ANALYSIS:News Corp will retain 40% stake under terms of BSkyB takeover
THE RELATIONSHIP between Rupert Murdoch and the British Conservative Party has been a long one, though the billionaire businessman has always ensured that the party has never been able to take his support for granted.
Secretary for culture Jeremy Hunt ruled yesterday that Murdoch’s bid to control BSkyB completely – which will cost him a minimum of £8 billion (€9.3 billion) – does not need any sanction by the UK’s Competition Commission.
Facing MPs in the House of Commons, Hunt went to some lengths to show how carefully he had gone about making his decision, saying that he had even detailed every meeting that had taken place with Murdoch executives.
Saying he had followed the advice of another of the regulators, Ofcom, Hunt declared: “Because I am very, very conscious that people are suspicious of the motives of politicians on a decision like this, I sought independent advice at every step of the way.”
Little of it cut ice with Labour MPs, with one, John McDonnell, saying it was “a dark day” for media plurality in the UK. Even some Conservatives have doubts about the move.
Showing how badly he wants the deal, which would bring him all of the satellite company's gargantuan sports revenues, Murdoch spent much of January in London on a firefighting exercise as the voicemail hacking scandal in the News of the Worldthreatened to derail his ambitions.
Murdoch’s son James, the man who is now at the helm of News Corporation, has made concessions: Sky News will be split away from BSkyB and run as a separate organisation, with an independent board and guarantees of 10-year funding. But News Corporation will still hold the same 40 per cent stake it owns currently, leading even former Murdoch editor Andrew Neil to wonder why other investors would queue up to buy the rest.
The key will be the affiliate fee that BSkyB pays to Sky News to provide its news services. Currently, the news channel loses a reported £20 million a year. Yesterday, some analysts speculated that the affiliate fee could be as large as £30 million a year, but the channel would be entirely dependent on Murdoch, unless it could find other sources of revenue.
Supporters of the deal pointed to the safeguards to be put in place. The new Sky News company would be run by an independent board, the chairman would be appointed independently and it would have to abide by all existing rules and regulations governing broadcasting.
Murdoch would not be able to increase his shareholding in Sky News – which some feared he wanted to turn into a UK version of Fox News, if he could get broadcast regulations changed – for a decade without the sanction of the British government.
However, Murdoch has been here before. In 1981, promises he made after he took over the London Timesand the Sunday Timesproved to be worthless within months, leading to the departure of renowned editor Harold Evans. Independent directors appointed to the board of the Wall Street Journalin 2007 were also shown to have little influence as Murdoch went about putting his stamp on his new acquisition.
Hunt, however, has perhaps played a clever game, since the Competition Commission might not have sought the separation of Sky News, particularly since the European Commission said in December that it saw no plurality problems if Murdoch was to get the go-ahead.
The culture secretary has given opponents 15 days to make submissions, and there will be many – particularly from a coalition of media companies including BT, Guardian Media Group, Associated Newspapers, Trinity Mirror, Northcliffe Media and the Telegraph Media Group.
Competitors fear that BSkyB and Murdoch’s other media enterprises will be increasingly merged, with cross-promotion, bundling of services, bans, perhaps, on rivals’ advertisements and a rapid distortion of the advertising market with cross-platform offerings that no one else can match.
Mark Hennessy is London Editor