Published on 3 Mar 2011 Sections , ,

Sky News: Hunt approves Murdoch takeover of BSkyB

As Culture Secretary Jeremy Hunt gives initial approval to News Corp’s plans to take over BSkyB, he tells Channel 4 News the move strengthens safeguards on plurality of media ownership.

The Culture Secretary told the Commons that News Corp’s plans to hive off Sky News had met his concerns about competition – despite fears in some quarters that Mr Murdoch is extending his reach over the media.

He said: “Throughout this process I have been very aware of the potential controversy surrounding this merger. Nothing is more precious to me than the free and independent press for which this country is famous the world over.”

News Corp wants to buy the 61 per cent of BSkyB that it does not own at the moment, but would not increase its holding in Sky News, which would be run as a separate company under an independent chairman.

Interviewed on Channel 4 News, Mr Hunt said that the agreement meant that fears over concentration of media ownership had been “fundamentally addressed”.

“In terms of plurality of ownership of news – vital in a democracy – this actually strengthens those safeguards.” Culture Secretary Jeremy Hunt

“At the moment, James Murdoch is the de facto chairman of Sky News,” he said. “He will not be able to be that in future. The chairman of this new company will have to be one of the independent directors.

“As a result of these undertakings, I am satisfied that what has actually happened is that, in return for being able to buy these shares in the rest of Sky, James Murdoch is actually saying that he will have to settle for less influence over Sky News.

“So in terms of plurality of ownership of news – vital in a democracy – this actually strengthens those safeguards.”

‘Reduced power’

David Elstein, a former head of programming at BSkyB, said Mr Murdoch’s News Corp already had full operational control of BSkyB with its 39 per cent stake in the satellite broadcaster.

Buying the rest of the company would not make him any more formidable, and it could be argued that – by agreeing to “insulate Sky News” – he was “slightly” less powerful.

“This doesn’t change anything at all. It’s just swapping £8bn of cash for 60 per cent of BSkyB. It isn’t increasing the scale and scope of News Corp.”

Mr Elstein said plans to turn Sky News into a separate company were “a little sad”. There was a danger that by separating Sky News “from the mother ship”, its quality would decline.

Commons exchanges

In the Commons exchanges, the Shadow Culture Secretary Ivan Lewis said Mr Hunt had changed his mind about whether to refer the takeover bid to the Competition Commission, adding: “This process has exposed an arrogant Government, cavalier about its responsibility to be impartial and contemptuous of the importance of transparency in circumstances where there is already a high level of public cynicism.”

Mr Lewis said his Conservative counterpart had been handed responsibility for the issue, despite “being on the record as saying he didn’t see a problem with News Corp purchasing BSkyB”.

“Disastrous day for democracy.” Labour MP Dennis Skinner

This line of attack was followed up by Labour MP Chris Bryant, who said Mr Hunt had told him last September that he supported the takeover. But the Culture Secretary said that what he thought was less important than the conclusions of the broadcasting regulator, Ofcom, which he had followed.

Labour MP Dennis Skinner called it a “disastrous day for democracy”, comparing Mr Murdoch to a Middle East dictator who had handed down power to his son James.

Mr Hunt said: “News Corporation – James Murdoch – has had to surrender a significant degree of control over Sky News to be able to purchase the remaining shares of Sky.”

Completely true to form, Twitter (and my email inbox) was full of cries of “whitewash” when Jeremy Hunt gave his approval (subject to consultation) for Rupert Murdoch’s News Corporation to acquire the 61 per cent of BSkyB that it doesn’t already own, writes Technology Correspondent Benjamin Cohen. 

"But those crying foul misunderstand the ruling and the way that news plurality will change as a result. They also fail to realise that the revolution in digital journalism has diminished the power Murdoch once had."

Read Benjamin Cohen's blog: Whitewash? Hunt had to accept Murdoch Sky deal and Murdoch's not that powerful any more!


News Corporation Chief Executive Rupert Murdoch (Reuters)

‘Whitewash’

The announcement was welcomed by News Corp, but condemned as a “whitewash” by a coalition of media companies including BT, Guardian Media Group, Associated Newspapers, Trinity Mirror, Northcliffe Media and Telegraph Media Group.

A spokesman said: “Smoke and mirrors will not protect media plurality in the UK from the overweening influence of News Corporation. In addition, the undertaking does nothing to address the profound concerns that the takeover would give News Corporation greater power to restrict or distort competition through cross-promotion, bundling, banning rivals’ advertisements and distorting the advertising market with cross-platform deals.

“We shall be vigorously contesting this whitewash of a proposal during the consultation period, as well as examining all legal options.”

News Corp, which owns the Times, Sunday Times, Sun and News of the World, said last summer that it wanted to buy the 61 per cent of BSkyB it did not already own.

To address media competition concerns, News Corp proposes to turn Sky News into a separate company, in which it would have a 39.1 per cent stake. News Corp has been anxious to avoid a full inquiry into its plans to buy the 61 per cent of BSkyB it does not own at the moment. Mr Hunt said last month he planned to refer the bid to the Competition Commission.

Cable’s ‘war’ on Murdoch

Mr Murdoch’s bid has proved controversial. In December, the Business Secretary Vince Cable had his powers over media competition taken away after being secretly recorded saying he had “declared war” on the tycoon.

The recordings were carried out by reporters from the Daily Telegraph, but their contents were revealed first by the BBC – leading to speculation that the Telegraph had decided to withhold Mr Cable’s comments because, as a critic of News Corp’s plans, it was worried about the effect they might have on the bid.

Under News Corp’s plans, Sky News would be controlled by independent directors. News Corp would fund the loss-making satellite news channel for ten years. There will be a consultation until 21 March, after which Mr Hunt will make a final decision.

Mr Cable referred the bid to media regulator Ofcom on public interest grounds, but his powers were handed to Mr Hunt after his remarks about Mr Murdoch.

Ofcom said today it supported News Corp’s plans for Sky News. A spokesman said it was pleased the company had agreed to “place editorial independence and integrity at the heart” of Sky News.

A price has not been agreed for the takeover of BSkyB. Its initial offer of 700p a share was rejected for being too low.