UK culture secretary Jeremy Hunt has yet to decide whether he should refer the News Corporation’s planned takeover of UK satellite broadcaster BSkyB for a full-blown competition enquiry.
Hunt said he was minded to refer the deal to the Competition…
UK culture secretary Jeremy Hunt has yet to decide whether he should refer the News Corporation’s planned takeover of UK satellite broadcaster BSkyB for a full-blown competition enquiry.
Hunt said he was minded to refer the deal to the Competition Commission but added he was prepared to listen to special “undertakings in lieu” from News Corp as it sought to allay his concerns about the merger.
The decision passed to Hunt after Business Secretary Vince Cable was stripped of his responsibilities for media regulation, as he was recorded telling undercover reporters 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. The media giant is looking to buy the 61% stake it does not already own in BSkyB for as much as £7.8bn but still needs to get approval from British regulators in order to go ahead with the takeover.
Recent media reports suggested that News Corp told the government it might be prepared to make concessions to avoid a lengthy consultation, with the sale of Sky News one option said to be under review.
However, such a concession may not be enough to assuage regulatory concerns with media watchdog Ofcom recommending that the proposed deal should be investigated further by the Competition Commission. Hunt said he would ask Ofcom whether any of the measures suggested by News Corp address its concerns over media plurality and requested that the Office of Fair Trading is involved in the process.
If the undertakings are accepted, a 15-day consultation period will commence, when parties will be able to express their views.
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.
Murdoch’s eagerness to push ahead with the BSkyB takeover would have been further emboldened by the company’s latest financial results. Revenues for Sky 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.
But those improved results have also prompted BSkyB investors to ensure the company’s board gets a high enough price from Murdoch, according to reports. Odey Asset Management was quoted saying that any offer under 800p a share would undervalue BSkyB. On 22 February, BSkyB shares stood at 754p on the London Stock Exchange, valuing the company at approximately £13.2bn.
A Cloud in the Sky
These improved results come as BSkyB is poised to acquire local Wi-Fi operator The Cloud Networks for less than £50m, CFO Andrew Griffith told analysts.
The plan to acquire The Cloud, which is still subject to regulatory clearance in Jersey, was announced during Sky’s first-half results presentation as a way to support its mobile content activities.
Sky declined to reveal further financial details about the transaction but, according to The Cloud’s most recent audited financial statement, it had gross assets of £17.1m on 31 December 2009.
The Cloud has more than 5,000 public Wi-Fi locations across the UK, and will allow Sky to offer its broadband customers extended connectivity in much the same way as UK telecoms incumbent BT does with BT OpenZone.
