News Corporation's bid for BSkyB faces probe
- 4 November 2010
- From the section Business
The Business Secretary, Vince Cable, has ordered Ofcom to investigate News Corporation's plan to take full control of broadcaster BSkyB.
News Corporation has said it wants to buy the 61% of BSkyB it does not own.
The inquiry will look into "media plurality" - the degree to which news outlets are concentrated under one organisation's ownership.
Rupert Murdoch's News Corp owns News International, which owns the Sun, News of the World, Times and Sunday Times.
These account for a third of the UK's national newspaper circulation, while BSkyB has almost 10 million customers.
In a statement, News Corporation said it believed its plan would be cleared.
"News Corporation is confident that the proposed investment will not adversely affect media plurality in the United Kingdom and looks forward to discussing any substantive issues with the relevant authorities."
In a short statement, BSkyB said it noted the announcement made by Mr Cable.
Separately, the European Commission is also investigating the impact of the purchase on competition, owing to the size of the proposed acquisition, and will announce its decision by 8 December.
Mr Cable's move follows pressure from rival media groups who wrote to him last month urging him to block Mr Murdoch's move, which they said could reduce diversity in the industry.
The signatories included the heads of the BBC and Channel 4, as well as chief executives of newspaper groups, including the Telegraph, the Mail, the Guardian and the Mirror.
But the broadcasting executive and former head of programmes at BSkyB, David Elstein, said it was unclear whether there were any grounds for the complaints.
"You have to think through what possible effect on media plurality - ie the number of news outlets, media outlets there might be - from News Corporation owning all of BSkyB as opposed to 39% and it's quite hard to spot what they might be."
Ofcom has to report back to the Business Secretary by 31 December. Mr Cable must then decide whether to make a referral to the Competition Commission.
News Corp told the board of BSkyB in June that it was prepared to pay 700 pence a share to take full control of the leading satellite broadcaster, an offer that has not been made formal but that the directors of BSkyB said was too low.
As well as its UK interests, News Corp owns other major assets including the Fox film and TV empire, as well as major publishing companies, including Harper Collins.
Its latest results for the three months to September showed profits up 26% at $775m (£484m).