RUPERT MURDOCH'S plan to take full control of the satellite broadcaster BSkyB has been scuppered by the political fallout from the News of the Worldphone-hacking scandal, experts in the City of London believe.
Investors piled out of BSkyB shares yesterday after the British prime minister promised an independent inquiry into what went wrong at the newspaper. Sam Hart, media analyst at broker Charles Stanley, said: “Murdoch’s plan to bid for the satellite operator has been kicked into touch.”
Shareholders, he said, were discounting the possibility that the bid would happen in “the foreseeable future. Some people wonder if it will happen at all. It could take years before the various inquiries have wound up, so the deal has been pushed much further back than anyone would have guessed a week ago.”
British culture secretary Jeremy Hunt inherited the job of making the final call on Mr Murdoch’s takeover of BSkyB after Liberal Democrats colleague Vince Cable spoke unwisely about the matter last Christmas.
Mr Cable told two young women who he thought were constituents he was "at war" with Mr Murdoch, but they turned out to be Daily Telegraphreporters. Once quotes attributed to him were published, Mr Cable nearly lost his job. In the end, he lost the chance to decide on BSkyB's fate.
By noon yesterday, 140,000 views had been lodged about the deal – most of them negative.
Under the rules, the culture secretary must decide whether Mr Murdoch’s News Corp takeover of the 61 per cent of BSkyB it does not already own affects the plurality of choice that should exist in the British media.
Mr Murdoch's decision to shut the News of the Worldcould improve his chances, since he will now own three major newspapers – the Times, Sunday Timesand the Sun– rather than four, unless he goes ahead quickly with a new Sunon Sunday.
Mr Hunt has indicated the closure may be “a factor” in his final decision-making. However, he has not said how much time he will need to reach a decision. Clearly he does not want to do anything until September, and perhaps not even then.
Media regulator Ofcom could open an investigation into whether the Murdochs, or News Corp corporately, were “fit and proper” persons under the law to hold a broadcasting licence in the UK.
For now, the Murdoch team must bet Ofcom would not go ahead with such an investigation. If such an inquiry produced findings naming individuals, perhaps even News International chairman James Murdoch, or even the company itself, as not “fit and proper”, it would have devastating consequences for the Murdoch empire.
However, Ofcom does not want to act before the police have finished their investigations into phone-hacking, and allegations of bribery of police officers. But it is caught in a bind. If it waits that long, News Corp will end up getting BSkyB by default.
Last year, Mr Murdoch offered 700p a share for the part of BSkyB News Corp does not own, valuing the company at £12.8 billion. However, the satellite broadcaster’s board sought more. Even after losing £1 billion off its share price value in the last week, it is still worth about £13.5 billion.
Such a fall in share prices could be construed as good news for Mr Murdoch, since it could mean the crisis would end up costing him less if he eventually does manage to save the deal. – (additional reporting Guardian service)
