News Corp BSkyB bid bolstered as Cable combusts

Yesterday was an excellent day for News Corp: a thumbs-up from the EU, and the political hara-kiri of Cable, the man best placed to block the deal.

by James Taylor
Last Updated: 19 Aug 2013
Yesterday started badly and got worse for Business Secretary Vince Cable; if his secretly-taped comments about his ability to bring down the Coalition weren't bad enough, it emerged later that he also told the undercover reporters that he'd 'declared war' on Rupert Murdoch over NewsCorp's attempted takeover of BSkyB - a deal that theoretically required his approval. Not any more, though: an angry Downing Street promptly transferred that responsibility to (Tory) Culture Secretary Jeremy Hunt instead. A humiliation for St Vince - but great for News Corp, which also got a further boost when EU regulators said they were happy for the deal to go ahead without any modifications...

Cable's original comments about the Coalition were daft enough, but it turns out that the Telegraph (interestingly) didn't even publish one of the most inflammatory bits - which was leaked to the BBC's Robert Peston yesterday afternoon. The Business Sec said he had 'blocked [News Corp's BSkyB bid] using the powers that I have got' (not strictly true, as far as we can tell), adding: 'I have declared war on Mr Murdoch and I think we are going to win.' We wonder if Rupert noticed?

It's an extraordinarily naive thing to say, particularly to two complete strangers (distasteful and unscrupulous as this kind of hidden mic trick is). The scrutiny of the BSkyB bid is a quasi-judicial process; and by dint of his office, Cable is supposed to be objectively and impartially assessing its merits. Since that clearly wasn't the case, Downing Street had no choice but to remove him from the process immediately - and transfer that entire section of his department (including 50 civil servants) across to Hunt. That solves the immediate problem; but what of other companies who bring deals before Cable for approval? How can they be confident they’ll get a fair and impartial hearing?

As for the BSkyB deal, the Lombard column in today's FT argues that removing Cable from the process at this stage actually makes little difference; the theory being that he's already referred the issue to the regulator, and once this process is underway, politicians have limited ability to influence the outcome. Equally, as far as News Corp is concerned, the financial logic of the deal is unchanged; while for opponents, the 'threat to media plurality' argument remains as compelling as ever.

However, whereas Cable wanted to pick a fight with Murdoch, Hunt has previously expressed his admiration for Sky; nor does he have to worry about appeasing all those Lib Dems who are against the deal. So it's hard to believe the mood towards the deal won't change within Whitehall - and it wouldn't be a complete surprise if this coloured the thinking of the regulators a little. And with the EU happily waving the deal through yesterday, NewsCorp reckons there’s even less justification for their UK counterparts to intervene.

Perhaps the right answer is to keep the politicians out of this approval process altogether. But until that day comes, we need to maintain an impression of impartiality, if nothing else. Or the process loses all credibility. Much like Cable, you might argue.

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