News Corp in BSkyB buyout
CONTROL: The UK government has approved News Corp plans to buy BSkyB RUPERT Murdoch’s global media empire is poised to grow ever bigger after the British government approved plans by News Corp to buy full control of satellite TV operator British Sky Broadcasting Group PLC.
I n a c o n t r o v e r s i a l mo v e , t h e Conservative-led coalition said it will give News Corp the green light to buy the remaining 61 per cent of BSkyB it does not already own – on the condition that it spin off its Sky news channel as an independent company.
The ruling, which is subject to industry consultation and potential legal challenges, was attacked by a coalition of other major media outlets and the opposition Labour Party.
News Corp made the concession to hive off Sky to avoid a prolonged investigation by competition regulators into the proposed £ 12.3 billion ($ 19.76 billion) deal, one of its most politically charged takeovers in years.
Opponents are concerned that the company will have too strong a voice in the British media industry.
Culture Secretary Jeremy Hunt said he was ‘‘ very aware’’ of the controversy surrounding the deal, but the company had addressed concerns about media plurality should the takeover go ahead.
‘‘ The undertakings offered would ensure that shareholdings in Sky News would remain unchanged, and indeed offer it more independence from News Corp than it currently has,’’ Mr Hunt said.‘‘ Nothing is more precious to me than the free and independent press for which this country is famous the world over.’’
In return for government approval, News Corp will spin off the lossmaking but influential Sky News, retaining a 39.1 per cent stake in the news channel, the same as its current stake in BSkyB.
It will not be able to increase that shareholding for 10 years without government permission.
To ensure the channel’s survival, News Corp will fund Sky for 10 years and agree to a seven-year licensing agreement for it to use the Sky News name.
Media watchdog Ofcom, which had submitted a critical report on News Corp’s original takeover plans, said it supported the new proposals, noting that the company had agreed to ‘‘ place editorial independence and integrity at the heart’’ of the spun-off Sky News.
Aside from the consultation hurdle, the proposed deal hinges on shareholder approval.
News Corp has yet to agree on a takeover price with BSkyB after its initial £ 12.3 billion ($ 19.76 billion), or 700 pence per share, bid was rejected as too low.
The two companies agreed to postpone setting a price until the regulatory hurdles had been overcome.