Thursday, 3 March 2011

Murdoch rides roughshod over government

Rupert Murdoch's News Corporation has been given government approval for its controversial takeover of BSkyB. The green light follows News Corp's offer to spin-off Sky News as an independent company. The decision follows concerns about the concentration of media outlets in the hands of one organisation. News Corp, which owns the Sun, the News of the World, the Times and the Sunday Times, is looking to take over the 61% of BSkyB that it does not own.

96 Rupert Murdoch: used to getting his way

Culture Secretary Jeremy Hunt said he intended to accept News Corp's offer rather than refer the takeover to the Competition Commission. Ofcom, the UK media regulator, had said the deal should be referred to the commission. The European Commission has already ruled there is no reason to oppose the takeover on competition grounds. News Corp said it welcomed Mr Hunt's decision. It said it noted Ofcom's opinion to the culture secretary that it considered that "the revised proposed undertakings would address [its] plurality concerns".

Opponents will have until 21 March to lodge any complaints. A number of media groups have opposed the takeover, including the Guardian, Associated Newspapers, Trinity Mirror and the Telegraph. "We shall be vigorously contesting this whitewash of a proposal during the consultation period, as well examining all legal options," they said in a joint statement.

Mr Hunt, responsible for deciding whether to allow the takeover, said he believed News Corp's offer to hive off Sky News would "address concerns about media plurality". "The undertakings offered would ensure that shareholdings in Sky News would remain unchanged, and indeed offer it more independence from New Corporation than it currently has," he said.

Under the terms of News Corp's proposals, the board of Sky News would have a non-executive, independent chairman and a majority of non-executive, independent directors. News Corp has proposed that shares in Sky News be distributed among existing shareholders, with Mr Murdoch's company maintaining its 39% holding. It would not be allowed to increase its shareholding without the permission of the culture secretary for 10 years. It has also offered to provide funding in the form of "a substantial revenue stream" to Sky News for 10 years.

Media analyst Steve Hewlett told the BBC the offer "rolls forward the status quo, but with an independent chairman and board". The funding commitment and continued shareholding ensures that News Corp "has a long-term interest in Sky News prospering," he added.

BBC business editor Robert Peston said Mr Hunt's decision heralded "huge changes to the landscape of the British media industry". A combined News Corp and BSkyB would generate revenues that would "dwarf all rivals, even the BBC", he said.

Mr Murdoch has made no secret of his desire to gain control of BSkyB. The broadcaster made a pre-tax profit of £465m in the last six months of 2010, with revenues of £3.2bn. "BSkyB is doing very well, and News Corp considers Sky's pay-TV service as the best in the world," said Mr Hewlett.

News Corp has many interests outside the UK, including the Fox broadcast and cable networks, 20th Century Fox film studios, Harper Collins book publisher, and newspapers such as the Wall Street Journal.