NEWS CORP’S buyout of BSkyB is set to be given the go-ahead this morning after it agreed to spin off the loss-making Sky News Channel, thereby avoiding a lengthy Competition Commission investigation.
News Corp is expected to retain its current 39.1 per cent minority holding in Sky News while buying out 100 per cent of the rest of BSkyB. Sky News, will remain BSkyB’s only 24-hour news provider, but will be run by independent directors and have an independent editorial board.
In what is being dubbed “a dowry” News Corp will provide an annual subsidy of around £30m – the amount the channel is believed to lose each year – as well as provide an upfront lump sum.
The concession by News Corp will enable it to proceed with its bid for the 60.9 per cent of shares in BSkyB that it does not already own.
Culture secretary Jeremy Hunt is now expected to put the restructuring proposal out to a two-week public consultation. Assuming its success News Corp will then need to win the approval of BSkyB’s board for the takeover.
Broking firm Jefferies said it expects takeover discussions to begin at 800p with a deal likely to be done at 850p a share, a significant uplift on the
700p News Corp originally offered last June. Some BSkyB shareholders are said to be pushing for a price closer to 900p a share.
BSkyB’s senior independent director Nicholas Ferguson has made it
clear to investors he will be a tough negotiator.
Yesterday a spokesman for an alliance of media companies opposed to the takeover, including Associated Newspapers and Trinity Mirror, said leaving Sky News dependent on News Corp for funding was not “true independence”. “Smoke and mirrors will not deal with the plurality concerns expressed by so many. We will oppose any unsatisfactory arrangement, and consider all legal avenues available to us,” he added.