Britain clears way for News Corp/BSkyB deal

By Agence France-Presse
Thursday, March 3, 2011 21:38 EDT
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LONDON – The British government Thursday cleared the way to approve News Corp’s bid to win control of broadcaster BSkyB after it agreed to spin off its Sky News operation to address competition concerns.

The decision to allow the Rupert Murdoch-owned group to proceed sparked a furious response from rival media groups, who accused the government of a “whitewash”.

In a long-awaited announcement, culture and media minister Jeremy Hunt said he would accept the proposals on Sky News “in lieu of” referring the BSkyB deal to the competition authorities.

“The undertakings that News Corporation has offered would involve Sky News being ‘spun-off’ as an independent public limited company,” he added.

The deal now faces a period of consultation before Hunt announces his final decision on March 21.

News Corp’s proposals would turn the loss-making rolling news channel into a new company, with its shares distributed among existing BSkyB investors but with a board primarily composed of independent executives.

Murdoch’s company had been waiting on Hunt’s decision over whether to refer its £7.5 billion ($12.2 billion, nine-billion-euro) bid for the 61 percent of BSkyB shares it does not already own to British competition authorities.

Hunt said he had taken advice from the media regulator that the proposal to hive off Sky News “will address concerns about media plurality should the proposed News Corporation/BSkyB merger go ahead”.

Later, Hunt, from Prime Minister David Cameron’s Conservative party, rejected claims in parliament that he had passed the deal because Murdoch’s newspapers had supported the party ahead of last May’s general election.

“I have been absolutely scrupulous in making sure that there were independent views commissioned and expressed and published at every stage of this process, precisely because I wanted to reassure the public that this was not being taken on the basis of party interest,” he told lawmakers.

The government had delayed a decision on whether to refer the BSkyB deal for a full competition inquiry in January after media regulator Ofcom suggested the move might hamper competition.

The minister said at the time the move would give News Corp more time to gather information to support its bid and satisfy his concerns.

News Corp also owns British newspapers including The Sun, The Times and top-selling Sunday tabloid News of the World.

An alliance of media groups including BT, the Telegraph Media Group, Guardian Media Group and Trinity Mirror condemned the deal and dismissed the spinning-off of Sky News as “pure window-dressing”.

“Smoke and mirrors will not protect media plurality in the UK from the overweening influence of News Corporation,” a spokesman for the alliance said.

It said the undertaking on Sky News failed to address “profound concerns” that the takeover would give News Corp greater power to restrict or distort competition through cross-promotion or banning rivals’ advertisements.

The alliance would be “vigorously contesting this whitewash of a proposal during the consultation period, as well as examining all legal options,” the spokesman added.

Opponents of the deal include the owners of the Daily Telegraph and the Guardian, who compete with the News Corp-owned Times titles, and the Daily Mail and Mirror newspapers — the main rivals of Murdoch’s tabloids.

News Corp also controls such major US media outlets such as Fox television and Wall Street Journal.

Agence France-Presse
Agence France-Presse
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