As expected, Jeremy Hunt, culture secretary, has cleared the News Corp takeover of the 61 per cent of Sky it doesn’t already own. In a compromise to avert concerns on plurality in the UK news market, Sky News will be spun off as a separate UK PLC with shares distributed to BSkyB stockholders on their current basis – i.e. News will own 39 per cent. The company must have a majority of independent directors and an independent chairman.
The company will be awarded a 10 year carriage contract with BSkyB for the supply of news; thereby underwriting its £30 mllion a year losses – in other words News will subsidise the business.
Even with the Government’s OK – with Hunt deciding not to refer the deal for a full Competition Commission enquiry – there is very little chance the deal will happen in the near future. First, newspaper group rivals will undoubtedly challenge Hunt’s decision with a Judicial Review and, second, the share price of Sky has risen since News’ original 700p offer and it is by no means certain News will come up with a price that will satisfy the board.