7 Jul 2011

Rupert Murdoch’s BSkyB takeover ‘in disarray’

Washington Correspondent

As calls grow for Rebekah Brooks to be sacked, Channel 4 News learns the axing of the News of the World may have “shifted” the fate of Rupert Murdoch’s bid to take full control of BSkyB.

Rupert Murdoch’s bid to take full control of BSkyB has been thrown into disarray after a Government source told Channel 4 News the decision to shut down the News of the World may have “shifted” the decision-making process.

A source close to Jeremy Hunt, the culture secretary, said it was not now clear how he could proceed with a judgement on the takeover of BSkyB by News Corporation because the dynamics of Britain’s media market had changed.

“We’re going to have to wait and see,” the source said. “The issue is still media plurality and what this (shutting News of the World) does is reduce the number of voices in the media, so we don’t know at this stage how it will affect things.

BSkyB deal delayed

Jeremy Hunt has always said his only test for deciding on the takeover is the issue of media plurality – or whether the deal would give news corporation too much control of the UK’s media landscape.

But after the company’s concession to spin off Sky News, Mr Hunt had said he was minded to recommend the deal – despite the dramatic phone hacking revelations of the past few days.

But now that recommendation appears to be in doubt since shutting the News of the World has changed the basis upon which Mr Hunt”s previous decisions were made.

A source close to News Corporation told Channel 4 News tonight that the news of the world decision was “genuinely not a cynical move to get the deal through” while at the same time asserting that it should, however, work in Mr Murdoch’s favour because it meant he now had less control of Britain’s media than before.

“This is about the News of the World and the damage that’s been done to it. It’s about moving forward and getting to the bottom of what’s happened in the past.”

‘Fit and proper’

Mr Hunt was already expecting to take until September to go through the 100,000 plus responses he received to the latest consultation on the News Corp takeover which closes at noon on Friday.

But now that time-frame looks certain to be prolonged further still – if not thrown off course altogether.

One source at one of the investment banks advising on the deal said that, in theory, closing the tarnished newspaper should take away some of the uncertainty surrounding the deal. But he also said that James Murdoch’s admission that he had made a mistake by authorising out-of-court payments to hacking victims, could also destabilise it.

That’s because the media regulator Ofcom is duty bound to decide whether all holders of UK television licences are “fit and proper” individuals. So if James Murdoch is found to be complicit in any of the hacking scandals – that could spark an Ofcom investigation which could, in turn, derail the deal.

There is still much that is unknown tonight. But one thing is clear. If Rupert Murdoch believed that killing off the News of the World would draw a line under the scandal, save his reputation and his coveted BSkyB deal, then that tactic appears to have backfired.

It will also irk regulators and Jeremy Hunt alike to learn that he is planning to launch a Sunday version of the Sun newspaper, which News Corporation does not deny. So any credit he hoped to gain by axeing the News of the World, would be destroyed in an instant.