BSkyB deal getting closer for News Corp

Culture secretary Jeremy Hunt has 'provisionally' approved plans for BSkyB to spin out Sky News as part of Rupert Murdoch's bid to take full control of the company.

by Emma Haslett
Last Updated: 13 Jul 2011
News Corp has come a step closer to getting its hands on BSkyB (or at least, the 61% of the broadcaster it doesn’t already own) after culture secretary Jeremy Hunt said today that he ‘provisionally’ accepts a raft of new proposals designed to ensure News Corp doesn’t get too much power over the British media – which include spinning off Sky News as an independent company. That seems to have satisfied Hunt – but others will take a lot more persuading…

Under the proposals, the newly independent Sky News would have to have an independent editorial director in place to ensure News Corp’s influence was kept to a minimum. On top of that, it would have a monitoring trustee to keep an eye on things. The other sop to opponents of the deal is a promise that Sky will keep on cross-promoting Sky News across the rest of its channels – presumably to make sure it isn’t brushed to the side once the deal’s gone through.

Now that the deal has got the thumbs-up in Westminster, it looks as though the two sides are free to haggle over price. The broadcaster’s board has already rejected two offers from Murdoch et al, demanding he come back with an offer of ‘at least’ 800p. In fact, some shareholders even went as far as to suggest 900p might be more appropriate. But even though that doesn’t look likely, analysts reckon BSkyB’s sterling performance over the past few months will push its final price tag up to something in the region of 875p. Which will be a nice little earner for shareholders.

Hunt has now given opponent of the deal until Friday 8 July to come up with a reason he should refer the deal to the Competition Commission, instead of agreeing to it outright. At the moment, there are whispers from a group including the publishers of the Guardian, the Mail and the Telegraph (as well as a mysterious-sounding online activist group called Avaaz) about taking legal action – but nothing solid seems to have emerged yet.

Of course, the cynics might argue that whether the deal goes through or not, it won’t make much difference in practical terms. After all, News Corp already owns 39% of the company and Murdoch’s son James is its non-executive chairman, so News Corp is hardly without influence already. In fact, you could argue that if the deal goes through, its influence over Sky would be under much closer scrutiny than it was before…

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