RUPERT Murdoch's £8 billion bid to take over BSkyB could become the latest victim of the phone hacking scandal after UK ministers referred the deal to regulators yesterday.
The Competition Commission will now be asked to adjudicate on the potentially lucrative deal. At the very least, any decision will be delayed until at least next year, ministers confirmed.
BSkyB shares plummeted by almost 11% yesterday as the crisis surrounding the Murdoch empire deepened.
Following the closure of the News of the World over revelations it had hacked into the phones of murder victim Milly Dowler and the families of soldiers killed in Afghanistan and Iraq, fresh allegations yesterday called into question tactics at some of the paper’s sister titles.
Deputy Prime Minister Nick Clegg led a number of LibDems and Tory backbenchers who called for Mr Murdoch to do the “decent thing” and reconsider his bid for full control of BSkyB, of which he currently owns 39%.
Prime Minister David Cameron also effectively urged that the bid be suspended in the wake of the most recent allegations, saying: “I would be focused on clearing up the mess that there is in News International with all those problems that are coming out. Deal with that before you move on to working out which merger and which takeover and how many shares and all the rest of it.”
MPs also questioned whether Mr Murdoch’s News Corp organisation, the parent company of News International, was a “fit and proper” holder of a broadcasting licence in the light of recent allegations.
Culture Minister Jeremy Hunt had previously decided not to send the deal to the Competition Commission, but reversed his position yesterday after News Corp withdrew an undertaking to spin off one central part of the business -- Sky News.
Mr Hunt told MPs the Competition Commission would be able to consider “all relevant recent developments” in evaluating the proposed merger. He also said he had written to Ofcom, the broadcasting regulator, to ask whether News Corp would still be considered a “fit and proper” owner if recent allegations were proven.
Last year a number of media organisations wrote to the Coalition Government warning that allowing the BSkyB takeover to go ahead would damage media plurality and make the Murdoch empire too powerful.
There was also an outcry when Business Secretary Vince Cable was secretly taped telling two undercover reporters in his constituency office that he had declared “war” on the Murdoch stable. That led to Mr Cable being stripped of responsibility for any decision on the deal, which was passed to Mr Hunt. BSkyB is thought to produce profits of around £1bn a year. However, analysts believe the market for the broadcaster, which offers films and sports channels as well as pay-per-view events, is set to grow, meaning that profits could expand enormously over the next decade.
There were reports yesterday that Mr Murdoch, in London for crisis talks with News International chief executive Rebekah Brooks and the company’s chairman, his son, James, was considering selling off the entire UK newspaper arm of the business in order to keep the BSkyB bid on track.
Claims have been made that if the deal was allowed to go ahead the Murdoch empire would have a combined turnover of £7.5bn a year compared with the BBC’s £4.8bn.
However, concerns about media plurality are thought to have been reduced after the decision last week to close the largest selling Sunday newspaper in the country dramatically cut News Inter-national’s market share.
Mr Hunt has stressed that he is required to act in a “quasi judicial capacity” over the issue and that he could be open to legal challenge for making overtly political decisions about the business deal.
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