BBC BLOGS - Peston's Picks
IN ASSOCIATION WITH
« Previous | Main | Next »

Will News Corp's bid for Sky be blocked?

Robert Peston | 09:08 UK time, Tuesday, 12 October 2010

I wrote a few weeks ago that Vince Cable is minded to submit News Corp's planned takeover of BSkyB to Ofcom for review, on the basis that it would diminish so-called "plurality" in the British media (that's "choice" to you and me).

But the business secretary, who is not a political naïf, knows that such a reference to Ofcom would cause strains within the coalition - because before the general election, team Cameron assiduously courted Rupert and James Murdoch, News Corp's dynastic bosses, and won the endorsement for the Tories of News Corp's British newspapers (including the thumbs up that counts most, that of the Sun newspaper).

Which is why I was intrigued to learn that Mr Cable recently said to the bosses of other media groups - or so I am reliably told, by one of them - "give me a reason to refer the bid".

That, I suppose, could be seen either as showing that Mr Cable genuinely has an open mind about the merits of the takeover, and wants as much information as possible before making his formal decision.

Or, for those who believe in conspiracies, it might be seen as a plea to other media groups for political cover, so that as and when Mr Cable does refer the takeover, he's able to say to the prime minister words to the effect of "sorry old chap, I had no choice, look at the pressure on me from the rest of the media industry".

Certainly the unprecedented alliance of the Telegraph Group, Daily Mail and General Trust (DMGT), Trinity Mirror, Guardian Media Group, the BBC, Channel 4 and BT creates an interesting conundrum for Mr Cameron, if he sees it purely in respect of low and dirty party politics (which I'm sure he won't).

Whose wrath does Mr Cameron most fear - the ire of Tory-supporting News Corp titles, or the wrath of the Telegraph and Mail papers, which also backed the Conservatives?

That said, for me, it's the economic implications of the outbreak of peace between these disparate media groups that is most fascinating.

Because their argument against the takeover by News Corp of Sky is not just about a reduction in plurality, a potential diminution in the number of voices in the media industry.

They are also arguing that News Corp with full control of Sky could become a dominant force in a competition sense, especially in news.

The background to all of this is the belated but rapid convergence of television, print and online news - all of which are coalescing around digital, online delivery. The black rectangular symbol of this coalescence is the iPad and its fast-multiplying tablet imitators.

What the Telegraph and DMGT, in particular, have noticed is that only a combined News Corp and Sky have all the bits: the TV, the online, the print.

What's more, Sky is poised to generate mind-boggling quantities of cash, according to analysts, which could be used to invest in the digitally converged delivery of news, at a time when most other news groups remain seriously strapped for cash.

In other words, News Corp is likely to have to fight two very tough and separate regulatory battles to secure Sky, as and when it formally notifies the authorities of its formal intention to bid.

First, it will have to make its case to Ofcom that the deal won't dangerously reduce plurality.

Second, its hope that it would easily win the competition arguments, as and when the Brussels competition authorities start to investigate, well, that hope may well be dashed. There must even be some prospect that aspects of the competition case could be repatriated to the UK, for scrutiny by the domestic competition authorities.

Perhaps the biggest problem for News Corp is that there is a clamour of voices shouting that the deal must be blocked, but very little public argument in favour of the takeover.

It would have helped News Corp's cause if British Sky Broadcasting and its respected chief executive, Jeremy Darroch, could stand up in public and argue the merits of combining his company with News Corp.

But he can't do that, because News Corp refused to pay the £8 per share price demanded by Sky's independent directors. Unless and until News Corp and Sky reach a concord on the price of the takeover, Mr Darroch and his colleagues cannot campaign for the takeover.

All of which, for the first time, makes me think that there is a chance that - after all the noise has subsided and the dust has settled - News Corp's ambition to raise its holding in Sky from 39% to 100% may yet be frustrated.

Comments

  • Comment number 1.

    Sky is regarded as a news corp outlet anyway, and it's not like there's any conflict in their outputs.

    The only people affected by this are the government and the other big media outlets.

    For the man in the street it's an irrelevance.

  • Comment number 2.

    I thought Goldfinger, was only Flemings imagination. But are erstwhile Aussie friend looks like he is trying to rule the world. Do we still believe that we live in a democracy, when one man is so powerful.

  • Comment number 3.

    I respect Vince very highly, so hopefully he makes the right decision.

  • Comment number 4.

    If I remember rightly the first newspaper interview Cameron did after the election was in the The Sun, and the first official visitors to no.10, invited by Samantha Cameron, were a group of Sun readers. It is quite appalling how cap-in-hand some of our politicians have become to the press. Whatever happened to principles of fairness and neutrality? If the newspaper owners have that much power then the owners should not be able to own such vast media empires. Now THATs a law that would receive a lot a press criticism, but it would be a law that would be in the best interests of the country - please be brave politicians and do the right thing!

  • Comment number 5.

    Now if NewsCorp acquires Sky, and triples the cost of watching footy...then there WOULD be some serious interest.

    So it's just intellectchewalls wittering on about whether 40% or 100% of a company is going to makes a gnats kneecap of a difference to the level of control.

  • Comment number 6.

    I prey you're right but I fear the ruthlessness of Murdoch and the complete lack of understanding about anything from this government. I think we can guarantee that unless Europe can protect us our news and lives will be further distorted by this man who panders to our most basest instincts

  • Comment number 7.

    I agree that the deal should not be allowed to proceed but am not nearly as confident that Murdoch & Sons will not ultimately be succesful. You can not say this but I can - Mr Cameron (like Blair before him) is in Murdoch & Son's pocket.

    If any proof were needed look at how keen Mr Cameron is to hang on to Mr Coulson. If the Tory Press is so desperate to prevent Murdoch buyig Sky maybe they should focus a little more light on the phone hacking affair -there will be numerous opportunuities over coming weeks. In my opinion Mr Coulson has not revealed everything he knew about the use of phone hacking.

  • Comment number 8.

    Let us hope Robert is right and we are not witnessing the beginnings of Ming the Merciless media emperor. When oligarchs make government cower it is time to act.

  • Comment number 9.

    Dirty politics? I would think that Mr cameron is having a bit of small worry about what is happening around him.
    The partners in the house of commons and the press who "support" his party and those who don't getting into an alliance? All out of his spin doctors control, what will happen next?

    On the other hand will the public actually pay to get news from one and only one source? Will it be trusted? Are we in fact fed up of a reporter standing outside a gate waiting for anything to happen?

    Will I have to pay for any news in the future outside of the licence fee?

  • Comment number 10.

    Why is it in fiction that press barons are always conceited megalomaniacs?

  • Comment number 11.

    The last thing Britain needs is more trash from the likes of Rupert Murdoch and his little gang. We'd be mad to let this go through. Size taxes are the answer - hit him where it hurts him most (in the pocket).

  • Comment number 12.

    I thought that once you had 30% of a companies share capital then you had to make a full bid for the entire company, such is the level of 30% influence, never mind 40%.
    Maybe the original 60% issue gave Murdoch a bye.

    I predict that this will be the most seamless "takeover" in British corporate history, lol.

    If the takeover goes through on a Friday there won't be a single new phone number entered into a mobile phone or a single new email address put onto a computer on Monday because exactly the same employees will all be dealing with each other.

  • Comment number 13.

    So in essence you are telling us that the complaint is intended to stifle competition and limit the potential for innovation.

    With the monopolistic empires of old being outdone by the Murdoch machine, it is hardly surprising to see the BBC in the list of names complaining. Yet oddly without a Murdoch empire the BBC loses its favoured excuse for rabid expansion and indeed very existence.

    So are we to assume that if Murdoch establishes a news monopoly as the doom sayers and predictors of woe declare inevitable. That the BBC has then failed in its objectives and a media revolution complete with the burning of licence documents should commence.

  • Comment number 14.

    If you look at the horrendous effect News Corp's Fox News is having on the US political scene with it's utterly shameless, fact-free Republican bias you have to fear the effect of any increase in Murdoch's power to peddle his political agenda over here. Fox News is leading the uncritical US masses by the nose with blatant distortion and misinformation to destroy every attempt by Obama's administration to sort out the mess he's inherited. The fact that Fox News is succeeding in persuading a gullible public that the vested interests of big oil and media moguls are also in the best interests of Joe Public shows how dangerous News Corp is. Murdoch has way to much power as it is - he should not be allowed more.

  • Comment number 15.

    one hopes that given PANORAMA'S expose of the former conservative chairman last night that the government will not be part of Murdoch's march on media world domination, how much influence will the head of tory commuinications have have on the decisionIF SKY CORP TAKE IT OVER I'll cancel my sky sub and moved to freeview
    this man has enough influence over our government and media he needs his uk wings clipped the credibility of the coalition is at stake
    It is seriously on the wain so they could do weith doing the right thing

  • Comment number 16.

    If Mr Cable is inclined to try and do his job properly he might think that there is not enough competition in UK TV and broadcasting in comparison with e.g. the UK mobile telecommunications industry.

    If the Coalition govt really believes in competition then no doubt it will review competition issues in the UK public broadcasting industry and e.g. curtail the size of Murdoch's monopoly and rightsize the BBC and sell of part of the BBC at auction to the highest 'suitable' bidder (with the emphasis on 'suitable').

    I'd quite like to be watching 'Hawk Eye' reviewing the test cricket bowling on e.g. Channel 4 again ... without having to pay for it.

    There is otentially enough competition out there for the public not to have to pay anything at all, for most terrestial and satellite TV.

    If that means watching more commercials then so be it ... but Sky and the BBC are too big at the detriment of other broadcasters ... much more competition is needed and the UK consumer needs an enlarged and burgeoning Sky empire monopoly 'like a hole in the head'.

    The govt. raised a fortune in '3G' licences but the impact on '3G' on UK broadcasting, for the benefit of the consumer, has been limited ... by the lack of parallel competition in the broadcasting indsutry.

    Mr Cable will, I'm sure, ask 'Brussels' for permission to do something. Will the next phase be considering 'pan-european competition' ... which means there are potentially some new entrants to the UK broadcasting market?

  • Comment number 17.

    The more worrying aspect of this is of course that if it goes through then Murdoch will pressurise the Govt to cut back the BBC even further.

    Whilst I believe the BBC does need an overhaul particularly here in Scotland where it's generally thought of as the publicity wing of the Labour party any changes to its structure or output should be at the behest of its customer base and not the Govt nor its competitors.

  • Comment number 18.

    Murdoch has not got where he has today by being nice and friendly. If he wants complete control of Sky it's because he'll benefit. Ultimately it's about power but he'll get that power by hitting people in the pocket because that's when they take the most notice.

  • Comment number 19.

    so on one hand we have a supplier of news that offers and Im not being unkind here a biased political slant on things that we have no choice in paying for and then there is another that we have a choice in paying for that flip flops its bias to suit its purpose. Lump them in with the various purpose groups then I dont see what difference any of this will make as everything we see or read has some bias , free press died years ago, and if you try and report anything nowadays they will slap a national security notice on it or you will have a "sudden" heart attack

  • Comment number 20.

    At (9) Barry White writes 'will the public pay for news?'

    The point is that if they want the up-to-date films, the high class sport and similar offerings that Sky have been allowed to monopolise then they will happily pay for those - with which the news comes FOC. And the Murdoch, News Corp & Sky 'angles' and 'opinions' on the news which so worry those concerned about plurality. Look at Obama's comments about Fox News in the USA.

    Sky's massive cash pile is there because they are engaged in a cynical exerciose of raising their prices steadily and without justification knowing that the subscribers will hang in there, desperate to avoid upsetting their pub customers and their families at home who have become used to these channels being available. Only when they start to see cancelllations becoming significant will they start to ease back on the increases.

    The current exercise also encompasses the whole 'con' of high definition - move the items with most demand to HD channels (at no real extra cost to Sky) and demand a premium price. Watch all Sky's most popular offerings disappear from the basic channels in the next few months.

    As somebody who has to from time to time advise families with low incomes and serious debts I am horrified at the way in which Sky have escalated their prices - but for these families it is perhaps their only 'escape' from their troubles. None the less, it is a good target for them to economise on rather than necessities - though always unpopular!

  • Comment number 21.

    BBC should be paying special attention to Mr Murdoch and his News Corp, and the relationship with the current Conservative government.

    Who wants to pay for news when you can get high-quality, unbiased news for free.

    Im sure when the BBCs charter comes up for review we will all see just how much influence you can get in parliament for your $$$.



  • Comment number 22.

    The move to 100% ownership of Sky is more about the huge return on investment the Murdochs will gain from moving above their current ownership. Anyone who thinks that the Murdochs don't already have a huge controlling influence on Sky media is naive.

    The problem, rightly pointed out by Robert, is the future impact of 100% ownership by Murdoch on the future of media. With the inevitable convergence of media streams through technology, and changing trends in the way in which media is consumed, there will undoubtedly be casualties on the way. The real danger is that those casualties wont be suffered through the inability of some companies to facilitate development and change, but will be caused by the stranglehold of a NewsCorp TV, internet, and publication super-power. The crux of all this for me is who has the ability (and crucially impartiality) to govern the suitable framework to ensure this doesn't happen, whilst maintaining both freedom of expression, and of choice.

    My question is why wouldn't Ofcom evaluate any interest from NewsCorp for a Sky takeover anyway? Why does it have to be initiated by Government? The politics surrounding this is the sickening thing.

    I for one don't think a Government who was given a knee-up into power by the said corporation should have that say.

  • Comment number 23.

    If anyone wants further proof of the power of Murdoch & Son consider this - the BBC's Political Editor Nick Robinson has not done a single pieece on the Coulson affair or the influence of Murdoch.

    The poor man is quite simply frightened to express an opnion on the issue. And who can blame him. Anyone who attacks Murdoch & Son will never get a job with News International (so no hope of the big job at Sky or Fox) and is likely to find tabloids digging around in their personal life.

  • Comment number 24.

    Of course, if Britain had media ownership rules akin to the American rule that you have to be a naturalised citizen in order to own a broadcasting company, then things might be a little easier.

    Its about time we stood up to Murdoch and his continuous desire to interfere with the politics of major English speaking countries. His journalism is laughable at best, and corrupting at worst. We cannot be left in a situation where an Australian-American is trying to tell the British public what to think, how to think and when to think, else we end up with Glenn Beck on every Sky channel telling us that if we don't think like the far right Tea Party, we're all nazis.

  • Comment number 25.

    I think most people already consider Sky to be a Murdoch mouthpiece in any case, so I think this matters little.

    I also think it is becoming more and more difficult for media barons to control and influence new output as less and less people read newspapers, and more rely on the internet for news output

  • Comment number 26.

    @WrekinAir Sky TV is a luxury item and not for those who can't afford it. Whilst I agree, the constant escalation of prices is hard to justify, it is not an essential item to maintain a good standard of living.

  • Comment number 27.

    BSkyB's share price has hardly moved since the original announcement that News Corp wanted to acquire 100% ownership. That suggests investors still think it will happen. Any competition referral may place some restrictions on News Corp and/or require some divestments. It will not prevent them doing substantively what they want to do though. Is that good or bad? Only time will tell. The blog is correct, however, in pointing out just how much better placed News Corp/Sky is relative to other media groups both in its digital exposure already, and its ability to invest very heavily in future development in this area.

  • Comment number 28.

    Why does Vince feel that he has to be the one to refer Rupert Murdochs prospective takeover of BSB ?

    This is from the OFCOM guidelines (available on the OFCOM website)

    'Television Licensable Content Services
    Guidance notes for licence applicants


    Fair and effective competition

    75. Ofcom has a duty to ensure fair and effective competition in the provision of
    licensed services and services connected with them. Ofcom's general policy is to include in Broadcasting Act licences a condition requiring the licensee (a) not to enter into or maintain any arrangements or engage in any practices which are prejudicial to fair and effective competition in the provision of licensed services or connected services, (b) to comply with any code or guidance approved by Ofcom for the purpose of ensuring fair and effective competition in the provision of licensed services or connected services, and (c) to comply with any direction given by Ofcom for that purpose. Ofcom has adopted this general policy because of the merits of ex ante regulation in securing fair and effective competition.'

    They already have a duty and should be exercising it with or without the intervention of Vince Cable

    I think that they should allow his expensive takeover and then abolish OFCOM and its 'hanger on' quangos such as the Communications Consumers Panel and allow anybody to have a broadcast licence subject to simple rules regarding bandwidth etc.
    As far as content and advertising go, they could employ some of the people on DLA to sit at home and monitor all these channels with simple forfeit of licence for any infraction.

    The broadcast licence should be as cheap as possible, not the £2500 just for applying + £1000 p/a + share of the turnover.

    Murdoch should be allowed to broadcast whatever and wherever he likes, I still won't be buying it as the content that he produces is rubbish.

    If the barriers to entry in the broadcast market were removed we might see real quality independent output surface, obviously a lot more tosh will be available as well but at least there would be real choice, not the 'choice' between 2 or 3 broadcasters that we have now.

  • Comment number 29.

    Robert are you really surprised by Cables U-turn? In the last few moths he has changed his mind just about on everything. Oh well anything to stay in office!

    With the monopolistic empires of old being outdone by the Murdoch machine, it is hardly surprising to see the BBC in the list of names complaining.

    With a little over 39% Murdoch already effectively controls Sky - and Cameron will not bite the hand that got him into power

  • Comment number 30.

    20. At 11:10am on 12 Oct 2010, WrekinAir wrote:

    The point is that if they want the up-to-date films, the high class sport and similar offerings that Sky have been allowed to monopolise then they will happily pay for those - with which the news comes FOC.

    -------------------------------------------------------------------------

    Are you having a laugh? high class sport? that's too funny.

    Just spent a while in South Africa and they get more premiership football coverage than we do! The same thing I'm reliably told in India of all places!
    SA on DSTV (their version of Sky) has something like 10 sports channels with red button. They dont miss anything!

    Sky show like two games of premiership rugby and what, like three games of footie on a Saturday? In other countries you can watch every single game of their national sport on the tele - its all on the red button equivalent.

    High class sport coverage my *ss. Sky sport coverage is dismal, and that's being nice.

  • Comment number 31.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 32.

    @ 29. At 11:46am on 12 Oct 2010, Decentjohn wrote:

    > With the monopolistic empires of old being outdone by the Murdoch machine,
    > it is hardly surprising to see the BBC in the list of names complaining.


    The Murdoch machine is a monopolistic empire of old. Let's hope it gets crushed by the Internet. I'm in a Sun-Free-Zone - Liverpool. I just wished the rest of England had as much nouse as the scousers.

  • Comment number 33.

    who cares about sky, the sun, news of the world and the times anyway? These traditional forms of media and news outlets are starting to fall by the wayside now. I rely on independant journalism and various blogs to provide a real insight into what is going on in the world. If the "commentators" that you see on American news channels are powerful enough to influence the American public's minds then its their own dumb fault. What do you expect from a nation loaded up coke, macdonalds and walmart. We must to everything we can to stop it happening here!

  • Comment number 34.

    In Australia the Murdoch press apparently accounts for 75% of newsprint. But also in Australia, there are laws to restrict what is termed "cross media ownership". In section 60 of the Broadcasting Services Act, a person must not control a commercial television broadcasting licence and a commercial radio broadcasting licence having the same licence area, a commercial television broadcasting licence and a newspaper associated with that licence area, or a commercial radio broadcasting licence and newspaper associated with that licence area.

  • Comment number 35.

    33. At 12:20pm on 12 Oct 2010, RiskAnalyst wrote:

    Until they start taking control of the web and can then restrict what you post or what you see.

  • Comment number 36.

    There is no way that this will takeover will be blocked. For all politicians and political commentators, your are all redundant. THIS MAN MURDOCK rules the UK. Whoever he decides is going to win the Election wins. FACT, its whatever leader courts him and gets his media empire behind them who will win the next election. Lets hope for all our sakes it isn't UKIP (one irrelevant policy) or the facist BNP.

  • Comment number 37.

    32. At 12:02pm on 12 Oct 2010, Jacques Cartier wrote:


    Too big to fail...?

  • Comment number 38.

    36. At 1:42pm on 12 Oct 2010, mja wrote:
    There is no way that this will takeover will be blocked. For all politicians and political commentators, your are all redundant. THIS MAN MURDOCK rules the UK. Whoever he decides is going to win the Election wins

    So who did he want to win the election in May?

  • Comment number 39.

    #30 "Are you having a laugh? high class sport? that's too funny.

    Just spent a while in South Africa and they get more premiership football coverage than we do! The same thing I'm reliably told in India of all places!
    SA on DSTV (their version of Sky) has something like 10 sports channels with red button. They dont miss anything!

    Sky show like two games of premiership rugby and what, like three games of footie on a Saturday? In other countries you can watch every single game of their national sport on the tele - its all on the red button equivalent.

    High class sport coverage my *ss. Sky sport coverage is dismal, and that's being nice."

    =======================

    I think you will find a lot of that lack of coverage is due to regulators. So Sky cannot own all rights to show premier football, it shares rugby with ESPN etc.

    Come to think of it I probably have 10 channels of sport. 4 x Sky, a couple of Eurosport, ESPNx 3 (I think) and some other random ones that I cannot be bothered with. Mind you these come with the Virgin super package rather than Sky

  • Comment number 40.

    Whose wrath does Mr Cameron most fear - the ire of Tory-supporting News Corp titles, or the wrath of the Telegraph and Mail papers, which also backed the Conservatives?

    What a statement! Our policitical leaders should not be making decisions on the basis of fear.

    What are they afraid of? That some hidden deed may be revealed? Or of being bullied by someone bigger and stronger and more powerful then themselves? The only people our government should fear is the voters. If elected representatives in a democracy are fearful of any other group, then they shouldn't be in government.

  • Comment number 41.

    Sky is FOX UK people

  • Comment number 42.

    I've not been happy since MOTD moved from BBC2 to BBC1.

    It's been downhill ever since. Pushed by Mr M.

  • Comment number 43.

    "Will News Corp's bid for Sky be blocked?"

    I hope it will, because If Murdoch wants it, it's NOT going to be good for anyone else.

    In fact the best we can hope for is News Corp goes bankrupt, sooner rather than later. It would be a sign that mankind has real desire to up it's game. All News Corp does is try to drag everyone back down to it's level.

  • Comment number 44.

    Other than news and current affairs, I don't watch TV and I certainly do not read any newspapers. This is done through choice but quite frankly I'd rather sleep with popeye than give Murdock one penny of my hard-earned anyway.

    However, what I find really curious is that he seems to be as despised by his own customers as those - like me - that take a vociferous stand against everything he represents.

    How does such an awful man, hated by sooooooo many people, end up having so many of them as customers. Personally I'd choke before going there. The day I hand that man my money is the same day I make popeye breakfast in bed.

 

BBC iD

Sign in

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.