NEWS Corp bosses yesterday feared they may be forced to delay the firm’s multi billion pound bid for BSkyB, as the toxic political and commercial fallout of the phone hacking scandal continued to gather pace.
Bankers close to the deal told City A.M. that negotiations have ground to a halt while both sides consider the effects the ongoing scandal could have on the proposed takeover. Even if the bid is waved through by the government as expected, an offer could be pushed back by weeks.
Shares in Sky tumbled more than two per cent as investors worried that the long mooted takeover – and the juicy premium it carries – could now be in jeopardy. News Corp also plummeted 3.24 per cent on the Nasdaq as more blue-chip companies axed their adverts in the News of the World.
Police are understood to be just days from arresting a number of News of the World journalists and executives.
Despite public outcry over revelations the newspaper sanctioned the hacking of phones belonging to murder victims and those killed in the 7/7 bombings, as well as a string of celebrities, Jeremy Hunt is expected to give the bid the green light. The culture secretary says he is bound by law to examine only whether media plurality would be adversely affected by the bid.
Ofcom is also unlikely to step in at this stage with a “fit and proper” ownership review, despite David Cameron suggesting this was a possibility. However, the watchdog could still play an important role in the takeover saga by triggering a review should News Corp press ahead with a formal offer.
Cameron yesterday backed an independent inquiry into the revelations of widespread hacking at the UK’s biggest Sunday newspaper. His calls came amid fresh allegations the News of the World paid tens of thousands of pounds to police officers for information, with suggestions then-editor and former Downing Street spin doctor Andy Coulson authorised the payments. The spotlight is also on police chiefs, who have had access to documents created by Glenn Mulcaire, the jailed private investigator who worked for the News of the World, but have only now contacted some victims.
News Corp boss Rupert Murdoch yesterday took the unprecedented step of publicly backing Rebekah Brooks, chief executive of the newspaper’s parent company News International, who was editor during many of the instances of hacking. He branded the paper’s behaviour “deplorable and unacceptable” but said Brooks is still the right person to lead the group.
Publisher Trinity Mirror yesterday saw its shares jump 17 per cent on hopes it could land adverts axed from its rival.