News Corp’s Sky takeover bid goes to the European Commission
News Corporation has officially notified the European Commission that it intends to make a takeover bid for BSkyB.
The Commission will have until 8th December to conduct an initial investigation of the deal on competition grounds before deciding whether to launch a full phase two investigation, which could take up to 125 working days.
James Murdoch’s move has certainly put an end to speculation that News Corp may walk away from the deal, which has sparked controversy among media businesses and politicians alike.
In August, the proposed takeover came under scrutiny at the MediaGuardian International Television Festival, with culture secretary Jeremy Hunt strategically ducking any questions relating to Rupert Murdoch’s plans. Meanwhile, John Mayer said: “There is a reason why competition laws don’t apply to Sky. It is wrong for Murdoch to have a dominating position in the TV market… he is too close to politicians.” Mayer also pointed out that this kind of takeover would not be allowed in the USA or Australia.
Claire Enders is also against the deal, saying: “[News Corp] will have a force de frappe which none of their competitors can match, while the BBC’s income will be negotiated downwards.”
Enders analysis shows that News Int’s four newspapers currently control 37.3% of the UK press market, while Sky holds 80% of the pay TV market and 16% of television advertising. In September, Enders warned that if the deal goes ahead, News International newspapers and BSkyB channels will merge in to one stream of fact and opinion – therefore dominating the news agenda.
Business secretary Vince Cable now has the potential to block the deal on public interest grounds, though this seems unlikely after Hunt’s comments at the television festival. When asked whether the government was concerned about News Corp’s intention to buy out the remaining shares of Sky, Hunt simply said: “We have rules in place and there is no need to change them.”
However, officially Cable will be allowed to intervene to protect “media plurality”. His office said he will decide within the next two weeks. If Cable does step in, which he will be pressured to do by many in the industry, it is likely that he will refer the issue to media regulator Ofcom. Guardian News and Media, DMGT, the BBC and Telegraph Media Group have all asked Cable to investigate the proposed deal.
In a recent Newsline column, Raymond Snoddy said there was little substance in the latest “witch-hunt” against Murdoch. “The main attack is on the grounds of that plurality of media voice would be threatened if the deal went through,” he said. “Yet all those media rivals have been united for years in saying – correctly – that Murdoch has always acted as if he already owned all of Sky. So it’s difficult to see what would change in terms of plurality if Murdoch actually got the lot.
“The really substantial argument, and it is one that will inevitably be considered by the competition authorities because of the size of the deal, is that full ownership of BSkyB will give Murdoch direct control of too much money.
“Overall, the Murdoch BSkyB issue smells like a normal business deal rather than a particularly fiendish plot to take over the media world – again. Indeed if he wasn’t trying it would be firm evidence that Murdoch was finally losing his marbles.”
News Corp offered to pay 700p a share fo the remaining 61% Sky stake in June, but the board is hoping for an increase. However, both parties have delayed negotiations until News Corp gets regulatory clearance.