Britain refers BSkyB deal after concessions withdrawn

11th July 2011, Comments 0 comments

The British government Monday referred a bid by Rupert Murdoch's News Corporation for BSkyB to competition authorities after the media giant withdrew concessions it had offered to push through the deal.

The government had indicated it would approve News Corp.'s bid for the 61 percent of satellite broadcaster BSkyB that it did not already own, after News Corp. agreed to hive off the Sky News channel to assuage competition concerns.

But ministers had come under sustained political pressure in recent days to block the bid because of the phone-hacking scandal at the Murdoch-owned News of the World, which caused the tabloid to close at the weekend.

Minutes before Culture Secretary Jeremy Hunt was due to update the House of Commons on the affair, News Corp. announced it was withdrawing its concessions and saying it was willing to engage with the Competition Commission.

"News Corporation today announces that it is withdrawing its proposed undertakings in lieu of reference to the Competition Commission with respect to its proposed acquisition of BSkyB," the group said in a statement.

"Should Jeremy Hunt decide on this basis to refer the proposed transaction to the Competition Commission for a detailed review, News Corporation is ready to engage with the Competition Commission on substance.

"News Corporation 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."

When Hunt stood up shortly afterwards in the House of Commons, he responded decisively.

"As a result of News Corporation's announcement this afternoon I am now going to refer this to the Competition Commission with immediate effect and will be writing to them this afternoon," Hunt said.

He added: "It will mean that the Competition Commission will be able to give further full and exhaustive consideration of this merger, taking into account all relevant recent developments."

Earlier, Conservative Prime Minister David Cameron rebuked News Corp. for the first time over the phone hacking row on Monday.

"If I was running that company right now, with all of the problems and the difficulties and the mess, frankly, that there is, I think they should be focused on clearing those up rather than on the next corporate move," he said.

But he insisted: "What government has to do is follow all the correct procedures and processes, and that is exactly what we will do."

Cameron's deputy, Liberal Democrat leader Nick Clegg, also turned up the heat after a meeting on Monday morning with the family of a murdered schoolgirl whose voicemail was believed to have been hacked by the News of the World.

Shares in BSkyB plunged on Monday as low as 669 pence, from 750 pence at the close on Friday, a drop of 10.8 percent. However, it recovered slightly on Monday to finish at 715.50 pence, down 4.60 percent.

The satellite broadcaster, which has a portfolio including live English Premier League football and blockbuster films, is holding out for more than the £7.8 billion ($12.5 billion, 8.6 billion euros) offered by News Corp. last year.

It wants an offer in excess of 800 pence a share, but the share price has dived by about 15 percent in just one week, knocking about £2.5 billion off the group's value.

© 2011 AFP

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