Murdoch BSkyB takeover gets closer
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 £12.3 billion, was rejected for being too low.
The two sides agreed to postpone setting a price until the regulatory hurdles have been overcome, but The 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.
Media watchdog Ofcom, which had submitted a critical report on News Corp's original takeover plans, said it was pleased News Corp had agreed to "place editorial independence and integrity at the heart" of the spun-off Sky News and "underpin this with arrangements that secure full independent governance".
In a statement to MPs, Mr Hunt 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."
Mr Hunt said he had sought and published independent advice, which he had then followed, and told MPs: "The result is that, if this deal goes ahead, Sky News will be able to continue its high-quality output with greater protections for its operational and editorial independence than exist today. For those who have concerns about plurality of news provision I hope this will be a welcome step forward."
Mr Hunt continued: "For the first time the requirement for the company to adhere to Ofcom's Broadcasting Code would be enshrined in the new company's articles of association." He added that that meant Sky News' editorial independence would be better protected than it is right now.