1st Jul 11
News Corp closer to acquiring BSkyB
by Katie Naylor
King of the world: Rupert Murdoch's empire set to expand even further
King of the world: Rupert Murdoch's empire set to expand even further
The government has stated that it is minded to accept assurances from News Corp regarding the spin-off of Sky News, although it plans to consult on some new conditions.
The Sky News spin-off is the key condition concerning News Corp being allowed to acquire full ownership of BSkyB. Among the conditions is ensuring that an independent editorial director is present at Sky News board meetings, while Sky News must continue to be advertised on other Sky networks. The consultation is due to run until 8 July.
Following that date, the Secretary of State for Culture, Media, Sport and Olympics, Jeremy Hunt, will make the final decision either to allow the takeover to go ahead or refer it over to the Competition Commission. Earlier recommendations from media regulator Ofcom and the Office of Fair Trading expressed concerns over News Corp having control over too much of the UK media.
News Corp offered 700 pence per share for BSkyB last June, but BSkyB’s board told it to return with a higher offer. BSkyB shares have gone up significantly since then, and were at 850p in Thursday’s early trading. Even if the culture secretary clears the takeover next week, the deal may yet stumble if they are unable to agree a price.
The company currently has a stake of 39 per cent in BSkyB and also owns the Times and Sun newspapers. It proposed to spin off Sky News as an independent organisation, but keep funding it, so as to ensure the takeover deal was not referred over to the Competition Commission.
The culture secretary launched a consultation on the proposals on 3 March and, due to this, has now added a further four conditions to the deal. Board meetings at Sky News must have an independent director present when editorial decisions have to be made.
In addition, a monitoring trustee is due to be appointed to ensure News Corp applies in its business with Sky News, other sky stations will continue to advertise Sky News, and the secretary of state must approve Sky News’ Articles of Association.
The government received over 40,000 representations in the consultation, but said that there was nothing to alter its earlier opinion that the Sky News spin off would make the takeover of BSkyB acceptable. The takeover has been strongly opposed by a group of other newspapers, including publishers of the Daily Mail, the Daily Telegraph and the Guardian.
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