City analysts think News Corp could be forced to pay up to £10.2bn ($16.2bn) for the 61% of BSkyB it doesn’t own. Sky’s shares rose by 11% after announcing strong first-half results this morning. Pre-tax profits at BSkyB rose to £467m in the last six months of 2010, with revenues up 15% to £3.2bn. Rupert Murdoch has flown into London to personally oversee negotiations with the British government. City analysts predict that, with results as good as these, the longer the deal is delayed, the more BSkyB’s share price will rise – and the more News Corp will be forced to pay. Its offer of 700p per share, valuing the deal at £7.5bn, has already been rejected. News Corp is sitting on a £5.42 billion cash pile. The pressure will be on to close the deal before News Corp shareholders question whether the company can really afford it. RBS, the City investment bank, tells me it expects the Sky deal will go through before June. “News Corp wants the deal to close asap and will work with the regulator to achieve that,” says Paul Richards, director of equity research at Numis.
Murdoch’s arrival comes during a week when his News Corporation has become the news, rather than reporting on it. First, there’s UK culture secretary Jeremy Hunt giving the Murdochs more time to come up with ways to reduce News Corp’s media influence if he allows the deal to go through. Hunt said he is minded to refer the proposed BSkyB deal to the Competition Commission if News Corp can’t come up with anything new. Second, there’s the ever-deepening phone hacking scandal at tabloid The News of the World – this morning it was revealed that a reporter had been listening to the voicemail of Sienna Miller’s mother-in-law only last year, despite News Corp swearing it had stamped phone hacking out. News International, the newspaper arm, is desperately trying to cut out any bad apples there. A news editor was fired on Wednesday. And two soccer TV pundits have lost their jobs from Sky’s sports channel for making sexist comments. Not the best of weeks for Rupe.
There’s another wrinkle too. News Corp has already offered to spin off Sky News to avoid a referral to the Competition Commission. Sky News loses £40m a year a year, which, on the face of it, doesn’t make it very attractive. However, I understand that News Corp would guarantee to buy Sky News’s output for at least 10 years. A guaranteed income steam would make Sky News very attractive for any buyer. The rub is that Hunt may insist News Corp spins off Sky News before the deal goes through. And BSkyB’s board will turn the screws on News Corp, extracting the best offer it can, as the price of its cooperation.
City and media analysts agree that it’s almost certain News Corp will now get approval to buy the 61% of BSkyB it doesn’t own. The deal would cement Rupert Murdoch’s position as the most powerful media magnate in the world. … Read More »
Jeremy Hunt, the UK culture secretary – and a man known to be sympathetic to the Murdoch media empire – will now decide whether News Corp’s £7.8 billion ($12.5 billion) takeover of BSkyB gets referred to the Competition Commission. … Read More »
News Corp has balked at selling off Sky News to satisfy Brussels. Despite that nose-thumbing, the European Commission has extended from December 8 to December 22 the deadline for the first phase of its competition investigation of Rupert Murdoch’s £12 billion ($19 billion) takeover of BSkyB. What Brussels is worried … Read More »
James Murdoch has warned the UK government that News Corp could move overseas if the regulator blocks its £7.8 billion ($12.5 billion) bid for BSkyB. News Corp’s European and Asian boss made the veiled threat talking to investment bank analysts in Barcelona. The government must decide whether it wants to risk “jeopardising an £8 billion investment in the UK” with a prolonged investigation, Murdoch said, noting that News Corp could relocate some of its most innovative projects to more “welcoming” countries if the UK blocks its bid for BSkyB. “From India to Italy and to Germany, countries are becoming more welcoming of investment and more welcoming of what we can bring,” Murdoch said. Read More »
Speaking in the House of Lords, the UK equivalent of the Senate, David Puttnam said that News Corp’s bid to take control of BSkyB posed a threat to democracy. Here are excerpts from the speech given by the one-time Columbia Pictures boss:
My Lords… I had the honour of entering your Lordships House thirteen years ago tomorrow. Since that time there have been three or four really big issues with which I’ve consistently tried to engage – in part because they relate to experiences gained in my former life, but also because I believe they represent the type of issues upon which rests the future of the type of society most of us would wish to live in… My Lords, the purpose of this afternoon’s debate is to draw attention to the possibility that we are on the edge of a very slippery slope – one that could find us falling further and further under the influence of a single, US-based owner, with a highly questionable interest in the benefits of a diverse and flourishing plural media here in the United Kingdom. So why this debate, and why now?
The primary reason My Lords is that News Corporation yesterday notified the European Commission of its intention to purchase the 61% of BSkyB that it does not presently own. As I’ve already mentioned, this morning we heard the welcome news that this proposal had been referred by the Secretary of State, to Ofcom. It’s my most sincere hope that the Coalition’s proposed ‘trimming’ of Ofcom’s powers will not result in any diminution of its capacity to exercise those powers in respect of important matters such as this.
There, are of course, a number of aspects to media plurality – notably the Government’s proposals to repeal the local “cross-media” ownership laws, but this afternoon I only have time to focus on the really big issue resulting from News Corporation’s power, reach and influence. It’s my contention that if regulators and legislators in Europe and the UK remain supine, and simply wave this proposed acquisition through, the consequences for the citizens, as well as the political class in this country could become deeply troubling. The purchase of these shares would give News Corporation an unprecedented level of control over the UK media, one that to my mind has the potential to be extremely damaging, not just in respect of media plurality, but to informed democratic debate as a whole.
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Rupert Murdoch took a swipe at rival media groups striving to block News Corp’s takeover of BSkyB and accused them of petty thinking. In what was billed as his first major speech in the UK since 1989, Murdoch tonight … Read More »