News Corp’s bid for BSkyB jeopardised

Sky headquarters News Corporation wants to buy the 61% of BSkyB it does not already own

There are three big things on my mind about the escalation of the crisis at the News of the World and News International over the alleged illicit way in which the Sunday tabloid obtained information.

First, the disclosure that the News of the World appears to have paid tens of thousands of pounds to police officers for information over a period of years is redolent of a newsroom that seems to have been out of control.

There was, according to sources, a macho culture at the News of the World from 2003 to 2006 or so when almost no practice was off limits, so long as the scoop was landed.

What we now need to know is which officers received the payments that were detailed in the internal News-of-the-World e-mails sanctioning the payments.

Was it a small number of officers? Was there a culture in the police force of receiving in effect freelance income for co-operating with journalists? Was it only the News of the World that made payments, or was this standard practice on other newspapers?

The e-mails seems to show the then editor of the News of the World, Andy Coulson, authorising the payments. But which reporter or executive at the News of the World handed the cash over to police officers?

Also who else at the News of the World or News International knew about the payments? Since they amounted to tens of thousands of pounds in total, it seems implausible that they were not approved at a higher level within the organisation.

Second, the police have had the notebooks and files of Glen Mulcaire, the private detective employed by the News of the World to hack phones, since 2006. So why was it only last night, for example - and on the eve of a parliamentary debate about all this - that the police got round to contacting the victims of the 7/7 atrocities, to inform them that Mr Mulcaire may have hacked their phones?

In the same vein, why have the families of the Soham victims and of Milly Dowler only recently been informed by the police that their voicemails too may have been intercepted?

Several big companies have said they will not place adverts in the News of the World this weekend

And what else is in the Mulcaire file about the techniques that many find truly shocking about how the News of the World behaved as though the only thing that mattered was landing the story, and never mind how it was obtained?

Which brings me to my third big point. I don't see how News Corporation, owner of News International, can pursue its takeover of British Sky Broadcasting at this juncture - or at least that is the inescapable conclusion of conversations I've had with those close to the bid.

On this last issue, and as I've pointed out before, Ofcom is under a legal obligation to ensure that the owners of broadcasters such as BSkyB are fit and proper.

But pending the results of the police enquiry into alleged illegal behaviour by the News of the World, and pending a public disclosure by News International of the way that it has changed its structures and practices to ensure such abuses never happen again, Ofcom is not in a position to adjudicate whether News Corporation is fit and proper.

That poses a dilemma for British Sky Broadcasting's independent directors. They know there is an increased risk of regulatory intervention by Ofcom to frustrate the takeover.

Because of that execution risk, they would have to demand a much steeper price from News Corporation than would otherwise be the case. It is their fiduciary duty to do so - and News Corporation, run by Rupert Murdoch, will be well aware of that.

Which means that even if - as is likely - the Secretary of State Jeremy Hunt gives a green light for the bid to be launched in a couple of weeks or so, it would be both potentially expensive and very risky for News Corporation to press the button on the bid then.

My conclusion from all this, which has been corroborated by talking to those close to the two companies, is that Rupert Murdoch and News Corporation will almost certainly have to delay their takeover of BSkyB - at least until it is apparent that the News of the World and News International have been cleaned up.

And, in a worst case for Mr Murdoch and News Corporation, where the reputational damage to his organisation continues to magnify, the delay could become semi-permanent - if, for example, the perceived value of BSkyB rises beyond what News Corp would or could pay.

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 153.

    Robert is it true that at Matthew Freud's weekend bash you were huddled together with Brooks, Lewis and James Murdoch for a good part of the evening, (as claimed by the Guardian).

    What were you talking about?

  • rate this

    Comment number 152.

    Rebekah Wade just happened to be on holiday when the Milly Dowler hacking was taking place? How convenient. Does that absolve her from overall editorial responsibility? Surely she should question where information was obtained. Or did it not matter so long as there was a headline to be grabbed. She must have had knowledge of what her staff were up to. If not she was negligent or incompetent.

  • rate this

    Comment number 151.

    Robert, you're doing a fantastic job of making sure its Coulson and not Brooks that is being put in the lime light.

    I look forward to seeing you replace Jeff Randall.

  • rate this

    Comment number 150.

    I am getting a little bit bored with this blog, through no fault of the bloggers or indeed Mr Peston. The problem is that with the cap on 400 characters, it has killed off most of the interesting debate that has occured here previously and contributers that have been active in the past now seem censored. Does anyone have any suggestions as to where you may now partake in or read a quality blog?400

  • rate this

    Comment number 149.

    I think its obvious to the man in the street,that owning so much media in the uk should not be allowed on competion rules.So why has this take-over been given the green light and why do we keep letting UK plc be taken over by foreign companies,it`s not good for taxes,jobs or R&D.


Comments 5 of 153



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