Murdoch's takeover of BSkyB gets green light
The controversial takeover of BSkyB by Rupert Murdoch's News Corporation has moved a step closer after the Government backed proposals from the media giant to spin off Sky News as a condition of any deal.
Culture Secretary Jeremy Hunt said he was minded to wave through the proposed takeover after News Corp revealed its intention to hive off the news channel into a new independent company in which it would retain a 39% stake. It has also pledged to fund the channel for 10 years.
The move comes as News Corp seeks to avoid a full-blown inquiry into its plans to buy the 61% of BSkyB it does not already own after Mr Hunt said last month he planned to refer the deal to the Competition Commission.
The undertakings are subject to a 15-day consultation period but an alliance of media groups attacked the proposal as "pure window-dressing" and said it would examine all legal options in relation to the plan.
News Corp has yet to agree a takeover price with BSkyB after its initial 700p-a-share bid, which valued the business at £12.3bn, was rejected for being too low.
The two sides agreed to postpone setting a price until the regulatory hurdles have been overcome, but yesterday's Financial Times said the price that News Corp is willing to pay is likely to be much lower than the 900p a share that many BSkyB investors are said to be expecting.
Mr Hunt, who took his decision following advice from regulators, said he was "very aware" of the controversy surrounding the deal but the remedies would address concerns about media plurality, should the takeover go ahead.
He said: "The undertakings offered would ensure that shareholdings in Sky News would remain unchanged, and indeed offer it more independence from News Corporation than it currently has.
"Nothing is more precious to me than the free and independent press for which this country is famous the world over."
Media watchdog Ofcom, which had submitted a critical report on News Corp's original takeover plans, said it supported the new proposals.
The announcement was slammed as a "whitewash" by an alliance of media groups, which includes BT, Guardian Media Group, Associated Newspapers, Trinity Mirror, Northcliffe Media and Telegraph Media Group.