News Corp warns Cable over Sky deal

Steve Dinneen
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NEWS Corp’s European boss James Murdoch has called on regulators to back his firm’s £7.8bn bid for BSkyB or risk losing its investment in the “world leader” digital TV operation.

Business secretary Vince Cable has asked media regulator Ofcom to investigate whether the takeover would harm “media plurality”. The European Union could also launch a full competition probe.

Murdoch, who is also chairman of Sky but has agreed to remain absent from the bid, said: “While we do not think the grounds for a public interest or a plurality intervention are very strong, I do think that governments need to make some choices.”

He added: “From a policy perspective, the government needs to assess the benefits of having a digital TV business that is a world leader centred in the UK marketplace, with all of the things that it brings, versus potentially jeopardising an £8bn investment in the UK with a prolonged kind of plurality process.”

The approval processes could take until the middle of next year, during which time the market value of Sky is likely to grow as the UK’s leading pay-TV operator reaps the benefits of past investments.

News Corp, whose chief executive is James’s father Rupert, said in June it wanted to buy the 61 per cent of Sky it does not already own.

The two parties failed to agree on a price and have been seeking regulatory approval before further talks.

Commentators have suggested that News Corp could dispose of the loss-making Sky News TV channel to appease regulators.

But Murdoch said the possibility of making disposals to secure approval for the proposed deal had not been discussed. He said: “We are at a very early stage in this process, so it is dramatically premature to be commenting on theories that have not even surfaced yet.”

Sky’s independent directors have said they would be prepared to support a bid of above 800p a share from News Corp, which has offered 700p per share, or a total of £7.8bn.
Sky chief executive Jeremy Darroch said he expects the firm’s profit margins to increase in coming months.