Saturday 27 May 2017

Murdoch hopes to ride out the storm in his bid for BSkyB deal

Takeover inquiry could last a year after News Corp changes tactics

Katherine Rushton in London

RUPERT Murdoch's News Corp sought to delay its proposed takeover of BSkyB yesterday in an apparent attempt to wait for public anger over the phone hacking scandal to subside.

Jeremy Hunt, Britain's culture secretary, wrote to Ofcom, the media regulator, and the Office of Fair Trading to ask whether the failure of News International, News Corp's British newspaper arm, to properly manage the 'News of the World' could mean the takeover should be blocked.

Hours later, News Corp withdrew its proposal to spin off Sky News as a financially and editorially independent unit, which would have got the merger cleared by regulators, effectively forcing Mr Hunt to refer the bid to the Competition Commission.

This will result in a lengthy inquiry that analysts believe could last up to a year.

Observers believe News Corp is hoping that outrage at the hacking scandal will dwindle over this time, and regulators will be left to focus only on whether the takeover would damage media competition.

BSkyB's share price, which had already plummeted last week, fell 7.3pc to below £7 in early trading, putting it at the level it was before News Corp's proposed bid and wiping more than £877m (€992m) off the broadcaster's value.

The price rose again after News Corp's announcement to Mr Hunt, but shares closed 4.6pc down at 715.5p.

Concerns

News Corp took a bigger battering, amid escalating concerns about the company's reputation. Its share price fell 7.16pc to $15.55 during afternoon trading in New York, where it is listed.

Mr Murdoch's hopes to merge News Corp with BSkyB looked increasingly distant last week. Ofcom emerged as a serious threat to the deal when it reminded BSkyB that it could withdraw its broadcasting licence at any time, if it did not judge its key shareholders or directors to be "fit and proper".

Ed Richards, Ofcom's chief executive wrote to John Whittingdale, chairman of the Commons select committee for culture, media and sport, explaining that the "fit and proper" test could look at any evidence it judged relevant, not just criminal convictions.

But the regulator is likely to take a back seat now that the Competition Commission is in charge of the investigation.

News Corp, which owns 39pc of BSkyB, reiterated its belief that the deal should be assessed on the matter of media plurality, not political issues.

"News Corp continues to believe that, taking into account the only relevant legal test, its proposed acquisition will not lead to there being insufficient plurality in news provision in the UK," it said.

Meanwhile, there was speculation that MR Murdoch could exit Britain altogether.

Speculation was rife last night that the News Corp media empire might seek to sell off News International to protect the rest of its business from the fallout of the hacking scandal.

The News Corp board in New York is likely to face questions from shareholders on the business case for retaining the News International stable of mostly loss-making titles.

Pressure increased yesterday with news that a group of American institutional investors had brought new charges against the company over the phone-hacking affair. The investors, accused News Corp of "rampant nepotism and failed corporate governance".

Beyond Mr Murdoch himself, News International has few friends at News Corp in the US. (©Daily Telegraph, London)

Irish Independent

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