The U.K. intends to refer News Corp.'s proposed £8.3 billion bid to take full control of British Sky Broadcasting to the Competition Commission but has delayed the decision until receiving further advice from regulators.
Jeremy Hunt, culture secretary, "intends to refer" News Corp.'s ( NWS) proposed £8.3 billion bid to take full control of British Sky Broadcasting, the pay-TV group, to the Competition Commission but has delayed his decision until receiving further advice from regulators. However, he has indicated that News Corp. could still change his mind and avoid a referral if it improves an offer to divest Sky News, BSkyB's news channel, in some form. Hunt said in a statement issued before markets opened on Tuesday that he was minded to accept a recommendation by Ofcom, the media watchdog, to refer the proposed bid for a detailed study by the Competition Commission, even after News Corp. offered to give up control of Sky News The culture secretary also published Ofcom's original report on the proposed bid, confirming reports in the Financial Times that it strongly recommended referral to the commission because of a threat to media diversity. Ofcom said the merged News Corp/BSkyB "may be expected to operate against the public interest since there may not be a sufficient plurality of persons with control of media enterprises providing news and current affairs to UK-wide crossmedia audiences". There have been two meetings between the secretary of state and News Corp., Hunt said. "As a result of these meetings and my consideration of the Ofcom report and subsequent submissions from the parties involved, I still intend to refer the merger to the Competition Commission. On the evidence available, I consider that it may be the case that the merger may operate against the public interest in media plurality." But the culture secretary leaves the door open for News Corp. to make further undertakings, which the Office of Fair Trading and Ofcom will study and report back to him with recommendations. Hunt also published a response from both companies. News Corp. made it clear that it felt it had been treated unfairly and that it believed Ofcom's report was flawed on at least seven grounds. In a 216-page submission, Rupert Murdoch's media group said: "Up to now News has been subject to an administrative review process which was seriously flawed: the initial decision to intervene in relation to this transaction on the basis of a public interest concern was taken by a secretary of state for business, innovation and skills who was biased against the interests of News and its shareholders." This is a reference to Vince Cable, who originally commissioned Ofcom to report but who in December was stripped of his powers after undercover reporters recorded him saying he had "declared war on Rupert Murdoch" over the bid. The response from BSkyB accuses Ofcom of "subtly recast ing the statutory formulation of the 'media plurality' test, with the result that it has approached in a distorted manner the questions which it should have answered". It adds: "Perhaps in consequence, Ofcom has given undue weight to particular pieces of evidence, and has discounted other relevant evidence".