12 July 2011 Last updated at 08:27 ET

Article written by Robert Peston Business editor

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Hunt cannot avoid BSkyB decision

 

News Corp want to buy the remaining share of BSkyB

My focus will inevitably shift - for a while - from the crisis at News Corp to the crisis in the eurozone.

The growing concerns about Italy's ability to finance its deficit and - more importantly - refinance its short-term debt is a matter of no small concern.

But in the meantime, there are a few loose ends to tie up relating to yesterday's decision by the culture secretary, Jeremy Hunt, to refer News Corp's proposed bid for all of BSkyB to the Competition Commission.

The first thing to say is that just ten days ago, the involvement of the Competition Commission would have been viewed as regulatory meddling of the worst sort by News Corp's chairman, Rupert Murdoch, and its deputy chief operating officer, James Murdoch (relation).

For the past year they were negotiating with Jeremy Hunt, the culture secretary, the media regulator, Ofcom, and the competition watchdog, the Office of Fair Trading, with the aim of dodging an investigation by the Competition Commission.

But last night, they were probably delighted that the Commission will be sticking its oar in.

How so?

Well it means their burning desire to increase News Corp's stake in BSkyB from 39% to 100% is on hold. They have, for now at least, skirted the alternative wanted by a growing number of MPs, which would be for them to call the whole thing off and abandon the bid.

It may of course yet come to that humiliating pass for the Murdochs. Much depends on what happens in the Commons tomorrow.

The Labour leader is pressing ahead with calling a vote that - if passed - would put pressure on News Corp to abandon its BSkyB ambitions.

That said, as I understand it, the motion being proposed by Mr Miliband (and we'll have its wording at 5pm today) will be designed to put moral pressure on the Murdochs, rather than endeavouring to somehow put in place a legal prohibition on the bid.

However, on the assumption that the Murdochs press on with the takeover regardless, the Competition Commission is in theory supposed to complete its investigation in 24 weeks - though it can ask for an eight week extension if the case seems particularly complicated.

It is reasonable to assume that the Commission will need the full 32 weeks, because there is very little case law for the question under review - which, as you will recall, is the impact of the deal on plurality, or the number and variety of voices in the media, rather than competition.

The Commission tells me it has only conducted a plurality review once before - which, believe it or not, was when BSkyB wanted to own a big chunk of ITV. At the time, BSkyB was run by James Murdoch, as its chief executive.

So no one, I think, can accuse the Competition Commission of being afraid to cross the Murdochs, if that's what its analysis of the impact of the deal on the variety and quality of news providers implies it should do.

The really tricky thing for the Commission however will be how to treat the "fit-and-proper" issue, the risk that Ofcom may at some indeterminate point - on eventual receipt of all the evidence uncovered by the police about possible malpractices at the News of the World and more widely within News Corp's UK operations - decide that News Corporation is not fit to own a broadcasting licence or control BSkyB.

Jeremy Hunt made clear that the Commission cannot ignore this question - because his letter to Ofcom yesterday says that he believes the question of whether News Corp is fit to hold a broadcasting licence is directly relevant to any analysis of the impact on plurality of the deal.

But on the Commission's timetable for producing a report, it will not be able to directly adjudicate on whether News Corp passes the fit-and-proper test - because the various enquiries and probes into what the News of the World did are highly unlikely to have reached final definitive conclusions by then.

Which means that there is no way off the hook for Jeremy Hunt on all this.

He will eventually receive a report and recommendations from the Competition Commission, probably in the opening months of 2012.

But - yet again, and potentially when it could be most politically embarrassing for him - it will be down to him to decide whether Rupert Murdoch should be granted his wish of owning every bit of BSkyB.

Jeremy Hunt has deferred his own moment of truth, not killed it.