be considered.

1.8 The Guidelines provide a working method of grouping media business, as

defined in the Competition Act, in order to facilitate the examination of

notified media mergers. The Guidelines in this area are not exhaustive and

do not preclude the examination of sub-sectors of the media sectors

identified or other relevant groupings of media businesses.

The Purchaser:

1.9 The Purchaser is active in:

The Broadcasting sector in the State through the transmission, (a)

retransmission and relaying of a broadcasting service and the

provision of programme material consisting substantially of news

and current affairs to a broadcasting service, and,

The Internet Media sector through the making available on an (b)

electronic communications network any written, audiovisual or

photographic material, consisting substantially of news and


1.10 The Purchaser is active in the following areas of the Broadcasting Sector in

the State:

The supply of 6 television channels, including CNBC, by its (a)

subsidiary NBC-Universal to broadcasting platforms operating in

the State,

The supply of CNBC on a retail basis to a number of businesses in (b)

the State, and,

The supply of the 24 hour news channel Euronews to broadcasting (c)

platforms operating in the State.7

1.11 The Purchaser is active in the Internet Media sector in the State as follows:

The news websites, www.cnbc.com and www.msnbc.com, (a) 7 Comcast & Sky, Media Merger Notification Form, pp. 2-6

http://www.cnbc.com/

http://www.msnbc.com/


The news website www.buzzfeed.com, (b)

The news media group Vox and its various news websites, (c)

including www.vox.com, and

Cheddar, which offers a live-stream of the New York Stock (d)

Exchange alongside other news and commentary.8

The Target:

1.12 The Target is active in:

The Broadcasting sector in the State through the transmission, (a)

retransmission and relaying of a broadcasting service and the

provision of programme material consisting substantially of news

and current affairs to a broadcasting services, and,

The Internet Media sector through the making available on an (b)

electronic communications network any written, audiovisual or

photographic material, consisting substantially of news and


1.13 The Target is active in the following areas of the Broadcasting Sector in the

State:

The Sky broadcasting platform, and, (a)

The broadcast of 30+ television channels on the Sky broadcasting (b)

platform and online and the supply of a number of these channels

to broadcasting platforms operating in the State, including the 24

hour news channel Sky News.9

1.14 The Target is active in the Internet Media sector in the State as follows:

www.news.sky.com.10 (a)

8 Ibid 9 Ibid, pp. 6-7 10 Ibid

http://www.buzzfeed.com/

http://www.vox.com/

http://www.news.sky.com/


2. Application of the Relevant

Criteria & s. 28D (2) of the

Competition Act

Significant Interests

2.1 In accordance with Section 28L of the Competition Act 2002, the

Guidelines provide a definition of what constitutes a significant interest in

a media business – which it states means “[h]as sufficient voting,

financial or ownership strength within the relevant media business or

media businesses to influence directly or indirectly, to an appreciable

extent, the direction or policy of the media business or media businesses

with regard in particular to news, current affairs or cultural content.

This includes sourcing, production, supply or delivery of such content”.

This definition further includes indicative thresholds as to what

constitutes a significant interest in entities that carry on media businesses

in the State, including that:

A holding or voting strength of between 10% and 19% (directly or (a)

indirectly) may constitute a significant interest.

A holding or voting strength of more than 20% (directly or (b)

indirectly) will generally constitute a significant interest.

2.2 The definition of “plurality of the media” is provided in the Competition

Act and includes both diversity of ownership and diversity of content, both

of which are also defined in the Act, as reproduced below:

Diversity of content – “means the extent to which the broad (a)

diversity of views (including diversity of views on news and current

affairs) and diversity of cultural interests prevalent in Irish society

is reflected through the activities of media businesses in the State

including their editorial ethos, content and sources”.


Diversity of ownership – “means the spread of ownership and (b)

control of media businesses in the State linked to the market share

of those media businesses as measured by listenership, readership,

reach or other appropriate measures”.

The Purchaser:

2.3 One shareholder has a shareholding in excess of 10% of the voting rights in

the Purchaser:

Mr Brian L Roberts owns all outstanding Class B common shares, (a)

equating to 9,444,375 shares or 0.02% of the total outstanding

shares11, in the Purchaser, which equates to 331/3% of the available

voting rights.12

2.4 Furthermore, the Class B common shares owned by Mr Roberts have

separate approval rights for certain transactions attached to them,

including in relation to mergers and acquisitions.13

2.5 Mr Roberts is also the President and CEO of the Purchaser and is the

Chairperson of the Purchaser’s board of directors.14

2.6 As stated in the Purchaser’s 2017 annual report, the nature of Mr Robert’s

shareholding and the various positions that he holds within the Purchaser

means that he “has considerable influence over our company”.15

2.7 Therefore, and as acknowledged by the Parties16, Mr Roberts is considered

to have a significant interest in the Purchaser.

The Target:

2.8 One shareholder has a shareholding in excess of 10% in the Target:

Twenty-First Century Fox, Inc. (21CF) holds 39.14% of the issued (a)

share capital of the Target, which equates to the same percentage

voting rights.17 Pursuant to a 2005 voting agreement between 21CF

11 Comcast & Sky, Annex 9, Comcast Form Annual Report 2017, p. 2 12 Comcast & Sky, Media Merger Notification Form, p.13 13 Comcast & Sky, Annex 9, Comcast Form Annual Report 2017, p. 30 14 Comcast & Sky, Media Merger Notification Form, p.13 15 Comcast & Sky, Annex 9, Comcast Form Annual Report 2017, p. 30 16 Comcast & Sky, Media Merger Notification Form, p.13 17 Ibid, pp 13-14


and the Target the voting rights that 21CF can exercise at general

meetings of the Target are capped at 37.19%.18

2.9 As noted in the Target’s 2017 annual report, in accordance with the Listing

Rules applicable to the London Stock Exchange, 21CFis deemed to be the

controlling shareholder of the Target and, accordingly, a relationship

agreement is in place.19 This relationship agreement contains a number of

prescribed independence provisions.20.

2.10 Furthermore, the following members of the Target’s board of directors

hold positions in 21CF

Mr James R. Murdoch, who is the Chairperson and former CEO of (a)

the Target, is the CEO of 21CF,

Mr Chase Carey is the Vice-Chairperson of 21CF, and, (b)

Mr John Nallen is the Senior Executive Vice President and CFO of (c)

21CF.21

2.11 Therefore, 21CF has a significant interest in the Target.

2.12 As determined in previous examinations22, the Murdoch Family hold,

through various trusts and direct shareholdings, 38.9% of the voting rights

in 21CF.

This may be considered a significant interest.

Other Interests of Significant Interest Holders:

2.13 As determined in previous examinations, the Murdoch Family holds,

through various trusts and direct shareholdings, 39.4% of the voting rights

in News Corporation.23

2.14 However, as the interest held by the Murdoch Family in the Target will be

extinguished should the proposed transaction proceed, it is not considered

18 Ibid 19 Comcast & Sky, Annex 10, Annual Report 2017, p. 70 20 Ibid 21 Comcast & Sky, Media Merger Notification Form, p.15 22 M/2016/4 – News Corp & Wireless Group; M/2017/3 – 21CF & Sky 23 Ibid


necessary to further assess News Corporation in relation to this

examination.24

Impact:

2.15 As can be seen from the above there is one person that has a significant

interest in the Purchaser:

Mr Roberts. (a)

2.16 As can be seen from the above, there are two entities that have or may

have a significant interest in the Target:

21CF, and, (a)

The Murdoch Family. (b)

2.17 Therefore, should the proposed transaction proceed, Mr Roberts will gain

a significant interest in the Target through the Purchaser’s acquisition of

the issued and to be issued share capital of the Target.

2.18 As the significant interest held by 21CF and the significant interest that

may be held by the Murdoch Family in the Target will be extinguished

should the proposed transaction proceed, they will not be considered

further in this examination.

2.19 It should be noted that significant interests within a media business or a

range of media businesses do not necessarily constitute a significant

interest in a media sector or across media sectors. While the Guidelines

provide a definition of what constitutes a significant interest in a media

business, the relevant criteria in the Competition Act specifies the

consideration of significant interests in and across media sectors.

Therefore, there are two separate concepts of significant interests

considered in media merger examinations and thus in this examination,

those in media businesses and those in media sectors.

2.20 Therefore, whether Mr Roberts acquiring a significant interest in the

Target is concerning to the State and if it will have an adverse impact on

the plurality of the media in the State will be assessed, in accordance with

24 Please refer to footnote 1.


the relevant provisions of the 2002 Act and the Guidelines, in terms of the

remainder of the indicators in this examination, particularly Relevant

Media Assets, Ownership and Control, Market Share, Governance and

Editorial Management and the Views of the European Commission.

Relevant Media Assets

2.21 Relevant media asset is defined by the Guidelines as “holdings which

constitute a significant interest in an undertaking (other than an

undertaking party to the merger) that carries on a media business in a

media sector(s) in the State, and which are held either by an undertaking

party to the merger or by a natural or legal person with a significant

interest in an undertaking party to the merger”.

The Purchaser:

2.22 The Purchaser operates a number of relevant media assets in the State.

These are as follows (pars.1.10-1.11):

The supply of 7 television channels, including the 24 hour business (a)

news channel CNBC and the 24 hour news channel Euronews, to

broadcasting platforms operating in the State,

The supply of CNBC on a retail basis to a number of businesses in (b)

the State,

The operation of the news websites, www.cnbc.com, (c)

www.msnbc.com, www.buzzfeed.com and www.vox.com, which are

made available in the State, and,

An online service Cheddar which offers a live-stream of the New (d)

York Stock Exchange alongside other news and commentary.

2.23 However, given the apparent low visibility, based on the information

provided by the Parties, of www.cnbc.com, www.msnbc.com,

www.vox.com, and the NYSE live-stream service in the State it is not

considered necessary to assess them further in this examination.

The Target:



http://www.buzzfeed.com/

http://www.vox.com/



http://www.vox.com/


2.24 The Target operates a number of relevant media assets in the State. These

are as follows (pars.1.13-1.14):

The Sky broadcasting platform, and, (a)

The broadcast of 30+ television channels on the Sky broadcasting (b)

platform and online and the supply of a number of these channels

to broadcasting platforms operating in the State, including the 24

hour news channel Sky News, and including those channels

operated through its joint venture with A+E Networks UK AETN,

and,

The news website www.new.sky.com. (c)

Impact:

2.25 The information above does not give rise to concerns regarding issues of

relevant media assets in regard to the proposed transaction. The following

entities relevant to this examination have or may have significant interests

in media businesses that operate a number of relevant media assets:

Mr Roberts: (a)

(i) The relevant media assets of the Purchaser identified above.

21CF: (b)

(i) The relevant media assets of the Target identified above.

The Murdoch Family: (c)

(i) The relevant media assets of the Target identified above.

2.26 The ownership, of a number of the relevant media assets identified above,

by the significant interest holder identified above must be assessed in

terms of the market share that these relevant assets possess in their

respective sectors and on a cross-sector basis.

Ownership and Control

Relevant Media Assets:

http://www.new.sky.com/


2.27 Mr Roberts has holdings in the Purchaser that constitute significant

interests and thus significant interests in the relevant media assets,

identified above (par. 2.22), of the Purchaser.

2.28 21CF has a holding in the Target that constitutes a significant interest in

the Target and thus a significant interest in the relevant media assets,

identified above (par. 2.22), of the Target.

2.29 The Murdoch Family has a holding in the Target that may constitute a

significant interest in the Target and thus a significant interest in the

relevant media assets, identified above (par. 2.22), of the Target.

Regulatory Oversight:

2.30 With the exception of Euronews, the television channels broadcast or

made available in the State by the Purchaser, and the television channels

broadcast or made available by the Target are broadcast from the United

Kingdom and, in accordance with EU law, are subject to regulatory

oversight in the Member State of origin, i.e. the UK, the UK Office of

Communications (OFCOM).25

2.31 Euronews is broadcast from France and is subject to regulatory oversight

by the the Conseil supérieur de l’audiovisuel.26

Proposed Changes:

2.32 The Purchaser notes that

27

2.33 The Purchaser has offered a number of legally binding commitments to

the UK Takeover panel, including that,

The annual expenditure in Sky News for the next 10 years will be at (a)

least equal to the expenditure incurred from 1 July 2016 to 30 June

2017, and,

25 http://static.ofcom.org.uk/static/radiolicensing/html/tv/cs/cabandsat-main.htm [accessed 29/6/18] 26 Convention de la chaîne Euronews, 28 March 2018 27 Comcast & Sky, Media Merger Notification Form, pp. 35-36

http://static.ofcom.org.uk/static/radiolicensing/html/tv/cs/cabandsat-main.htm


A Sky News editorial board will be established on a legal footing (b)

and will be charged with ensuring the editorial independence of

Sky News for a period of 10 years.28

Impact:

2.34 The information above does not in itself give rise to concerns regarding

issues of ownership and control in regard to this acquisition. The

commitments offered by the Purchaser to the UK Takeover Panel are

noted. These commitments were made as part of the UK regulatory

process and not in the context of the media merger regime in the State.

The ownership, of a number of the relevant media assets identified above,

by the significant interest holders identified above, must be assessed in

terms of the market share that these relevant assets possess in their

respective sectors and across sectors.

Market Share

2.35 The above identified relevant media assets of the Purchaser and of the

Target are active in the Broadcasting Sector through the broadcast and

supply to broadcasting platforms of a number of television channels,

including a number of 24 hour news channels and, in the case of the

Target, the operation of a broadcasting platform and in the Internet Media

Sector through the operation of a number of online news offerings.

Therefore, where they are active in the same area and similar data is

available for both, they are directly comparable with each other.

2.36 Comparison, through the use of various market share or similarly

indicative data, will be used to determine whether the significant interests

possessed in the Purchaser by Mr Roberts, as measured by its relevant

market shares, when taken together with the market shares of the relevant

media assets of the Target, would constitute a significant interest in the

Broadcasting Sector, the Internet Media Sector or across sectors such that

it raises a concern.

2.37 Distinct data is generally available for the different media sectors and the

market shares in the relevant sub-sectors therein. The relevant data is

28 Ibid, p. 35


assessed by different methods and across different time periods. The

sourcing of this data for this examination is outlined below:

For the television channels, excepting Euronews, information is (a)

available via Nielsen data, who are contracted by TAM Ireland.

For the broadcasting platform operated by the Target information (b)

is available via the Commission for Communications Regulation

(Comreg).

The Parties have also provided revenue estimates for the (c)

“provision of audiovisual content to end-users” for 2017. This is an

industry measure that does not exactly match what are considered

media businesses for the purpose of media mergers. However, this

data can provide a useful indicator of the Parties presence in the

wider media market.

Direct information regarding the online news offerings operated by (d)

the Parties is unavailable. Information regarding the brand reach

and source prominence of these offerings is available via the

Reuters Digital News Report 2018.

As provided for in the Competition Act, "other appropriate (e)

measures" of market share may be referenced as deemed

appropriate.

2.38 There are a number of different methods of measuring market share and

different time periods during which market share is measured. The nature

of a particular market share and its time period, if available, will be noted

during this section.

2.39 Generally, the media sectors or sub-sectors considered for the purposes of

gauging cross-sectoral market share are the print publication sector, the

radio broadcasting sector, the TV broadcasting sector and the online news

sector.

The Purchaser:

2.40 Television Channels


2.41 The Parties have provided a breakdown, using Nielsen data, of their

audience shares for news-based television channels in the State for the

period 2017.29 This breakdown does not include channels that contain

news but are not news-based channels, e.g. RTÉ One

Group (Channel) Audience Share

NBCU (CNBC)30

Sky (Sky News)

Combined – Sky/NBCU

RTÉ (RTÉ News Now)

BBC (BBC News)

Other31

2.42 The Parties have also provided a breakdown of their audience shares for

all basic-pay TV32 channels in the State for the period 2017.33

Group Audience Share

NBCU

Sky (including AETN)

29 Comcast & Sky, Media Merger Notification Form, p. 18 30 Euronews is not included in TAM Ireland’s contract with Nielsen. 31 This includes CNN, Al Jazeera English, Russia Today, Oireachtas TV, France 24 and Bloomberg. 32 The basic pay-TV segment of television channels excludes channels which are primarily free-to-air, e.g. RTÉ, and channels which are considered premium and for which further costs are typically charged, e.g. Sky Movie channels. 33 Comcast & Sky, Annex 12, Notification to European Commission – Annex 7.4


Combined

Viacom

Discovery

UKTV

Disney

Time Warner

Fox

2.43 While a breakdown of audience shares for all TV channels, free-to-air and

pay channels, has not been provided, given that the penetration rate of

pay-TV in TV homes in the State stood at 65% as of January 201834 the

combined audience shares of the Purchaser and the Target are, based on

the information provided by the Parties, likely lower35 than for basic pay-

TV.

2.44 Furthermore, the Parties have also provided revenue estimates for the

“provision of audiovisual content to end-users” for the period 2017, which

gives a broader overview of the relationship between providers of

audiovisual content and end-users.36

Group Revenue Share

34 Commission for Communications Regulation, Irish Communications Market, Quarterly Key Data Report, Q1 2018, p. 80 35 As Sky has a number of channels which are classified as free-to-air, this may not be the case. 36 Comcast & Sky, Media Merger Notification Form, p. 19


NBCU 37

Sky

Combined

RTÉ

Virgin Media (Liberty Global)

Netflix

TV338

TG4

Setanta

UTV

2.45 Online News Offerings

2.46 No specific data is available or has been provided for the Purchaser’s

online news offerings in relation to their market shares in the State.

The Target:

2.47 Television Channels

2.48 The Target’s television channels are examined in the Purchaser sub-

section above.

37 for 2017, of which related to CNBC and the remainder of which relates to the Purchaser’s on-demand offering hayu. 38 TV3 is owned by Virgin Media (Liberty Global)


2.49 Broadcasting Platform

2.50 According to data compiled by Comreg, 52% of households in the State

have access to Sky TV.39 As Sky TV is a subscription only service, it follows

that 52% of households have a subscription to Sky TV.

2.51 Online News Offerings

2.52 No specific data is available for the Target’s online news offering in

relation to its market share in the State.

Brand & News Reach:

2.53 The Purchaser:

2.54 According to the Reuters Digital News Report 2018 for Ireland,

www.buzzfeed.ie has a reach of 8% across online sources of news in the

State and was the main online source of news for 4% of respondents.40

2.55 The Target

2.56 According to the Reuters Digital News Report 2018 for Ireland, Sky News

has a reach of 14% across online sources of news in the State and was the

main online source of news for 8% of respondents.41 In terms of traditional

sources of news (newspapers, radio, television), Sky News had a reach of

32% and was the main traditional source of news for 19% of respondents.42

On the basis of the above Sky News is an important source of news within

the State.

The Views of the Parties

2.57 The Parties state that “any increment in the share of the combined entity

which will arise in relation to the wholesaling of news-based TV channels

or the retail supply of TV services to end-users in the State will be entirely

de minimis”.43

39 Commission for Communication Regulation, Ireland Communicates Survey 2017, p. 84 40 Reuters Digital news Report 2018, Ireland, p. 41 41 Ibid 42 Ibid, p. 42 43 Comcast & Sky, Media Merger Notification Form, p. 8

http://www.buzzfeed.ie/


2.58 The Parties also state that the sectors in which they are active are

“dynamic, fast-changing and increasingly plural”, noting that “OTT [on-

demand services] is growing by more than 20% annually, heightening

competition and enriching television offerings available to consumers”.44

Impact:

2.59 Should the transaction proceed, Mr Roberts, who has a significant interest

in the Purchaser, will have significant interests in companies whose

relevant media assets have the following market shares and reach:

40+ television channels with the following market shares by (a)

audience:

(i) of news-based television channels (par. 2.41) and with

Sky News being the main traditional source of news for 19%

of people with an overall traditional reach of 32%,

(ii) of basic pay-TV channels (par. 2.42),

A broadcasting platform to which 52% of households in the State (b)

have a subscription (par. 2.50),

A number of online news offerings, which are the main source of (c)

online news for 12% of respondents (par. 2.54), and,

More broadly, of the revenue generated in the State in relation (d)

to the provision of audiovisual content to end-users (par. 2.44).

2.60 The above equates to the following increases in market shares, etc., in

relation to the significant interests already held by Mr Roberts:

In relation to television channels, the following increase in market (a)

shares by audience:

(i) A increase (par. 2.41) in relation to news-based

television channels, of which Sky News is the main

traditional source of news for 19% of people with an overall

traditional reach of 32% (par. 2.55),

44 Ibid, p. 9


(ii) A increase in relation to basic pay-TV channels (par.

2.42),

In relation to broadcasting platforms, an increase to a TV home (b)

penetration rate of 52% (par. 2.50),

In relation to online news offerings, an increase of 8% in terms of (c)

main sources of online news (par. 2.54).

2.61 On the basis of the above it is unlikely that Mr Roberts already possesses a

significant interest in either the Broadcasting or Internet Media sectors in

the State. For example, the television channels in which he has a

significant interest in that operate in the State comprise of news-

based television channels by audience and of basic-pay-TV channels by

audience.

However it can be seen that, in relation to the market shares possessed by

the Target, Mr Roberts will gain a significant interest in the Broadcasting

Sector and potentially in the Internet Media sector in the State should the

proposed Transaction proceed.

2.62 Given that it is unlikely, based on the information above, that Mr Roberts

already possesses a significant interest in any media sector in the State and

the scale of the increase in market shares that this proposed transaction

would bring about, it is considered unlikely that this acquisition of

significant interests will have an adverse impact on the plurality of the

media in the State.

Further to this, the significant interests held by the Murdoch Family in the

Broadcasting Sector, and therefore across sectors, will be diminished

should the proposed transaction proceed. It is considered unlikely that

this diminishment of significant interests will have an adverse impact on

the plurality of the media in the State.

Given these two factors it is considered unlikely that the proposed

transaction will, in this regard, have an adverse impact on the plurality of

the media in the State, either regarding diversity of ownership or diversity

of content.


Governance and Editorial Management

2.63 As previously noted (par. 2.5), Mr Roberts is the President and CEO of the

Purchaser and is the Chairperson of the Purchaser’s board of directors.

2.64 As previously noted (par. 2.10), Mr James R. Murdoch is the chairperson

of the board of the Target.

Compliance and Ethics

2.65 As previously noted (par. 2.30), with the exception of Euronews, the

television channels broadcast or made available in the State by the

Purchaser, and the television channels broadcast or made available by the

Target are broadcast from the United Kingdom and, in accordance with

EU law, are subject to regulatory oversight in the Member State of origin,

i.e. the UK, the UK Office of Communications (OFCOM)..

2.66 Furthermore, and as previously noted (par. 2.31), Euronews is broadcast

from France and is subject to regulatory oversight by the the Conseil

supérieur de l’audiovisuel.

2.67 The Purchaser has a number of internal policies and codes, including its

Corporate Governance Guidelines and Code of Business Conduct.45

2.68 The Target also has a number of internal policies and codes, including a

Memorandum on Corporate Governance.46

Editorial Ethos

2.69 The Purchaser’s channels,

to ensure compliance with

Ofcom’s codes and rules.48 Furthermore, the Purchaser has

45 Comcast & Sky, Media Merger Notification Form, p. 23 46 Ibid, p. 24 47 Ibid, p. 27 48 Ibid


designed to

ensure a high standard of editorial independence.49

2.70

50

2.71 The Target has provided information regarding the editorial functioning of

Sky News, including the Sky News Editorial Guidelines which are

comprehensive and detailed and states that “Sky News and its

management enjoy operational and editorial independence within Sky

and remain free from editorial influence from Sky’s management,

directors and shareholders”.51 Any changes to Guidelines would be viewed

in the context of the commitments made by the Purchaser to the UK

Takeover Panel (par. 2.33).


2.72 The Parties state that both the Purchaser’s and the Target’s channels have

strong compliance records, noting that Ofcom has recognised that Sky has

a “particularly good record”.52

2.73 The Parties also state that the regulatory framework provided by Ofcom

and their own internal protocols “encourages accuracy and impartiality

of content and ensures and absence of influence by management on

editorial decision-making in relation to matters of public debate”.53

Impact

2.74 The information above does not raise concerns regarding governance and

editorial management in relation to the proposed acquisition. Therefore, it

is unlikely that the proposed acquisition will, in this regard, have an

adverse impact on the plurality of the media in the State.

Content – Diversity

49 Ibid 50 Ibid 51 Ibid, p. 26 52 Ibid, pp. 25-28 53 Ibid, pp. 37-38


2.75 The Parties have provided information regarding the type of content

contained in a number of the relevant media assets relevant to the

proposed transaction.

The Purchaser

2.76 The Purchaser has provided information regarding the content broadcast

on the CNBC television channel, as follows:54

Content Type Percentage

Advertising

News and Current Affairs

Comprising:

US:

Asia:

Europe:

Other:

Irish Regional Stories

Irish Local Stories

Irish National Stories

International Stories (non-UK)

Sport

54 Ibid, p. 30


Music

Drama

Entertainment

Audience Participation

Irish Language

Minority Interests

Cross Media Content Content on the CNBC channel also

appears on www.cnbc.com

2.77 The Purchaser also states that its other 5 NBCU channels have an

entertainment focus ranging from television dramas and TV movies to

reality television programming.55

The Target

2.78 The Target has provided information regarding the content broadcast on

the Sky News television channel, as follows:56

Content Type Percentage

Advertising

News and Current Affairs

55 Ibid, p. 29 56 Ibid, p. 31



Irish Regional Stories

Irish Local Stories

Irish National Stories

International Stories (non-UK)

Sport

Music

Drama

Entertainment

Audience Participation

Irish Language

Minority Interests

Cross Media Content Content on the Sky News channel also

appears on www.news.sky.com

2.79 It is noted that Sky News has a bureau in Dublin that produces on average

stories per week and employs permanent staff members.57

Alternative Content

57 Ibid, p. 7

http://www.news.sky.com/


2.80 In relation to alternative content to that made available by the Parties, the

Parties state that the channels they operate “will face significant

competition from a range of other sources”, noting that the Purchaser’s

most popular channel has an audience share of only while, for

example, RTÉ One, including RTÉ One+1 has an audience share of

and TV3, including TV3 +1, has an audience share of .58

2.81 In terms of news-based channels, the Parties state that, while the Target’s

news channel Sky News, has the largest market share, there are a number

of other new-based channels, including RTÉ News Now and BBC News,

which will continue to ensure diversity of ownership and content in this

area.59

2.82 In terms of online news offerings, the Parties state that they face

competition from a “broad array of digital news sources”, which includes

www.thejournal.ie, www.independent.ie, www.rte.ie/news and others.60

Impact

2.83 The information above does not raise concerns regarding diversity of

content, particularly news and current affairs, in relation to the proposed

transaction. Therefore, it is unlikely that the proposed transaction will, in

this regard, have an adverse impact on the plurality of the media in the

State.

Financial

The Purchaser:

2.84 The Purchaser is a large multinational media company operating in the

Broadcasting and Internet Media sectors in the State.

2.85 The Purchaser had revenues for the year ending 31 December 2017 of

$84.526 billion, a net income of $22.714 billion61 and cash on hand of

$3.428 billion62.

58 Ibid, p.p. 32-33 59 Ibid, p. 33 60 Ibid, p. 34 61 Comcast & Sky, Annex 9, Comcast Form Annual Report 2017, p. 63 62 Ibid, p. 62

http://www.thejournal.ie/

http://www.independent.ie/

http://www.rte.ie/news


2.86 The proposed transaction, with a value of £25.9 billion63, is to be funded

through a combination of the Purchaser’s existing financial resources and

third party debt, including two credit agreements with an aggregate value

of £23 billion64.

The Target:

2.87 The Purchaser is a large multinational media company operating in the

Broadcasting and Internet Media sectors in the State.

2.88 The Target had revenues for the year ending 31 December 2017 of £12.916

billion, an operating profit of £964 million65 and cash on hand of £2.2

billion66.


2.89 The Parties state that the Purchaser generates approximately of its

revenues in the United States of America and that

67

2.90 The Parties also state that the proposed transaction will support the ability

of the combined entity to invest more in original and acquired

programming, utilise a greater combined customer base and obtain

synergies of scale.68 The Parties state that they expect to generate an

average run rate annual synergy of around $500 million through a

combination of revenue benefits and recurring cost savings across the

combined entity.69

Impact:

2.91 The information above does not raise concerns regarding finance in

relation to the proposed transaction for the following reasons:

63 Comcast & Sky, Recommended Superior Cash Offer, 13 July 2018, p. 11 64 Ibid, pp. 27-28 65 Comcast & Sky, Annex 10, Sky Annual Report 2017, p. 84 66 Ibid, p. 85 67 Comcast & Sky, Media Merger Notification Form, pp. 7-8 68 Comcast & Sky, Recommended Superior Cash Offer, pp. 19-20 69 Ibid


That the acquisition is expected to generate synergies of around (a)

$500 million and will therefore improve the combined profitability

of the Parties,

That the financial risk of the combined businesses post-acquisition (b)

does not materially change the Target’s current position, therefore

not impacting upon the financial risk associated with the

operations of the Target, and,

That, while the transaction will increase financial risk associated (c)

with Comcast due to the increased leverage of the business post-

acquisition and while there is a risk in the realisation of potential

synergies identified, based upon the information available, the

increase in financial risk is not considered to be significant enough

to raise material concerns regarding the proposed transaction.

Impact on the Irish Language

2.92 At present, the relevant media assets operated by the Purchaser and the

Target do not produce any Irish language content.

Impact:

2.93 The information above does not appear to raise concerns regarding the

impact on the Irish language in relation to the proposed acquisition. As

neither the Purchaser nor the Target produces any amount of Irish

language content and that this is unlikely to change in the near future, it is

unlikely that the proposed transaction will, in this regard, have an adverse

impact on the plurality of the media in the State.

The scale and reach of RTÉ and TG4

2.94 As RTÉ and TG4 are active in the Broadcasting Sector in the State, they

are in competition with the television channels operated by the Parties. As

RTÉ is active in the Internet Media sector, it is in competition with the

online news offering operated by the Parties.

2.95 In terms of television channels, the Purchaser’s most popular channel has

an audience share of , Universal Channel Ireland, and the Target’s

most viewed channel, Sky 1, has an audience share of while RTÉ


One, including RTÉ One+1 has an audience share of and RTÉ 2 has

an audience share of .70 Furthermore, TG4 has an audience share of

.71

2.96 Moreover, as previously noted (par. 2.56), Sky News had a reach of 32%

across traditional sources of news (television, radio and print) and was the

main traditional source of news for 19% of respondents. In comparison,

RTÉ TV News had a reach of 51% across traditional sources of news and

was the main traditional source of news for 38% of respondents.72

2.97 In terms of online news offerings, as previously noted (par. 2.59), the

online news offerings made available by the Parties are the main source of

online news for 12% of respondents. In comparison, RTÉ News Online was

the main source of news for 21% of respondents.73

Impact:

2.98 The information above does not appear to raise concerns regarding any

detrimental impact to the pluralistic nature of RTÉ or TG4 in relation to

the proposed transaction. Therefore, it is unlikely that the proposed

transaction will, in this regard, have an adverse impact on the plurality of

the media in the State in terms of the scale and reach of RTÉ and TG4 and

therefore the adequacy of the public service broadcasters is not affected by

the proposed transaction.

The Views of the European Commission

2.99 The proposed transaction constitutes a concentration under Article 3(1)(b)

of Council Regulation No. 139/2004 concerning the control of

concentrations between undertakings (the EU Merger Regulation) and

was therefore notified to the European Commission in accordance with

Article 4 (2) of the regulation on 7 May 2018.

2.100 On 15 June 2018, the European Commission cleared the proposed

transaction, declaring it compatible with the internal market and the EEA

agreement.

70 Comcast & Sky, Annex 14, Nielsen Channel Ranker 2017 71 Ibid 72 Reuters Digital news Report 2018, Ireland, p. 42 73 Ibid, p. 41


The Views of the Undertakings Involved

2.101 Further to the views of the Parties noted throughout this examination, the

Parties state the following:

That, given the nominal footprint of the Purchaser’s media (a)

businesses in the State, any increase in market shares resulting

from the proposed transaction will be minimal,

That there are a wide variety of competing entities providing (b)

alternative content to that provided by the Parties, including 24

hour news channels, entertainment channels, broadcasting

platform providers and online news offerings,

That the Parties news outlets adhere to rigorous internal and (c)

external (Ofcom) standards,

That the Purchaser has made a number of legally binding (d)

commitments to the UK takeover panel which will ensure the

independence of Sky News in relation to editorial matters, and,

That the proposed transaction will bring “generate enhanced (e)

benefits for media consumers” in the State, including 74

74 Comcast & Sky, Media Merger Notification Form, pp. 37-38


3. Summary of the Application of

the Relevant Criteria & s. 28D

(2) of the Competition Act

3.1 This examination, in accordance with s. 28D(2) of Part 3A of the

Competition Act, was conducted with regard to the following:

The “relevant criteria” as set out in s. 28A of the Competition Act. (a)

The Guidelines on Media Mergers issued in accordance with s. 28L (b)

of the Competition Act.

The Notification Form and other information provided by the (c)

Parties to the proposed media merger.

The Views of the European Commission in relation to the proposed (d)

media merger.

Relevant research conducted by the BAI under s. 28M of the (e)

Competition Act.

3.2 Furthermore, this examination considered the following indicators in the

application of the “relevant criteria” and with regard to s. 28D(2):

Significant Interest – Mr Roberts is deemed to have a (a)

significant interest in the Purchaser and will gain a significant

interest in the Target through the Purchaser’s acquisition of sole

control of the Target should the proposed transaction proceed.

21CF is deemed to have a significant interest in the Target and the

Murdoch Family is may be considered to have a significant interest

in the Target. These interests will be extinguished should the

proposed transaction proceed.

Whether Mr Roberts gaining a significant interest in the Target is

of concern is assessed in terms of the remainder of the indicators


in this examination, particularly Relevant Media Assets,

Ownership and Control Market Share, Governance and Editorial

Management and the Views of the European Commission.

Relevant Media Assets – The relevant media assets of the (b)

Purchaser and the Target to be considered in this examination are

identified.

Ownership and Control – The ownership and control (c)

arrangements of the various relevant media assets identified are

examined in this section, as are the regulatory regimes in place

regarding the relevant media assets and any proposed changes on

the part of the Purchaser to the operation of the relevant media

assets of the Target post-transaction.

The significant interest held by Mr Roberts in the relevant media

assets of the Purchaser, and the significant interest the Purchaser

will gain in the relevant media assets of the Target are assessed in

the Market Share section of this examination in terms of the

market share that these assets possess in the publishing and

internet media sectors.

Market Share – The market shares of the various relevant media (d)

assets identified earlier in this examination are analysed in terms

of readership, reach, distribution, etc. The aggregated market

shares of those assets which would be owned by the Purchaser

should the proposed transaction proceed are analysed.

The views of the Parties in relation to this section are also

examined.

It is determined that:

(i) It is unlikely that Mr Roberts already possesses a significant

interest in either the Broadcasting or Internet Media

sectors in the State. However, it can be seen that, in relation

to the market shares possessed by the Target, that he will

gain a significant interest in the Broadcasting Sector and


potentially in the Internet Media sector in the State should

the proposed Transaction proceed, and that,

(ii) Given that it is unlikely that Mr Roberts already possesses a

significant interest in any media sector in the State and the

scale of the increase in market shares that this proposed

transaction would bring about, it is considered unlikely that

this acquisition of significant interests will have an adverse


Further to this, the significant interests held by the

Murdoch Family in the Broadcasting Sector, and therefore

across sectors, will be diminished should the proposed

transaction proceed. It is considered unlikely that this

diminishment of significant interests will have an adverse


Given these two factors it is considered unlikely that the

proposed transaction will, in this regard, have an adverse

impact on the plurality of the media in the State, either

regarding diversity of ownership or diversity of content.

Governance & Editorial Management – The current (e)

governance and editorial regimes of the Purchaser and the Target

are analysed.


examined.

The information does not raise concerns regarding governance and

editorial management in relation to the proposed transaction and

it is deemed unlikely that the proposed transaction will, in this

regard, have an adverse impact on the plurality of media in the

State.

Content – The content made available by the Purchaser and the (f)

Target and alternative content to the Purchaser’s and the Target’s

relevant media assets are identified.


The information does not raise concerns regarding content

management in relation to the proposed transaction and it is

deemed unlikely that the proposed transaction will, in this regard,

have an adverse impact on the plurality of media in the State.

Financial – The Financial standings of the Parties are examined. (g)


examined.

The information does not raise concerns regarding financial

management in relation to the proposed transaction and it is

deemed unlikely that the proposed transaction will, in this regard,

have an adverse impact on the plurality of media in the State.

Impact on the Irish Language – The potential impact of the (h)

proposed transaction on the provision of Irish language content is

analysed.

It is noted that, at present, the relevant media assets operated by

the Target do not produce any amount of Irish language content.

The information does not appear to raise concerns regarding the

impact on the Irish language in relation to the proposed

transaction. As neither Party produces any substantial amount of

Irish language content, it is deemed unlikely that the proposed

transaction will, in this regard, have an adverse impact on the

plurality of media in the State.

The Scale and Reach of RTÉ and TG4 – The potential impact (i)

of this acquisition should it proceed on the Public Service

Broadcasters, RTÉ and TG4, is analysed.

The information above does not raise concerns regarding the

impact on adequacy of the public service broadcasters in ensuring

the plurality of the media in the State. Therefore, it is unlikely that

the proposed transaction will, in this regard, have an adverse



Views of the European Commission – The views of the (j)

European Commission regarding the competition element of this

proposed transaction are noted.

Views of the Parties – The views of the Parties are noted and (k)

considered throughout this assessment, generally, and specifically

in the relevant sections, and where appropriate, responses are

provided.


4. Conclusion

4.1 In light of the notification, and other materials supplied by the Parties to

the proposed acquisition as considered with regard to the matters the

Minister shall have regard to under s. 28D of the Competition Act,

including the ‘relevant criteria’ as set out in Part 3A of the Competition

Act, the Guidelines published by the Minister under s. 28L of the same

Act, as considered by the Department in this assessment, it is

recommended that the proposed transaction should be permitted to be put

into effect.

4.2 The following are the major factors informing the recommendation:

Given (a)

(i) That it is unlikely that Mr Roberts already possesses a

significant interest in any media sector in the State, and,

(ii) The smaller scale of the market shares of the media

businesses in which he has a significant interest compared

to those of the Target,

It is considered unlikely that this acquisition of significant interests

will have an adverse impact on the plurality of the media in the

State.

Further to this, the significant interests held by the Murdoch

Family in the Broadcasting Sector, and therefore across sectors,

will be diminished should the proposed transaction proceed. It is

considered unlikely that this diminishment of significant interests

will have an adverse impact on the plurality of the media in the

State.

Given these two factors it is considered unlikely that the proposed

transaction will, in this regard, have an adverse impact on the

plurality of the media in the State, either regarding diversity of

ownership or diversity of content.


4.3 In light of the above, it is considered that the proposed transaction is not

contrary to the public interest in protecting media plurality in the State

and should be permitted to be put into effect.

Documents

Comcast Corporation & Sky plc