RUPERT MURDOCH’S News Corp has taken a huge step towards securing its prized $14 billion buyout of satellite broadcaster BSkyB as the British government backed its proposals to ease competition concerns.
Culture secretary Jeremy Hunt said yesterday he was minded to wave through the takeover after the media giant offered to make Sky News a separate independent company and subsidise it for a decade. The move will allow News Corp to avoid a prolonged investigation into its plans to buy the 61 per cent of BSkyB it does not already own and start negotiating the terms of the deal.
With BSkyB consistently adding new customers and selling more services, analysts had said the acquisition price would rise and Mr Murdoch’s proposal to spin off a chunk of his flagship Sky News channel showed his desire to do a quick deal.
“Murdoch has shown how much he wants to acquire the asset and how speedily he wants to do so,” said Tim Daniels, media sector strategist at Olivetree Securities. “It seems he doesn’t have much leverage to avoid paying shareholders top dollar.”
News Corp made its initial offer of 700 pence a share for the pay-TV group last summer. Sky’s independent directors said they wanted over 800 pence. Analysts said yesterday that the asking price should now be over 900 pence.
“The evidence that News Corp is in a hurry suggests that it may be willing to pay 900 pence to 1,000 pence to secure a deal quickly,” Citi media analyst Thomas Singlehurst said.
The takeover battle has sparked a huge debate in Britain about the dominance of Murdoch-owned media. Many were not reassured by the ruling which will see him remain as the main funder and 40 per cent owner of Sky News.
Analysts and lawyers, including one with direct knowledge of the situation, said it would be hard to challenge the ruling although it would raise questions over the government’s conduct, as Mr Murdoch’s papers backed the party at the last election.
Mr Murdoch, who also owns a third of the British newspaper market including the Sunand Timespapers, has a reputation for interfering in the editorial stance of his companies. Analysts have speculated that he waited until a Conservative government was in power before launching the offer.
An alliance of media groups opposed to the buyout dismissed Mr Murdoch’s solution to competition concerns as a “whitewash” while Labour said it had concerns around the process’s transparency.
“It has been well-documented by former Murdoch editors that arrangements of this kind, including those put in place to protect the independence of the Sunday Times and Times, have proved wholly ineffective,” the alliance said.
In return for clearance, News Corp will spin off the loss-making Sky News channel and guarantee its future by giving it a 10-year carriage deal on the Sky TV platform and a seven-year agreement to use the Sky name. Its board will have a majority of independent directors and the shares in the new company will be distributed among existing shareholders of BSkyB in line with their holdings, with News Corp therefore retaining a 39.1 per cent stake.
Analysts suggest Sky News loses more than £20 million a year and that BSkyB’s carriage deal would need to at least cover that loss to make it an attractive prospect.The government will now hold off on a consultation until March 21st. – (Reuters)
