7 Jul 2011

BSkyB takeover – delay expected as opposition grows

The Government’s decision on Rupert Murdoch’s takeover of BSkyB could be delayed after a flurry of responses, as the broadcaster’s share price falls in the wake of News of the World hacking claims.

Delay expected over BSkyB takeover as opposition grows

The Government has received around 100,000 responses to its consultation process over whether Rupert Murdoch’s News Corp will be allowed to take full control over BSkyB.

The Department for Culture, Media and Sport told Channel 4 News that a more accurate figure would be available after the consultation process ends at noon on Friday.

A spokesman said that once the consultation closed all the submissions would be processed, a process which is expected to take some weeks.

News Corp – the parent company of News International, which owns News of the World – wants to buy the 61 per cent of shares in BSkyB it does not already own.

Following the shock revelation that the News of the World is to close, analysts have said it is likely News International could bring out a new Sunday title to hang on to its readership.

The closure would have been designed to take the market by surprise, analysts said.

Michelle Stanistreet, general secretary of the National Union of Journalists said Rupert Murdoch “is clearly banking on this drawing a line under the scandal, removing an obstacle to the BSkyB deal, and letting his senior executives off the hook.”

Following fresh allegations suggesting that murdered schoolgirl Milly Dowler had her phone hacked by journalists at the News of the World, the Government received a spate of fresh submissions to the consultation.

According to reports, the number responses has risen by 40,000 since the new claims earlier this week.

Only after the consultation period will Culture Secretary Jeremy Hunt make a final decision to approve the deal or refer it to the Competition Commission.

The bid by News Corp already faced opposition from rivals in the media industry and some politicians. The phone-hacking scandal has brought the deal even more under the spotlight, and yesterday Labour leader Ed Miliband urged the Government to refer it to the Commission.

Government debates deal

The Government on Thursday refused to suspend consideration of the News Corp bid, but insisted the Culture Secretary “will not be rushed” in the decision.

Asking an urgent question in the Lords, shadow Lords leader Baroness Royall of Blaisdon warned that refusing to suspend the process would be seen as “incomprehensible both by the public and by News Corporation’s advertisers and investors”.

But Government spokeswoman Baroness Rawlings said: “The Culture Secretary (Jeremy Hunt) takes the view that News Corp have offered serious undertakings and discussed them in good faith in all circumstances.

“And given that the implementation of those undertakings will be overseen by the monitoring trustee and thereafter monitored and if necessary enforced by the OFT (Office of Fair Trading), he takes the view that there are sufficient safeguards to make certain compliance with the undertakings.”

The MP who secured this week’s dramatic parliamentary debate into the phone hacking scandal claimed the closure of the News of the World was an attempt to protect News International chief executive Rebekah Brooks.

Before news broke that the News of the World was to close, BSkyB’s share price dropped by nearly 4 per cent this week, wiping £562m from its market value as investors fret that the deal may not go through.

News Corp last year offered 700p a share, valuing the company at £12.3bn, but the board told Mr Murdoch to come back with a higher offer.

Since then its share price has boomed on the back of strong results. Even after its share price losses in the past week, the current market value is still £14.3bn.