20 Jan 2011

BSkyB deal could see Murdoch relinquish Sky News

Washington Correspondent

Channel 4 News learns that Rupert Murdoch’s News Corp is in talks with the government about relinquishing control of Sky News in return for being allowed to buy the remaining part of BSkyB.

BSkyB deal could see Murdoch relinquish Sky News

The deal would give permission for News Corporation to buy the remaining 61 per cent of BSkyB that is doesn’t already own.

Channel 4 News understands that James Murdoch is in discussions with the Culture Secretary, Jeremy Hunt, to reach an agreement after Ofcom, the UK’s media regulator, recommended that the deal be sent to the Competition Commission for review.

Ofcom is understood to have reached that conclusion on the grounds that News Corp owning all of BSkyB would reduce the “plurality” or diversity of news outlets in Britain.

Jeremy Hunt is due to announce his decision on the deal sometime within the next week. But before he refers the deal to Europe – which seems the most likely outcome – he is first holding discussions with Mr Murdoch about what concessions News Corp might be prepared to make in order to let the deal go through.

Given plurality is chiefly about the dissemination of news, getting rid of Sky News seems the most likely option, although no decision has yet been made and it’s not clear how News Corp might achieve it.

One source familiar with the discussions told Channel 4 News that News Corp was considering a way of giving up control of Sky News such that the channel was effectively independent of News Corp but ultimately still owned by it. In other words, it would give up editorial control of Sky News, but not financial. Whether or not that would be enough to keep regulators happy is far from clear.

One thing is clear, however. Those who thought that Vince Cable’s removal from the News Corp/Sky decision process would make it more likely that the deal would happen appear to be wrong.

Why else would Jeremy Hunt be sitting on an Ofcom report about the deal for this long if the news was good? Although nothing has yet officially been confirmed, it doesn’t take a genius to work out that Ofcom has some serious concerns about the transaction. Serious enough for Jeremy Hunt not to ignore.