The UK government intends to approve UK media giant News Corp’s plan to spin off subsidiary Sky News unit to allow its takeover of local broadcaster BSkyB.
Culture Secretary Jeremy Hunt said he accepted the plan for Sky News to be made into an…
The UK government intends to approve UK media giant News Corp’s plan to spin off subsidiary Sky News unit to allow its takeover of local broadcaster BSkyB.
Culture Secretary Jeremy Hunt said he accepted the plan for Sky News to be made into an independent public limited company (plc), paving the way for News Corp to acquire the 61% of BSkyB it does not already own for as much as £7.8bn.
Under the plan, the consultation of which expires 21 March, Rupert Murdoch-controlled News Corp will still retain a 39.1% stake in Sky News, but will have no direct influence over its board.
Announcing that the merger will not be referred to the Competition Commission, Hunt said Sky News will have a board made up of a majority of independent directors, including an independent chair. In addition, News Corp will need to receive government permission if it wanted to increase its shareholding in the news group over the next ten years.
Hunt said: “Informed by advice from the regulators, I believe that these will address concerns about media plurality should the proposed News Corp/BSkyB merger 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.”
The decision over whether to refer the proposed merger to the Competition Commission was passed to Hunt after Business Secretary Vince Cable was stripped of responsibilities for media regulation, after he was secretly recorded commenting that he had “declared war” on Rupert Murdoch’s media empire.
Back in late December, the media giant cleared a major hurdle after gaining approval from European regulators for its takeover of BSkyB.
News Corp currently owns two of the largest newspapers in the UK: The Times and The Sun, and critics of the planned takeover argue that having full ownership of the country’s largest pay-TV operator would give the media giant too much power.
Hunt added: “Throughout this process I have been very aware of the potential controversy surrounding this merger. Nothing is more precious to me than the free and independent press for which this country is famous the world over.
“In order to reassure the public about the way this decision has been taken I have sought and published independent advice at every step of the way, even when not required to do so by law. And I have followed that independent advice.”
Murdoch’s eagerness to push ahead with the BSkyB takeover would have been further emboldened by the company’s latest financial results. Revenues for BSkyB soared 15% to £3.186bn for the six months to 31 December 2010, compared with £2.773bn a year earlier, while profits jumped 26% to £520m. Adjusted EBITDA climbed 19% to £677m, compared with £568m for the previous fiscal year.
