Britain 'to delay decision' on News Corp./BSkyB deal

7th July 2011, Comments 0 comments

The British government could delay a decision on Rupert Murdoch's bid for pay-TV giant BSkyB until September, reports said Thursday, after the deal came under pressure over a phone hacking scandal.

In a dramatic twist, Rupert Murdoch's son James, chairman of News International, said he would close the Sunday tabloid newspaper at the centre of the hacking allegations, the News of the World. The final edition will be this week.

It was not immediately clear whether the move to shut the 168-year-old title, which dominates the Sunday newspaper market, was an attempt to smooth the way towards government approval of the BSkyB deal.

Unsourced reports earlier on the Murdoch-owned Sky News channel and in the Financial Times said the government had decided on the pause after a slew of revelations of hacking at the News of the World.

Before the latest allegations on the hacking broke, News Corp. last week moved closer to controlling BSkyB when the government said its plans to spin off Sky News into a new company allayed fears that Murdoch would gain too much power in the British media.

As the furore grew, however, Culture and Media Minister Jeremy Hunt decided to extend consultations until this Friday to strengthen state proposals aimed at resolving competition issues.

A final, positive decision was broadly expected next week.

But the latest revelations that a private investigator working for the News of the World hacked the voicemail of a teenage murder victim has forced a rethink, the unsourced reports said.

In an announcement which rocked the British media world, James Murdoch said Thursday he had no choice but to close the newspaper because the alleged hacking, if proved, had been "inhuman."

British media watchdog Ofcom, which is advising Hunt on the takeover, said on Wednesday it was "closely monitoring" the hacking allegations, adding that it had a duty to probe whether broadcasters were "fit and proper."

The reports Thursday agreed that Hunt would now delay his decision until September.

News Corp. is bidding to buy the 61 percent of BSkyB which it does not already own. BSkyB is powerful media player which holds most of the rights to English Premier League football.

The government has been flooded with more than 100,000 submissions from the public about the proposed deal this week. Protest group Avaaz said 135,000 of its members had written to Hunt to oppose the deal.

One analyst said News Corp. now had no choice but to put its bid on hold.

"The fallout from the News of the World phone hacking scandal has raised fears about the likelihood that News Corp. will be reluctant to finalise its prospective takeover of BSkyB, sending the shares lower," said Michael Hewson at trading group CMC Markets.

The government is facing calls to delay its ruling on the bid after it emerged that private investigator Glenn Mulcaire hacked the voicemail of 13-year-old teenager Milly Dowler, who was later found murdered.

Messages had been deleted, potentially hampering the police investigation.

A slew of allegations followed, including that the News of the World tried to access the phones of dead soldiers' family members and relatives of victims of the 2005 London bombings.

The main opposition Labour leader Ed Miliband said he was "disgusted" by the fresh allegations, one day after he urged the Conservative-Liberal Democrat coalition government to delay its decision on the BSkyB deal and refer it to competition authorities.

The Daily Telegraph newspaper, one of many British media outlets fiercely opposed to the deal, called Thursday for News Corp. to "put its BSkyB bid on hold" while the hacking scandal is investigated.

Prime Minister David Cameron called for a public inquiry into the phone hacking but insisted Wednesday that he would not intervene in the government's deliberations over the News Corp. bid for BSkyB.

He said it was "quite right" that Hunt "carries out his role in that manner without any interference from anyone else in the government."

The scandal hit BSkyB shares, which sank 1.88 percent on Thursday while the the FTSE 100 index of leading companies rose 0.86 percent.

News International is the British division of News Corp. and its stable of newspapers also includes The Sun, The Times and The Sunday Times.

© 2011 AFP

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