State stymies News Corp’s BSkyB takeover plan

UK Business Secretary Vince Cable has stated that he will intervene in News Corp’s planned £12bn bid to take control of DTH broadcaster BSkyB.
Following mounting pressure from rival media groups, including the BBC and a number of major national…

UK Business Secretary Vince Cable has stated that he will intervene in News Corp’s planned £12bn bid to take control of DTH broadcaster BSkyB.

Following mounting pressure from rival media groups, including the BBC and a number of major national newspapers, Cable has stepped in on ‘public interest grounds’ over media plurality and competition. He has subsequently issued an intervention notice that requires the UK communications regulator Ofcom to investigate the proposals and report back by 31 December. Depending on the outcome of that report, Cable will decide whether to refer the matter to the Competition Commission.

Cable said: “On the basis of the information and submissions available to me, I have decided that it is appropriate to issue an intervention notice in this particular case. The independent experts at Ofcom will now investigate and report to me on the media plurality issues that may arise from this proposed acquisition.”

News Corp’s plan to take BSkyB private by acquiring the 61% it does not already own was first revealed in June when the BSkyB board revealed that it had rebuffed an initial approach worth 700 pence per share. The satellite broadcaster said that the offer significantly undervalued the business and called for an offer in excess of 800p a share.

Despite this difference over BSkyB’s valuation, the two parties agreed to begin work on the regulatory process required for a tie-up. To that end, News Corp formally notified the European Commission on 3 November of its takeover bid. The EC will now will launch a probe looking at competition issues and publish a report on the proposed transaction on 8 December.

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. The current proposals are seen as a test of the Conservative-led coalition government’s attitude to media consolidation as well as the power of the Murdoch empire.

It is thought that the new government has been split on its approach to the proposals, with Conservative ministers understood to be more relaxed over News Corp’s move than Mr Cable and other Liberal Democrats.

The opposition Labour party have also expressed concern over the deal, with shadow culture secretary Ivan Lewis arguing: “Rupert Murdoch and BSkyB have been a force for good in improving the quality of broadcasting for British consumers and stimulating investment in our creative industries. But the Murdoch empire has sometimes crossed reasonable boundaries with overzealous business practices and the assertion of political power. There is a case to answer, and the public interest can only be determined through proper scrutiny by the competent authorities.

“It is important for democracy in Britain that the power to influence opinion and shape debate is in the hands of a broad range of organisations and prevents any one organisation dominating the landscape.”