News Corp could bring legal action against Cable

NEWS Corp was last night taking legal advice on whether to challenge Vince Cable’s decision to refer its bid for BSkyB to the media watchdog.

Cable asked Ofcom to examine the deal on the grounds of public interest on 4 November – less than 24 hours after News Corp notified the European Commission of its intention to acquire BSkyB.
Sources said the firm was “reviewing the situation” and “taking advice” from several parties, including its lawyers.

A source close to News Corp said: “We’ve now gone down a line that has been initiated by someone who isn’t impartial. We can’t help but feel the whole process has been biased from the start.”

News Corp insiders point out that Cable used the past tense when he told undercover reporters he was trying to scupper the deal. “I have blocked it using the powers that I have got and they are legal powers that I have got,” he said.

The timing of Cable’s claims could not have been more ironic. They came just hours after the European Commission gave the green light to News Corp’s bid for BSkyB.

Joaquin Almunia, the commissioner leading the investigation into the proposed takeover, said he was “confident” that it would not weaken competition in the UK.

However, the EC was only examining the deal on relatively narrow competition grounds.

Culture secretary Jeremy Hunt, who has been handed responsibility for overseeing the deal, must now decide whether the takeover would damage media plurality in the UK, a much trickier and politically sensitive question.

Almunia said he was waving the deal through because News Corp and BSkyB were active in different UK markets and competed with one another only to a “limited extent”.

News Corp owns News International, the UK’s largest publisher of national newspapers, and 39.1 per cent of BSkyB, the biggest broadcaster by revenue in the UK, with 10m subscribers.

Last month News Corp offered 700p-a-share for the 60 per cent of BSkyB it does not already own. The offer was dismissed as too low by BSkyB, which said it would consider offers in the region of 800p-a-share. Both sides agreed to clear regulatory hurdles before negotiating over price.

Ofcom, which is examining whether the deal would hurt media plurality in the UK, has already signalled that the case “raises potentially material public interest issues”.

If News Corp and BSkyB fail to resolve those issues before a deadline of 31 December, Ofcom is likely to refer the matter to the Competition Commission (CC).

BSkyB is already under investigation by the CC due to its dominant position in the premium TV movies market. In a bad sign for the satellite giant, Almunia said his probe had “revealed strong concerns over BSkyB’s exclusive deals for premium movies with all six Hollywood [studios]”.