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A new newspaper price war?

Andrew Neil | 20:32 UK time, Thursday, 3 March 2011

Coverage of the government's go-ahead for Rupert Murdoch to buy the 60% of BSkyB he doesn't own has concentrated on the condition that he spins off Sky News. Reporting and comment has been devoted to whether or not the somewhat arcane mechanism proposed to house Sky News would be truly independent from Murdoch control/influence.

But I don't think that's what concerns the phalanx of British newspapers -- including such unlikely bedfellows as the Mail, Telegraph, Mirror and Guardian -- opposed to the go-ahead. I doubt they much care who controls or influences Sky News; they are not, after all, in the TV business.

They are much more worried about what Murdoch will do with the massive new resources at his disposal if he ends up owning all of BSkyB. Subscription TV is a massive cash generator and BSkyB is a pedigree cash cow. With 100% ownership, profits heading fast for £1 billion a year would all flow into the Murdoch coffers.

His newspaper rivals worry that it would take only a fraction of that to be diverted to his newspapers to make life very uncomfortable for them. He could use BSkyB cash, for example, to mount a newspaper price war (he's done it before) designed to drive his competition out of business. Less dramatically he could use the massive marketing reach of BSkyB to promote his papers cheaply -- perhaps even offering digital subs to his papers with a Sky sub.

Click here to watch Thursday's Daily Politics debate on the BSkyB debate and the future of Sky News


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