Advanced Television

UK Govt in corner on News Corp

January 12, 2011


The attempt by News Corp to buy up the 61 per cent of BSkyB that it doesn’t own looks like being a win-win for two sets of participants: the lawyers, as always, and probably News Corp itself. Our rationale for this is that the British government has backed itself into a corner that will be tough to extract itself from.

Let’s review the latest position:

  • The European Commission has unconditionally approved the acquisition.
  • The UK broadcasting regulator Ofcom has made a preliminary report, seen by News Corp but not made public, which reportedly says that Culture Secretary Jeremy Hunt should refer the bid to the Competition Commission.
  • It has been widely reported that very senior News Corp execs – or their lawyers – are seeking meetings with the minister and his officials in order to seek flexible remedies (as they did with the EU) and thus side-step the need for a full six-month public investigation into the bid.
  • These informal undertakings could cover commitments NOT to bundle TV subscriptions with newspaper subscriptions, or ring-fencing Sky News with a wholly independent board, or even disposing of Sky News altogether.

The problems would then come from just about every other newspaper or media group operating in the UK, all of whom seem to object to the deal, and most have engaged lawyers to nit-pick every stage of the process.  They see any such ministerial meetings as giving News Corp an unfair advantage.

Assorted lawyers are also cautioning Mr Hunt from having any dialogue with News Corp, suggesting that any such talks would be seen as inappropriate. Their consensus suggests that Hunt’s role is simply to decide whether or not to refer it to the commission, and not to have cosy chats with News Corp under any circumstances.

If Hunt decides NOT to refer the bid, and thus permit the deal to proceed on normal commercial terms then he will be upsetting these rival media groups.

However, if Hunt kicks the News Corp bid into the long grass of a Competition Commission review, on the grounds of media domination or plurality, then News Corp will undoubtedly fight back with any amount of data and proof that its influence is much less than feared.

News Corp will also drag Business Secretary of State Mr Vince Cable’s unfortunate comments that he was out to declare “war” on Rupert Murdoch into their defence, arguing perhaps that the government had already – and unfairly – made its mind up!

In other words this bid could run and run.  The best sentiment is expressed via the London stock market, where BSkyB’s share price is well off its £7.46p ‘high point’ at £7.37p Wednesday evening, and having fallen steadily these past few days as enthusiasm for the deal waned.

Categories: Blogs, Inside Satellite