TYCOON ABANDONS SKY BID – FOR NOW
RUPERT Murdoch’s bid for BSkyB came crashing to earth yesterday after News Corp caved in to intense political pressure and ended its pursuit of the broadcaster.
The shock decision marks Murdoch’s darkest day in his 42 years in the British media industry.
News Corp acknowledged that proceeding with its much maligned attempt to buy the 61 per cent of BSkyB it doesn’t already own would prove “too difficult” in the firestorm political climate.
In typical show-stealing fashion, Murdoch pulled the bid just hours before MPs were due to vote on a motion opposing it.
The vote went ahead regardless – passing with no opposition – after a long debate in which Gordon Brown made his first major speech in the Commons since stepping down as Labour leader.
In a rare show of unity, David Cameron branded News International’s actions a “disgrace” and set in motion a wide-ranging inquiry into the press, to be led by Lord Justice Leveson.
Ed Miliband, the Labour leader, said the day’s events were “a victory for people up and down this country who have been appalled by the revelations… and the failure of News International to take responsibility.”
Murdoch is now left to count the cost of the failed bid. He is already liable for a £38.5m break fee, to be paid to Sky, after withdrawing the bid and is disallowed from making a new approach for at least six months.
News Corp shares gained 3.78 per cent yesterday to close at $15.93, recouping some of the $6bn (£3.75bn) it has seen wiped from its market value since the latest wave of revelations hit the firm last week.
BSkyB closed at 705p, after fluctuating wildly during the day. Before the announcement, the stock hit a low of 665p, on a day when more than 27m shares changed hands – nine times the average trading volume. Even with yesterday’s late gain, Sky has seen more than £2.5bn wiped from its value.
Other losers from the biggest M&A collapse of the year include Sky advisers Morgan Stanley, UBS and Bank of America Merrill Lynch, and News Corp’s banks Deutsche Bank and JP Morgan, who were poised to collect a combined $90m in advisory fees upon completion of the transaction.
Meanwhile, Murdoch now faces a gathering storm across the pond in the US, where two senators have called on the Justice Department to investigate whether News Corp has broken any US laws.